Bitcoin Holds Steady Near $21K Even as Equities Slide
Bitcoin held steady near its most recent $21,000 perch, and a leading crypto analyst said the market had already priced in the looming bankruptcy filing of crypto brokerage Genesis Global Capital and other recent industry debacles stemming from the collapse of disgraced crypto exchange FTX .
The largest cryptocurrency by market capitalization was recently trading at about $20,980, up 0.8% over the past 24 hours, even as investors mulled conflicting economic reports.
“Most of the negative news should be priced in” because Genesis has been in trouble since the end of last year, Edward Moya, senior market analyst at foreign-exchange market maker Oanda, wrote in a Thursday note.
On Wednesday, Bloomberg reported that Genesis, a CoinDesk sister company, was in confidential negotiations with various creditor groups, with Genesis warning it could seek bankruptcy protection if it fails to raise capital. Bitcoin’s price tumbled as low as $20,370, a roughly 5% drop from the previous day, after the U.S. Department of Justice foreshadowed an announcement that it was charging Hong Kong-based crypto exchange Bitzlato with laundering $700 million.
But the announcement turned out to be “anticlimactic, at least in contrast to what the markets were guessing would happen,” said Michael Safai, managing partner of crypto trading firm Dexterity Capital. Safai told CoinDesk that the crypto market's recent positive sentiment could lift further if institutional traders maintain BTC’s trading range between $20,000 and $21,000 over the next couple of days.
Ether (ETH) was recently changing hands at around $1,550, up 1.1% from Wednesday, same time. The CoinDesk Market Index (CMI) recently climbed 1.8%.
Meanwhile, traditional markets continued to stumble this week, with the S&P down 0.7% for the day. The S&P, which has a hefty technology component, is off 2.1% for the past five days, as investors remain fretful about the prospect of recession and big banks kicked off the earnings season with mixed results.
Crypto-exposed stocks were also varied: Exchange Coinbase (COIN) was down 1.5% for the day, while bitcoin miner Marathon Digital Holdings (MARA) was up 6.2%.
Bitcoin’s strong 2023
The dip of the past two days has hardly dented bitcoin’s sterling performance so far this year. BTC has gained 26% since Jan. 1, rising from weeks-long doldrums around $17,000.
Martin Leinweber, digital assets product specialist at MarketVector Indexes, attributed bitcoin's recent rally to the weakening U.S. dollar, slower inflation and a short squeeze.
According to Coinglass data, traders liquidated some $492 million of short positions on Jan. 13, sending BTC above $20,000.
However, Leinweber said that it's still hard to call a market bottom because "normally in a bear market violent rallies tend to fool investors into believing that this is a sustainable one," considering liquidity isn't fully returned yet.
“You very rarely see these V-shaped bottoms,” he told CoinDesk. “You see a rounding U-form, which just takes a little bit of time and there's a little bit of volatile in between. That's the best-case scenario. But I think you still need the right macro backdrop for risk assets in general to rise and the crypto can outperform.”