Cryptocurrencies had a tough day on Sunday after recovering well last week. But in cryptocurrencies we have recently seen that the momentum doesn't last long.
By 16 p.m. ET, Bitcoin was down 00% in the past 3,5 hours, Ethereum was down 24%, and Dogecoin was down 4%. But in the past week, the same cryptocurrencies have risen by 3,8%, 7,4%, respectively, and are flat. You have taken advantage of this by trading with platforms such as Bitcoin Pro?
There are further bad debts in the cryptocurrency lending sector
Blockchain.com allegedly suffered a loss of $ 270 million on loans made to Three Arrows Capital. Collateral damage and the lending network in the cryptocurrency industry came to light after Three Arrows Capital filed for US bankruptcy and began liquidation.
The good news is that Celsius continues to unravel its complex positions. Over the weekend, he reportedly repaid $ 258 million to Aave and Compound to free up $ 950 million in guarantees. If Celsius manages to dissolve his positions and recover the collateral, he may be able to repay the funds of clients they wish to withdraw. The problem is that recovering collateral could also mean selling crypto assets, dumping more on the market at a time when buyers are in short supply.
Bitcoin may also have recovered from a spike after Binance announced on Friday the option to trade this currency without fees. Trading volume spiked, but then declined once the initial exuberance was exhausted.
Now what should you expect?
Weekends can be volatile for cryptocurrencies as the volume drops and any news can move the market extremely quickly. With all of today's cryptocurrency liquidations, it is possible that there will be even greater selling pressure in the coming weeks as large leveraged positions are liquidated. But that's not what will drive the price of cryptocurrencies in the long run.
I think it's worth taking a step back and thinking about what's being developed using cryptocurrencies and blockchain as a basis. Today, there are thousands of developers building businesses backed by billions of dollars of capital and we are just beginning to see the rewards of these investments. Over the next few years, we will likely see many types of transactions move to blockchain, and businesses will begin to create more use cases over time.
I am optimistic about this ongoing construction, but given the prevalence of cryptocurrency trading over the past year, it is not surprising to see a decline. Traders who have lost money are exiting the market and leveraged positions are being released. It will take some time, but in the long run we have to keep in mind that a lot of value is being created and this will be great for investors who buy and hold.
