LUNA’s sudden crash last week opened up a bearish market, with a clutch of currencies following the ill-fated token in trending down. Both LUNA’s established and alternative coins plummeted, with Bitcoin and Ethereum down two points each and DOGE and Solana down 3.39 and 7.56 points. Funds have shrunk down to their lowest points since the last bear market of summer 2021, but with all the doom and gloom comes a glimpse of hope.
Experts have suggested the recent volatility has attracted a swathe of new investors.
Market analysis from Bitfinex, a cryptocurrency exchange based in the Virgin Islands, has pointed out that institutions are venturing into the market.
The exchange wrote: “The recent market volatility that we’ve witnessed is drawing increasing numbers of institutional investors into the space, especially those with an interest in derivatives.
“This belies the outflow that is being seen in digital token investment products indicating that interest – in Bitcoin in particular – remains high.”
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“Investment from big institutions in infrastructure supporting the digital token economy continues, as evidenced by the recent investments made by Goldman Sachs and Barclays in Elwood Technologies.
“The icy calculation of institutional capital pours scorn on Bitcoin’s critics.
“Today, prices across the cryptocurrency space are in the green. Regardless, this is a long-term game.”
The flash crash has given way to some signs of life recently as Bitcoin has reclaimed a key benchmark.
While it has since moved down to $29,385.10, the coin crossed the $30,000 mark over the weekend.
The support level should keep investors happy for a time, and market factors could see it rise even further.
Mark Newton, a technical strategist at Fundstrat Global, said the S&P will decide where it goes next.
He told Bloomberg: “If the S&P falls some more, that should create one final flush and a great buying opportunity for Bitcoin.”
“There’s a lot of bearishness, and we should be approaching a time when you really want to buy into that in the next couple of months.”
While hope is now growing from the recent troubles, there is a move towards regulation, which may tame some of the sudden growth.
Cryptocurrencies are inherently highly volatile, due primarily to the lack of regulation on the market.
There is no regulation for the bulk of the market, and momentum is now growing to put some in place.
The G7 and Financial Stability Board (FSB) are currently leading calls.
In a recent report, the organisations stated they would work to “advance the swift development and implementation of consistent and comprehensive regulation of crypto-asset issuers and service providers”.
They would work to hold crypto-assets, including stablecoins (such as Tether, which LUNA was coupled to) “to the same standards as the rest of the financial system”.
The organisations added the regulation must help digital innovation in payments, a “key driver of economic progress and development”.
The information in this article does not equate to financial advice. Anyone considering investing in cryptocurrency should understand the risks involved.