‘Still a lot of risk out there’: Experts tip crypto bounce but warn markets finely balanced – Sydney Morning Herald

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Market experts are tipping cryptocurrencies to stabilise after last week’s brutal selloff in bitcoin and ethereum triggered concerns about contagion into traditional finance, but warn investors must be vigilant ahead of key economic data.
The ASX is set to open higher on Monday, with futures markets pointing to a 0.8 per cent rise following a strong Friday night rally on Wall Street after a volatile week in the world’s largest economy.
Cryptocurrency prices are expected to stabilise in the week ahead.Credit:Bloomberg
The mysterious crash of stablecoin Terra and its sister token luna dominated markets last week, triggering widespread panic and sending digital currency prices crashing. The global cryptocurrency market, which once had market value of $US3 trillion, lost more than half its value and is now worth less than US$1.3 trillion.
But experts believe the virtual bloodbath is largely over, with cryptocurrency prices set to stabilise in the week ahead.
“We’ve definitely seen a bit of a recovery in [Bitcoin’s] price,” said Caroline Bowler, the chief executive of Australia’s largest digital asset exchange BTC Markets, noting that the price of Bitcoin fell to around $38,000 on Thursday morning but climbed back above $42,000 over the weekend.
On the BTC Markets exchange, buying volumes for both Bitcoin and Ethereum are ticking upwards, she added. “I think people are coming in and saying, ‘we think this is now a really good point to come into the market’.” It’s a sentiment shared by many other Australian digital fund asset managers, including Apollo chief investment officer Henrik Andersson.
“I would expect a consolidation around the current price, meaning that there may be some movement up or down … of a few thousand … but I don’t anticipate large swings based on what we can see from the market,” Bowler said.
In the aftermath of Terra and Luna’s collapse, she added that its founders will have to front up to lingering questions on what exactly caused the implosion. “What happened? Where did the problems stem from? Who profited, basically?”
Tribeca Investment Partners portfolio manager Jun Bei Liu agreed that cryptocurrency prices will recover. “It’ll have a bounceback,” she said. “Last week it clearly got tested with its ability to peg to the US dollar … this week, people will feel better about buying risk and more volatile [assets].”
However, eToro market analyst Josh Gilbert isn’t certain the market pullback is over yet.
“Despite a relief rally, we could still see some downside pressure over the next week given there is still a lot of risk out there,” he said.
But it’s unlikely to be as dramatic as last week. “In saying that, we believe the outlook is poised for less bad news.”
BetaShares chief economist David Bassanese also expects “some sort of recovery, if only because things have been deeply oversold in the short run”.
But Bitcoin – once touted as a “hedge against inflation” – is now intertwined with the broader sharemarket.
“As ownership of crypto has broadened to retail investors, the fear and greed, the passions that drive equity markets are driving crypto markets,” said Bassanese.
The US will this week release data on housing and retail spending that Wall Street will scrutinise for indications of whether America’s economy is slowing.
“Crypto will be dictated by how US equity markets perform this week.”
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