(Boursier.com) — The main cryptocurrencies are still hesitating, but have been trying to rebound for two days. Over 24 hours, Bitcoin has taken 3% and is thus back in contact with $21,000. Ethereum rallies 2%, Binance Coin 4% and XRP 2%. Dogecoin gains 8% over 24 hours as Elon Musk confirmed his support for the digital currency.
Thus, Bitcoin recovered to levels above $20,000, after falling to around $17,600 over the weekend. This token return to $20,000 is viewed positively, but some thoughts of downside risk remain unless it can retrace back above $23,000. Several headwinds are weighing on sentiment, including the macroeconomic situation, such as aggressive monetary tightening by central banks led by the Fed and the broader withdrawal of risky assets. Idiosyncratic drivers are also undermining the general mood around the ‘crypto’ space, with the collapse of stablecoin terraUSD and the creditworthiness of crypto lender Celsius.
Fears that a sustained drop in Bitcoin below $20,000 will force the liquidation of large leveraged bets and exacerbate the credit crunch in the industry persist. Data from Coinglass showed that the weekend sell-off led to the liquidation of more than $600 million in leveraged positions and could increase pressure on balance sheets. However, there are still some positive views in the digital currency space. Long-term bulls think there could be the possibility of a base with most of the excess leverage now out of the system. However, the broader risk environment is expected to remain challenging given the macroeconomic headwinds.
Elon Musk, interviewed on the subject at the Qatar Economic Forum, summed up: “I have never said that people should invest in cryptocurrencies. In the case of Tesla, SpaceX and myself, we have all bought bitcoin, but it’s a small percentage of our total cash.”