That total market figure now stands at around $900 billion, pummeled by a quarter in which the burgeoning Terra crypto ecosystem collapsed close to zero, and a mounting liquidity crunch caused several prominent companies to border on insolvency. Even some of crypto’s best funded companies announced swaths of layoffs, while Bitcoin’s current trading levels have seen it floating back and forth over the $20,000 mark for a number of weeks.
Prices were tumbling again on Thursday, with the world’s largest token by market value sliding more than 6% to breach $19,000 for the second time in a fortnight. More volatile altcoins did worse, with Avalanche and Polygon each falling more than 10%.
While perhaps not directly correlated to falling prices, the mood around Bitcoin was worsened by the Securities and Exchange Commission’s rejection of a bid to turn one of the world’s largest Bitcoin funds, Grayscale’s Bitcoin Trust (GBTC), into an exchange-traded product late on Wednesday. Another knock came in the form of a report that Genesis Trading, a sister company to Grayscale, may be facing a loss in the region of hundreds of millions of dollars from its exposure to struggling crypto lenders.
The recent drumbeat of bad news signals a broad rebuke to crypto’s love of unbridled speculation and free-wheeling innovation, which has now cost investors dearly. Its obsession with leverage laid at the heart of that mindset, as lenders and hedge funds alike parlayed their customers’ assets into even riskier bets that quickly buckled as prices dropped.
Yet for all the gloom, some analysts are pointing to signs that the bottom may be near. The deleveraging that accelerated the rout in past months may not have much further to run, JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou said in a note published Wednesday. They also pointed to venture capital funding that “continued at a healthy pace in May and June.”
“Bitcoin has had good success over the last dozen years at making cyclical lows every 90 weeks,” said Fundstrat technical strategist Mark Newton. “Lows should be right around the corner according to this cycle composite, and one should be on alert in the month of July, looking to buy weakness for a healthy rebound, just as sentiment seems to be reaching a bearish tipping point.”