E-Paper
Sign In
Fri, Nov 22, 2024 | Jumada al-Awwal 20, 1446 | DXB
0°C
Cryptos not out of danger zone yet
Bitcoin and ethereum, the two largest cryptos, are still sitting nearly 50 per cent below their all-time highs in November 2021
Since late June, Bitcoin has been trading at around $20,000 to $24,000. — File photo
Cryptocurrencies, which have been trending up in recent weeks after a sustained crash that had wiped their market value by $2.0 trillion, are not out of the danger zone yet, analysts say.
Bitcoin and ethereum, the two largest cryptos, are still sitting nearly 50 per cent below their all-time highs in November 2021.
Since late June, Bitcoin has been trading at around $20,000 to $24,000. While it has shown attempts to push higher, it has strugglled to create a significant breakout. But there are now signs of a small rally, crypt analysts say.
“BTC continues to show signs of bullishness mainly due to higher highs and lows being formed,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said.
Critics says the crypto crash — from $2.9 trillion to less than $900 billion in recent months has reinforced the perception that markets for the digital currency are little more than global casinos operating with virtually no rules or accountability. Cryptos are still used primarily as an investment vehicle as it is not widely accepted as payment for goods and services, they argue.
After crashing below $20,000 in recent weeks from its peaks of $65,000 in November 2021, bitcoin started a recovery to hit $24,000 even as experts debate whether it will see further declines similar to 2013 and 2017. Ethereum, the second most valuable digital currency, has seen more gains than bitcoin over the last few weeks and was trading above $1,900.
The crypto market could still experience one more drastic sell-off before it is on the road to recovery, says a senior market analyst. “Between a collapse in the market, layoffs and the ongoing liquidity crisis in the crypto industry, prices will likely remain low for the foreseeable future, such as they did in between early 2018 and mid-2020.”
Some experts say another crypto winter is already setting in. Between a collapse in the market, layoffs, and the ongoing liquidity crisis in the crypto industry, they say prices will likely remain low for the foreseeable future, such as they did in between early 2018 and mid-2020.
“Crypto assets are very volatile, in part because there’s so much uncertainty about which crypto technologies are likely to be the most useful in the long run—for example, which ones the market may coordinate on for mediums of exchange, and a lot of the applications are technological in nature and novel (or at least unproven). And so, there’s a lot of uncertainty and a lot of the value of return is downstream, just like with tech companies,” says Harvard Business School Professor Scott Duke Kominers.
How vulnerable are crypto investors, particularly the retail-level amateur investors amid a flurry of bad news involving high-profile firms like bitcoin, terra, and Celsius? Experts believe there is a need for more consumer protection in this space across the board.
“There needs to be more transparency and not just transparency at the abstract level, but the technology needs to be made transparent for consumers in ways that they can understand. This is a problem across crypto, and it’s one that companies are starting to try and solve,” says Kominers.
— issacjohn@khaleejtimes.com
Sign Up For Breaking News Alerts
Be in the know. Get the latest breaking news delivered straight to your inbox.
Next Story