The cryptocurrency market has almost returned to levels before the damaging collapses of Terra/Luna and FTX in 2022. Bitcoin recently surpassed $39,000 for the first time since May 2022, fueled in part by growing expectations that the U.S. Securities and Exchange Commission (SEC) could finally approve a spot bitcoin exchange-traded fund (ETF) in the next few weeks, or even days.
At the time of publishing, Bitcoin is trading around $39,700 - a gain of just $800 to $40,500 would officially represent a full recovery.
2022: A Year So Bad, it Took 2 Years To Recover From...
In 2022, two big hits cut Bitcoin's price in half over just few months.
The first came from the Terra/Luna debacle, triggered by the collapse of TerraUSD, an algorithmic stablecoin that was supposed to maintain a $1 peg but ultimately lost all value. Prior to its failure, the high interest rates offered by Terra through its Anchor protocol had attracted billions of dollars in investments, including from major crypto lending firms like Celsius Network. As the 'stablecoin' hit a liquidity crisis Terraform Labs began rapidly selling its bitcoin reserves in a desperate attempt to maintain the peg. This massive dumping of bitcoin put significant downward pressure on prices, contributing to bitcoin falling from around $30,000 down to below $20,000.
The second big hit came just months later when crypto exchange FTX filed for bankruptcy after questions arose over its financial health and potential commingling of customer funds. As one of the largest and seemingly most reputable exchanges, FTX's failure shook investor confidence and reignited worries of contagion across the crypto ecosystem. Bitcoin fell to under $16,000 amidst the fallout, its lowest level since late 2020.
Since then, the Market has Been Gradually Recovering...
Some analysts believe bitcoin could soon surmount the key psychological barrier of $40,000 if momentum continues building ahead of a long-awaited bitcoin spot ETF approval.
Others caution bitcoin may retreat to around $35,000 if ETF approval doesn't happen soon, but still bounce past $40k when it eventually happens.
But all are in agreement - the crypto winter is officially thawing.
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Author: Oliver Redding
Seattle Newsdesk /
