Bitcoin’s recovery from the brutal sell-off that wiped out billions from the crypto market shows the resilience of the cryptocurrency.
This is according to the CEO of LMAX crypto and forex exchange David Mercer, who said that the two-day period following the Terra Luna crash saw the largest amount of cryptocurrencies traded on its platform this year, with $2.5 billion and $3.5 billion traded. Every day in a row.
“We saw it as a journey towards quality,” Mercer said. Financial news.
Even during the start of the pandemic in March 2020, Bitcoin found ground at around $4,000 while other assets were experiencing sharp declines.
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The volatility showed “the resilience of bitcoin and the cryptocurrency. The assets were heading south at the time, oil was trading below zero and the bitcoin chart looked like it was going to zero,” Mercer said.
The global market for major cryptocurrencies has fallen from $2.3 trillion late last year to about $1.3 trillion now, according to analysts at Goldman Sachs. Although bitcoin is down more than 55% from its peak of $69,000 in November 2021, Mercer said that the cryptocurrency’s returns over the past two years show an “amazing performance” for the asset.
With prices lower, research firm Macro Hive found that net flows into bitcoin futures ETFs rose, a sign that institutional investors found valuations more attractive.
“Investors are insuring themselves against further downside risks,” Macrohive said in derivatives markets.
“Bitcoin will not fail the way Luna has failed,” said Yves Chouefaty, chief investment officer at French asset manager Topame, which launched the world’s first open-ended bitcoin fund in 2017.
“The Bitcoin value proposition is that there are only 21 million of them. What gives money its value is its scarcity.”
Bitcoin dropped to around $26,000 during the sell-off and has since recovered to trade around $29,000.
“You wouldn’t agree with me if you bought it at $64,000, but over a longer period of time it performed well,” Mercer said.
Mercer said that the estimated loss of $40 billion for terraUSD should be put into context. While the market capitalization of cryptocurrencies has fallen by nearly $1 trillion as a result of the sell-off, the total value of global financial assets is around $510 trillion.
“There was fear in the market – the well-regarded stablecoin went from lot to zero. It was a failed scientific experiment,” Mercer said.
The $40 billion loss in value is huge, but it’s not huge in relation to the entire capital markets. Look at the missing amount from the S&P or Nasdaq.”
Chouefati said that while confidence in cryptocurrencies plummeted after the Luna crash, Bitcoin held up.
“When there is a young ecosystem, a catastrophic event is always a good moment for innovation,” Shwevati said. “Ecosystems have to go through a crisis. Look at the 2000 crisis of the Internet. It was a disaster for many companies. But you often need to burst bubbles from time to time so that healthy projects are chosen over the most fragile.”
To contact the author of this story for comment or news, email David Ricketts