Market experts are advising cryptocurrencies to stabilize after last week’s brutal sell-off in Bitcoin and Ethereum raised concerns about contagion to traditional finance, but warn investors to be vigilant ahead of key economic data.
The ASX is expected to open higher on Monday, with futures markets pointing to a 0.8 percent gain after a sharp rally on Wall Street on Friday night after a volatile week in the world’s largest economy.
Cryptocurrency prices are expected to stabilize in the coming week.Recognition:Bloomberg
The mysterious crash of stablecoin Terra and its sister token Luna dominated markets last week, sparking widespread panic and sending digital currency prices plummeting. The global cryptocurrency market, which once had a market value of $3 trillion, lost more than half of its value and is now worth less than $1.3 trillion.
However, experts believe that the virtual bloodbath is largely over and cryptocurrency prices will stabilize in the coming week.
“We’ve definitely seen some recovery [Bitcoin’s] Price,” said Caroline Bowler, chief executive of Australia’s largest digital asset exchange, BTC Markets, noting that Bitcoin’s price fell to around $38,000 on Thursday morning but bounced back above $42,000 over the weekend.
On exchange BTC Markets, purchase volumes for both Bitcoin and Ethereum are ticking up, she added. “I think people will come and say, ‘We think now is a really good time to come into the market.'” This sentiment is shared by many other Australian digital fund asset managers, including the Chief Investment Officer by Apollo, Henrik Andersson.
“I would expect a consolidation around the current price meaning there could be some movement up or down… by a few thousand… but I’m not expecting big swings based on what we can see from the market .” Bowler said.
After Terra and Luna’s collapse, she added that their founders must deal with lingering questions about what exactly caused the implosion. “What happened? Where did the problems come from? Who basically benefited?”
Tribeca Investment Partners portfolio manager Jun Bei Liu agreed that cryptocurrency prices will rally. “It’s going to have an upswing,” she said. “Last week it was clearly tested on its ability to peg to the US dollar…this week people will feel better about risk buying and they will be more volatile [assets].”