Crypto The assets were also engulfed in a large sell-off of risky investments due to concerns over high inflation and rising interest rates. Sentiment is particularly fragile, as tokens that should be pegged to the dollar have faltered.
Bitcoin, the largest cryptocurrency by total market value, managed to rebound in the Asian session and traded at $ 30,300 at 0623 GMT, up 5%. It staged a kind of recovery from the 16-month low of around $ 25,400 reached Thursday.
But it remains well below a week-ago levels of around $ 40,000 and, unless there is a rebound in weekend trading, is headed for a record seventh consecutive weekly loss.
“I don’t think the worst is over,” said Scottie Siu, investment director of Axion Global Asset Management, a Hong Kong-based firm that manages a cryptocurrency index fund.
“I think there is a further downside in the next few days. I think what we need to see is the collapse of open interest a lot more, so the speculators are really out, and that’s when I think the market will stabilize.”
Discover the stories of your interest
TerraUSD (USDT) broke its 1: 1 peg to the dollar this week as its mechanism to remain stable, using another digital token, failed under selling pressure. It was last trading close to 10 cents.
bindThe largest stablecoin, and the one whose developers claim it is backed by dollar assets, was also under pressure and dropped to 95 cents on Thursday, according to data from CoinMarketCap, but returned to one dollar on Friday.
The sale has roughly halved the value of the global cryptocurrency market since November, but the drawdown has turned to panic in recent sessions with the squeezing of stablecoins.
These tokens are anchored to the value of traditional assets, often the US dollar, and are the primary means of moving money between cryptocurrencies or converting balances into fiat money.
“More than half of all bitcoin and ether traded on exchanges are against a stablecoin, with USDT or Tether taking the largest share,” analysts at Morgan Stanley said in a research note.
“For these types of stablecoins, the market must be confident that the issuer holds sufficient liquid assets that they would be able to sell in times of market stress.”
Tether’s operating company claims it has the necessary resources in treasury bonds, cash, corporate bonds and other money market products.
But it is likely that Tether will face further tests if traders continue to sell and analysts fear that stress could spill over into money markets if pressure forces greater liquidation.
Ether, the second largest cryptocurrency by market capitalization, stabilized near $ 2,000 on Friday after falling to $ 1,700 on Thursday. Bitcoin and ether are around 60% below the record highs reached in November.
Shares related to cryptocurrencies have also taken a hit, with shares in the broker Coinbase stabilizing overnight, but still halving in just over a week.
In Asia, Hong Kong-listed Huobi Technology and BC Technology Group, which operate trading platforms and other crypto services, recorded weekly drops of more than 17%.
Amid the turmoil, Nomura on Friday said it has begun offering bitcoin derivatives to clients, the latest move by a traditional financial institution in the asset class.