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(Bloomberg) – Cryptocurrencies are off to a poor start to the year as trading volumes remain subdued following numerous industry scandals and crashes in 2022.
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Volumes on Binance, the largest digital asset exchange, are at their lowest levels since last summer, while volumes outside the platform are also low, according to Arcane Research’s Bendik Schei and Vetle Lunde.
Some of the slump can be blamed on the holidays and U.S. markets being closed during the period. But a “general exodus” of active retail participation and concerns about other potential negative catalysts that could still roil the sector also added to the decline, analysts wrote in a note.
Bitcoin volatility has fallen sharply, with the 7-day reading dropping to 0.7% and hovering around 2020 lows.
Cryptocurrencies are not doing well in 2022 as many key projects in the industry are burned and billions of dollars are lost. Bitcoin fell 64% last year, its second-worst annual performance on record, while many other coins fared worse. The scandal and falling prices have put off many institutional and retail investors. JPMorgan Asset Management recently stated that “for most large institutional investors, cryptocurrencies are virtually non-existent.”
Bitcoin hovered around $16,600 on Tuesday, down from around $46,000 at this time last year. Ether is trading around $1,200, down nearly 70% from the same period in 2022. Elsewhere, Solana, the digital token backed by fallen cryptocurrency tycoon Sam Bankman-Fried, is down 95% since its November 2021 peak, though it managed to bounce back 16% Tuesday.
Read more: $200,000 Bitcoin Prediction Fails as Coin Ends 60% Year-End
“For so many gamers in 2022, a near-death experience will cast a long shadow in 2023,” B2C2’s Adam Farthing wrote in a report. “Undervalued and damaged Balance sheets will mean that credit risk continues to take precedence over market opportunities. As a result, the market will need a safer alternative to the current unregulated offshore exchange equities that serve dual functions of custody and matching .”
—With the assistance of Isabel Lee.
Most reads come from Bloomberg Businessweek
©2023 Bloomberg Intelligence
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