Bitcoin Surge Stalls as Digital Assets Falter

The decline of the world’s biggest cryptocurrency in June, which was 41 percent, is the most severe one that Bloomberg data has documented dating back to 2010.

As digital currencies battle to find their footing, Bitcoin was able to whipsaw traders with violent swings on Friday, only days after seeing its largest-ever monthly fall.

On Friday, the biggest token had gains of up to 11.3 percent in Asia, which came perilously close to crossing the $20,000 threshold. 

The majority of those gains were then promptly given up by Bitcoin, trading at about $19.4k at 11:30 a.m. in London. 

The 41 percent decrease seen in June was the most since Bloomberg began collecting data in 2010.

The gyrations of Bitcoin highlight the uncertainty hanging over cryptocurrencies at a time when investors are having difficulty estimating how far central banks will go to control uncontrolled inflation.

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The selloff in the market has put significant crypto participants such as hedge fund Three Arrows Capital and lender Celsius Network into disarray, which raises the possibility of future contagion and adds to the current turmoil.

In June, inflation in the Eurozone reached a new peak, establishing a new record for the highest level ever seen at such a rapid pace.

Consumer prices rose 8.6 percent from the previous year, a bigger increase than economists had anticipated. 

The actual inflation levels in the zone have exceeded the projections made by analysts for 11 out of the previous 12 months.

If the instability on Wall Street in the third quarter continues, a senior market analyst at Oanda Corp. named Edward Moya warned in a note that Bitcoin “may be susceptible to one more nasty plummet that might have many traders dreading a fall towards the $10k range.” 

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Midway through 2020 was the last time the token traded at such levels.

El Salvador’s President Nayib Bukele said on Twitter that his country has once again bought the drop, adding 80 Bitcoins for $19k per coin. 

El Salvador is unfazed by the potential downsides, according to Bukele.

MicroStrategy Inc., a Bitcoin-backed technology company, owned by Michael Saylor, said earlier this week in a filing that the company had acquired an additional 480 coins at the peak of the crypto market for around $10 million.

After falling below $18k on June 18, the price of bitcoin has been bouncing around the $20k level ever since. 

This lack of direction is reminiscent of how the currency traded in the aftermath of the collapse of the TerraUSD stablecoin in early May when it clung at a price close to $30k for weeks before collapsing again. Currently, the coin is trading similarly.

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