Cryptocurrency market continues to push higher across the board on the back of favorable news and eased investor worries drawing a picture of bullish market sentiment.
Prices of assets whether digital or not– from shares, to property, to commodities such as iron ore – have surged as optimistic investors believe that the global economy devastated by the Covid-19 pandemic, is set to rapidly bounce back to pre-pandemic levels.
Bitcoin, the world’s biggest crypto asset with more than $1 trillion market cap, has managed to hold steady above the $55,000 mark but the upward momentum appears to be running out of steam, at least for now. At this level, the sellers appear to be in charge at the moment.
Ether (ETH), the world’s second-largest virtual currency by market value, hit a new all-time high of US $2,684 before settling at US $2,640 after Bloomberg cited unnamed sources as saying the European Investment Bank (EIB) plans to issue a digital bond sale on the ethereum blockchain network. This might provide a relief about institutional legitimacy of crypto investment.
Among the other free-floating cryptocurrencies in the Big Cap 10, ripple (XRP) is changing hands at US $1.40, Binance Coin (BNB) US $571, cardano (ADA) near US $1.3, Dogecoin (DOGE) US $0.27, ChainLink (Link) US $37, Stellar (XLM) $0.5, Litecoin (LTC) US $259 and Vechain (VET) US $0.20.
Cryptos rebounded after it appeared U.S. President Joe Biden would find it hard, if not impossible, to push his capital gains taxes through the Congress, a move which could likely reduce investment in the digital assets.
This month, cryptocurrency holders have been fumed as a chain of multiple risk events have triggered the forced liquidation of leveraged bets, wave of selling with pressure across the board. The flash crash made many investors cautious to buy into an ongoing crash, reducing bid liquidity in the market.
Many crypto exchanges allow traders to trade on a margin account (using leverage), which means that they can use a relatively small amount of money upfront to borrow the rest in order to hold large amounts of digital assets. Although the leverage magnifies profits if the price goes in the favorable direction (depending on short or long orders), it leaves traders in a much more vulnerable position if price goes in the wrong direction.
The vicious sell-off last week has been a costly lesson for the rookies who were stuffing their wallets with ‘upside momentum’ crypto coins with a false sense of security, thinking their holdings could only climb. The flush crash was indeed a timely reminder to novices – many of whom tend to shrug off intrinsic vulnerability of cryptocurrencies to possible government regulations – of just how quickly sentiment can sour.
Before the sudden mood swing, bitcoin hit a peak in mid-April, with the price of the digital coin hitting a record high of US $64,820 a piece.