After a turbulent week, cryptocurrencies are recovering some of the losses aggravated by the collapse of stablecoin TerraUSD UST at a fast pace.
As of 9:46 a.m. ET, bitcoin is trading around $30,696, nearly 10% up since yesterday. All other major cryptocurrencies are posting double-digit percentage gains. Ether ETH , cardano and solana are up by 10%, 24% and 23% respectively.
Polkadot DOT is leading the gains among the heavyweights. The token has added a staggering 40% over the past day but remains far below last week’s levels.
Embattled UST, designed to always be worth $1, is now worth 13 cents. Its “stabilizer” token LUNA LUNA has ultimately collapsed to a market capitalization of $0.43 million. The Terra blockchain, which supports both assets, halted twice on Thursday as the entities responsible for verifying transactions on the blockchain were looking to “come up with a plan to reconstitute” the network. Binance, the world’s largest crypto exchange, suspended spot trading for LUNA and UST against its own stablecoin BUSD BUSD on Friday after rival platform OKX said it was planning to end spot listings of UST. However, the cryptocurrencies remain available on FTX and other minor exchanges.
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Scottie Siu, investment director of Axion Global Asset Management, a Hong Kong-based firm that operates a crypto index fund, told Reuters, “I think there is more downside in the coming days. I think what we need to see is the open interest collapse a lot more, so the speculators are really out of it, and that’s when I think the market will stabilise.”
Alex Kuptsikevich, the FxPro senior market analyst, has also expressed caution, “This could be both the start of an extended buying wave and a trap for the bulls.” He points out that the Bitcoin BTC Fear and Greed Index, a metric perceived as an indicator of investor sentiment in the market, “largely ignores the optimism of recent hours”. The reading remains in the ‘extreme fear’ zone.
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Author: Nina Bambysheva, Forbes Staff