Bitcoin’s crushing week and collapse in Ether, memecoins challenge optimism in digital assets
- Bitcoin, the largest cryptocurrency, fell towards US$34,000 on Saturday to cap more than 50 per cent retreat from its all-time high last November
- Even long-time bull like Novogratz has cautioned this will be a year where people realise ‘being an investor is a difficult job’
Bitcoin, the largest cryptocurrency by market value, fell to as low as US$34,042.77 on Saturday, representing a loss of more than 50 per cent from its all-time high last November. As crypto traders reacted to hawkish signals from the Federal Reserve, fresh US regulatory hints and the threat of an outright ban in Russia, the decline in Ether and other newer coins have outpaced Bitcoin’s fall.
Over the past seven trading days, Bitcoin has shed around 20 per cent of its value compared with nearly 30 per cent for Ether. Solana’s SOL and DeFi-play Avalanche’s AVAX token have fallen nearly 38 per cent each. The wipeout in memecoins has been profound: Dogecoin is down 30 per cent on the week while Shiba Inu is off 38 per cent, according to CoinMarketCap.
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Crypto “is a risk asset up and down,” Starkiller Capital’s Leigh Drogen said. “It’s even more of a risk asset now that most of the crypto market cap is Ethereum, Solana and all sorts of other stuff that is just basically technology where we’re pulling forward massive assumptions of global growth into the present.”
Overall, more than US$1 trillion in market value has been destroyed since the last peak, with Friday’ decline leading to the liquidation of more than US$1.1 billion in crypto futures positions.
Even long-time bulls are starting to wonder out loud at what point the battering might end. Famed crypto investor Mike Novogratz mused on Twitter that “this will be a year where people realise being an investor is a difficult job.”
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Ether’s slide relative to the largest digital coin has caught the eye of Noelle Acheson, head of market insights at Genesis Global Trading. To her, it’s a reminder that Ether is even more vulnerable to macro-driven swings of risk appetite than Bitcoin.
“This reminds us that BTC is a risk asset that is getting hit in the risk-off sentiment, but that ETH is even more so (it has lost over 40 per cent of its value over the past 30 days!),” Acheson wrote in an email. “It is definitely strange to see BTC a strong outperformer today.”
Many crypto fans are still confident that with Bitcoin already spending two-thirds of the year in the red, better times could come soon. At some point, sellers will become exhausted and the market could see some capitulation soon, said Matt Maley, chief market strategist for Miller Tabak.
“When that happens, the institutions will come back in a meaningful way,” he said. “Once the asset class becomes more washed-out, they’ll have a lot more confidence to come back in and buy them. They know that cryptos are not going away, so they’ll have to move back into them before long.”
