Bitcoin swings buffet traders after token suffers worst month

The largest token rallied as much as 11.3% in Asia on Friday, briefly closing in on the $21 000 level.
Image: Bloomberg

Bitcoin, fresh off its biggest-ever monthly decline, whipsawed traders with wild swings on Friday as digital assets struggle to regain their footing.

The largest token rallied as much as 11.3% in Asia on Friday, briefly closing in on the $21 000 level. Bitcoin then quickly gave up most of those gains, trading around $19 400 at 11:30 a.m. in London. June’s 41% drop was the steepest in Bloomberg data going back to 2010.

Bitcoin’s gyrations underscore the uncertainty looming over cryptocurrencies as investors struggle to assess how far central banks will go to tame rampant inflation. Adding to the confusion, major crypto players ranging from hedge fund Three Arrows Capital to lender Celsius Network have been thrown into disarray by the market selloff, raising the prospect of further contagion.

Euro-area inflation accelerated to a fresh record in June, with consumer prices jumping a faster-than-expected 8.6% from a year earlier. Inflation numbers for the zone have outpaced economists’ forecasts for 11 of the past 12 months.

Bitcoin “could be vulnerable to one more ugly plunge that could have many traders fearing a fall towards the $10 000 area” if the turmoil on Wall Street continues in the third quarter, Edward Moya, senior market analyst at Oanda Corp., wrote in a note. The token last traded at those levels in mid-2020.

The risks aren’t deterring El Salvador, whose President Nayib Bukele said on Twitter that the nation had again bought the dip, this time adding 80 Bitcoins at a price of $19 000 each.

Earlier this week, Michael Saylor’s Bitcoin-backed tech firm MicroStrategy Inc. said in a filing it had purchased another 480 coins worth about $10 million at the height of the crypto swoon.

Bitcoin has been gyrating around the $20 000 mark after crashing below $18 000 on June 18. The lack of direction is reminiscent of how the coin traded in the wake of the TerraUSD stablecoin collapse in early May, when it clung close to $30,000 for weeks before plunging again.

© 2022 Bloomberg

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