On Wednesday, altcoins pared gains from the US holiday rally as South Korea reassesses its position on cryptocurrency following Do Kwon-led $60 billion decline in the market value of Luna.
Despite Bitcoin hitting $32,000 a coin, cryptocurrency traders are not convinced the world’s most dominant digital coin can sustain its positive trajectory. Therefore, investors started taking profit after Bitcoin hits the $32,000 per coin resistance level.
In the last 24 hours, Bitcoin has dropped 6% of its value, and presently trading at $29,900 a coin. As recently as Tuesday morning, Bitcoin was trading above $32,000 on reports that China has started relaxing some of her COVID-19 restrictions and the possibility of the US Federal Reserve easing it recently raised interest rates.
By early Wednesday, all of that good faith had vanished, with investors reverting to the risk aversion that had characterized their actions for much of the previous eight months. Ether, which was selling at around $1,800 at the time, was also down over 7%.
Other big cryptocurrencies plummeted even more, with Luna Classic (LUNC), the new moniker for the original LUNA on the Terra protocol, plummeting by 61 percent at one point. SOL and ADA both dropped by almost 12%, while DOT fell by about 9%.
Joe DiPasquale, CEO of crypto fund manager BitBull, stated to CoinDesk, “Bitcoin’s price behavior today is not wholly unanticipated.” “Not only has it been under pressure from traditional markets, but it has also been unable to break through the $31K-$32K resistance zone, resulting in a breakdown from the weekend’s range.”
As investors reinforced their concerns about high inflation and the possibility of a recession, major stock indexes fell, with the tech-heavy Nasdaq and S&P 500 each shedding 0.7 percent. The price of gold and the yield on the 10-year Treasury note both increased.
Jamie Dimon, the CEO of JPMorgan Chase and a crypto skeptic, warned investors and analysts at a business conference on Wednesday that the firm would be prudent with its balance sheet and prepare for tough economic times.
Dimon expressed concern about central bank quantitative tightening as well as the ongoing consequences of Russia’s invasion of Ukraine. “It’s kind of bright right now, things are OK, and everyone feels the [US Federal Reserve] can manage this,” Dimon added. “That hurricane is right down the road, heading straight for us.”
Despite outpacing altcoins, Bitcoin ended May in the red, despite being a historically good month. That indicated investors’ choice of the least risky digital asset. Nonetheless, DiPasquale of BitBull was pessimistic about Bitcoin’s ability to rapidly rise. “Any prospects of a speedy reversal will require strong purchasing activity and a major sentiment shift moving forward,” he wrote.
