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Cryptos turn choppy as bounce momentum ebbs

bitcoin plunges
Crypto is in a phase of high volatility.

Cryptocurrencies slipped on Thursday, though without falling through recent lows, as traders clung to hopes that a nascent recovery from last week’s plunge can regain its momentum.

Bitcoin has failed to hold above its 200-day moving average and it fell about 4 per cent in the Asia session to $37,619. Ether, the coin linked to the ethereum blockchain network and the second-biggest cryptocurrency by market value, fell more than 7 per cent to $2,675.10.

Both have marked sizeable year-to-date gains, with bitcoin up about 30 per cent and ether more than tripling. But a month-long selloff culminating in a sharp collapse last week has each of them well below record peaks made in April.

Volatility is expected to remain high for crypto in the coming weeks, with either a sharp return to highs or further declines. shows Bitcoin’s 30-day volatility at its yearly high, suggesting that the benchmark asset remains at risk of wild price fluctuations in the sessions ahead. As of Wednesday, the ETH/USD Realised Volatility on a 30-day timeframe has reached near its 2017 peak levels, according to data provided by Skew.

Simply put, the top two crypto assets show a likelihood of moving in either direction with a higher degree of volatility, analysis shows.

“The volatility alarm rings at the time when both Bitcoin and Ether have posted incredible recovery rallies, following their recent price declines. In retrospect, the BTC/USD exchange rate plunged more than 50% after topping near $65,000 in April — a correction partially driven by Elon Musk’s anti-Bitcoin tweets and China’s crypto ban reiteration last week,” says.

Analyst Cathie Wood, who heads Ark Investment Management, reiterated her $500,000 Bitcoin price target after last week’s crash, calling the dip “a really great time to buy.”

Other analysts were more cautious.  Analysts at BiotechValley Insights Consulting Group noted that Bitcoin dropped hard even after the United States Consumer Price Index rose to 4.2 per cent.

“The crypto market is now going through an anxiety stage,” the consulting group said.

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