Shortly before Wednesday’s business day began in Asia, bitcoin and most major altcoins had recovered ground lost late the previous day, as investors seemed at least temporarily heartened by Tron founder Justin Sun’s efforts to prop up Curve’s troubled CRV token. His relief effort seemed to allay some fears about DeFi’s stability.
The largest cryptocurrency by market capitalization was recently trading at $29,200, roughly flat over the last 24 hours, but up about 2% since dipping to $28,574 on Tuesday. That decline was part of a market downturn stemming from the chaos following a Curve exploit over the weekend.
CRV was recently up 5.4% from Tuesday, same time, to trade just below 60 cents. CRV rose more than 20% on Tuesday after falling below 50 cents. The increase came after Sun purchased more than $2 million worth of the token and pledged additional assistance through a liquidity pool on the Tron network. His rescue
Ether (ETH), the second largest crypto in market value, was recently changing hands at $1,850, off 0.3% from Tuesday same time. SOL and ADA, the tokens of smart contracts platforms Solana and Cardano, were a few fractions of a percentage point in the red, while Ripple’s XRP was up slightly, despite a court ruling casting doubt on its partial legal win against the Securities and Exchange Commission (SEC) last month.
The CoinDesk Market Index, a measure of crypto markets performance, was about flat, but improved from earlier in the day when it fell 1.7%.
“Clearly, there are fears over a liquidation cascade happening within the Ethereum DeFi ecosystem, Richard Mico, the U.S. CEO of payment-and-compliance infrastructure provider BanxaI, wrote in an email to CoinDesk. “I don’t know how likely such a cascade is, but the market seems jittery as a result of these metastasizing issues. What’s ironic is that DeFi had held up so well during the blowups of 2022, and yet it’s an exploit more recently that might be the trigger for a DeFi blowup itself now.”
Mico added that a judge’s ruling against stablecoin issuer Terraform Labs’ motion to dismiss a lawsuit against the SEC might “be adding to the relatively soft sentiment in the market,” but he noted that investors were buying up bitcoin’s recent “dips below $29,000…pretty quickly,” a sign that buyers are accumulating in expectation of the SEC approving one of the recent spot BTC ETF applications.
Major U.S. equity indexes were largely down with the Nasdaq Composite and S&P 500 off 0.4% and 0.3%, respectively.
In a note to CoinDesk, Mark Connors, the head of research at Canadian digital asset manager 3iQ, wrote that the recent “shift in market sentiment was NOT limited to digital assets, as equities took a breather.”
“Our bellwether cross asset correlation metric hit a 20Y high as bonds and equities sold off,” Connors wrote. “Looking forward, we will monitor for any sharp reversal from this historically high correlation – as that has often signaled a risk reversal.”
