Market Status: Bitcoin retraces $20,000 to stabilize cryptocurrency prices
The price of some altcoins rose slightly due to the publication of positive news and the improvement of traders’ sentiments. Bitcoin is currently trading at $20,900. In this report, while examining the price situation, we will discuss the effect of the current market situation on digital currency exchanges, as well as the coordination between the US Federal Reserve and the US Congress regarding the US national digital currency.
To Report CoinDesk followed volatile trading on Wednesday, with Bitcoin once again falling below $20,000 and leading other cryptocurrencies to decline. However, yesterday the prices stabilized again and returned to their position.
Bitcoin returned to $20,900 on Thursday evening, recovering from the previous day’s low of $19,764. At the same time, Ethereum, the second largest digital currency in the market, experienced a price increase of about 5.5% and reached above $1,100. The US stock market was also slightly bullish yesterday and the S&P 500 index (S&P 500) increased by about 1% and the Nasdaq index (Nasdaq) also increased by 1.5%. This can be attributed to the improvement of the market’s inclination towards risky assets.
Also read: 60% increase in the price of Polygan in 4 days; Continuous accumulation of Metic tokens
On Thursday, the price of MATIC, the native token of the Polygon network, increased by 19% compared to the previous day, after introducing features to improve privacy in decentralized autonomous organizations (DAOs) on its network.
In the meantime, after the decentralized exchange DyDx announced that it would build its blockchain using Cosmas and ditch Ethereum, the price of Cosmas also increased by 12%.
Also read: What is DAO? Acquaintance with the best projects of the decentralized self-governing organization
The problem of exchanges
Bitcoin’s $20,000 level is very important for digital currency market participants; Because analysts are eager to know whether Bitcoin will experience a similar experience like in 2013 (1392), when Bitcoin fell by 85%, or like in 2017 (1396), when Bitcoin fell by 84%? If Bitcoin has a trend similar to these events, the price will drop to the $10,000 level.
Cryptocurrency data analytics firm Kaiko warned in a note on Thursday that if low cryptocurrency prices persist for too long, cryptocurrency exchanges will face a host of problems.
Riyad Carey, an analyst at Kaiko, wrote in a note:
Exchanges will be tested as prices remain low, investment volume declines, hedge funds fail, and fees remain low.
Carey also pointed to the two companies of Sam Bankman-Fried, the billionaire entrepreneur, namely Alameda Research and FTX Exchange.
Those with sufficient capital and spending responsibly in a bull market will probably be able to weather the storm, but those dealing with high-risk products and investments will either take a chance and buy FTX or Alameda Inc. or That they will be completely destroyed.
For example, the CoinFLEX futures exchange (CoinFLEX) stopped the withdrawal due to what it called “acute market conditions” as well as lack of confidence in one of the specific platforms.
Earlier this week, cryptocurrency exchange FTX provided about $250 million in credit to lending firm BlockFi, and last week Alameda Research rescued cryptocurrency brokerage Voyager Digital.
Federal Reserve’s readiness for a national digital currency
Jerome Powell, the head of the US Federal Reserve, announced that the country’s central bank will consult with the US Congress to develop a national digital currency (CBDC).
Responding to a question from a lawmaker at a monetary policy hearing in the US Congress on Thursday, Powell said a national digital currency is something our country needs and it shouldn’t be a partisan issue.
Paul continued:
A national digital currency is a potentially very important financial innovation that will impact the lives of all Americans. Our plan is to examine it both politically and technologically over the next few years and come to Congress with a specific proposal for you.
The Federal Reserve released a report on the digital dollar earlier this year, and officials are still weighing what cryptocurrency industry players, traditional financial firms and investors are saying about the phenomenon. Their answer will likely influence the Fed’s final proposal to Congress.