Bitcoin sits still near $62,500 and well within Wednesday’s price range amid concerns of a broader market pullback in the wake of Coinbase listing on Nasdaq.
“I’ve seen a lot of weird coins like dogecoin and even XRP have huge retail spikes, which means there’s a lot of frenzy right now,” bitcoin bull and CEO of Galaxy Digital Mike Novogratz told MarketWatch. “That never ends well, and so we’ll probably have a washout at one point.”
The U.S.-based cryptocurrency exchange Coinbase’s shares (COIN) went live on Nasdaq on Wednesday, rising as high as $429.54 before closing the day at $328.
Being the crypto market leader, bitcoin broke out of its multi-week consolidation below $60,000 in the days leading up to the highly anticipated listing widely touted as a watershed moment for the cryptocurrency industry and clocked a record high of $64,801.79 on Wednesday. Corporate treasury money has been flowing into bitcoin mainly via Coinbase.
“In hindsight, bitcoin printing a new all-time high on the day shares the opened for trading was a bit of an obvious one. You could even attribute some of the price appreciation this week squarely to this much-anticipated event,” crypto exchange EQUOS said in its daily market analysis email.
However, XRP, dogecoin and few other cryptocurrencies also rallied despite not being listed on Coinbase. XRP picked up a bid near $0.6 on April 5 and clocked a three-year high of $1.9 on Wednesday – a 220% gain in nine days. Dogecoin has surged by 85% in the past three days.
As per Novogratz, that shows Coinbase’s listing on Nasdaq created a lot of euphoria – a point of maximum financial risk where investors, primarily retailers, think good times will continue unchecked. It’s usually the time when the market sees a temporary correction.
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According to Joel Kruger, currency strategist at LMAX Digital, the market is now seeing a classic sell-the-fact reaction to the news. Bitcoin, XRP and others have pulled back from the highs seen on Wednesday.
“It’s quite common for a market to run up in anticipation of an event before then selling off on the news itself,” Kruger told CoinDesk, adding that the cryptocurrency may track COIN in the short-term.
Coinbase’s shares witnessed a two-way business or indecisive price action on the first day of trading, as noted earlier. If the share price drops in the coming days, the cryptocurrency may test $58,820, according to Equos.
Dips, however, are likely to be shallow. “I would expect buying interest, detached in mindset from the noise of the day, to arrive and happily soak as weak hands leave the market.” Equos’ analyst noted.
According to Kruger, the focus would soon shift back to the bigger picture and macro drivers. Data released earlier this week showed the U.S. headline inflation rose to a 12-month pace of 2.6% in March, strengthening the case for continued investments in store of value assets such as bitcoin and gold.
“All those narratives are still true, and there’s a lot of money on the sidelines, especially in the institutional world that has not been deployed yet,” Alex Svanevik, the CEO of blockchain data company Nansen told CoinDesk. “I don’t see a reason for a big correction.”
Novogratz also remains bullish on bitcoin and the cryptocurrency industry as a whole and foresees bitcoin at $500,000 by 2024.