Bitcoin, Ethereum price: Coins on the rise after horror week for cryptocurrency

Those heralding the death of crypto this week have been put in their place after a phenomenal resurgence on Friday.

Bitcoin bounced back on Friday after a rough few days, rising 14.08 per cent (and counting) in the past 24 hours.

Ethereum, the word’s second most popular cryptocurrency, also rose 17.16 per cent after tumbling earlier this week.

At the time of writing, Bitcoin now sits at $43,600, with Ethereum sitting at a flush $3,000 AUD per coin. They have now returned to the price they were at a week ago before social media devolved into hysterics over the sudden drop.

Over the past week, the value of bitcoin plummeted by almost 60 per cent from its highest-ever point.

An eye-watering $US200 billion ($A291 billion) was eviscerated from the crypto market in just 24 hours, as reported by CoinMarketCap, while a drop in Asian stocks linked to crypto indicated the panic was spreading.

The blow fuelled speculation we could be heading into a “crypto winter” – a term given to a long period where many cryptocurrencies lose most of their value.

But elsewhere on cryptocurrency forums, cashed-up buyers and those faithful of a resurgence were licking their lips, urging anyone within earshot to “buy the dip”.

Insiders have put the crash down to concerns that the US Federal Reserve’s attempts to kerb skyrocketing inflation would push the economy into a recession, which suddenly made less secure investments like cryptocurrency a seriously unattractive option.

But this week, a far more specific crisis was unleashed, sending shockwaves through the industry.

A solution to crypto’s instability was the invention of so-called “stablecoins” – cryptocurrencies that are “pegged” against the US dollar or other traditional assets, which in theory protected them from market bloodbaths.

This week, TerraUST, an “algorithmic” stablecoin with its value backed by a sister token known as Luna, broke that crucial peg, which saw its value fall to just 30 cents.

The idea behind that arrangement is that if Terra fell below $1, it could be swapped for Luna, which was supposed to ensure stability – but this week, both crashed simultaneously, with Luna collapsing by a devastating 98 per cent, with some investors losing their life savings.

The same happened to fellow stablecoin Tether, which also broke its peg to the US dollar.

Crypto’s ‘death spiral’

While the crypto boom has attracted a legion of diehard fans, there have also been a slew of sceptics who from day one warned of the market’s innate instability.

Speaking to CNN in the wake of the initial crash, Henry Elder, who leads decentralised finance at digital asset manager Wave Financial, said the current stablecoin crisis was “exactly the ‘death spiral’ a lot of people predicted”.

Meanwhile, Dan Ashmore, Crypto Data Analyst at, also weighed into the drama, claiming one decision by Terra was the “key to their demise”.

Mr Ashmore noted that earlier this year, Terra founder Do Kwon announced that bitcoin would be used as collateral in case of a scenario where large amounts of UST was sold off – a move that may have sealed its fate.

“This is key, and it was a massive oversight by Terra. It doesn’t make much sense to collateralise an asset (UST) with a highly volatile asset (BTC). It makes even less sense when those two assets are correlated to each other,” he said.

Crypto loyalists remain hopeful

However, many experts – such as Balmoral Digital co-founder and portfolio manager Jesse Smythe – remained certain crypto would “rebuild and recover” after the busy week.

In a statement, Mr Smythe said confidence had been “hit hard” and that there were some “severe strains” on the system.

“We have seen really severe volatility in crypto before. One of the industry’s catchcries is ‘Hold on For Dear Life’ for that reason,” he said.

“Ultimately markets are made up of people, people get emotional and that can result in savage bear markets even in the safest investment grade bond markets.

“Crypto is a very young asset class. It is incredible what has been achieved already in such a short space and it will continue to evolve and get better and better.”

– with Alexis Carey

Originally published as Bitcoin, Ethereum on the rise after horror week for cryptocurrency