Bitcoin is steady at $6,380 this (UTC) lunchtime as the battering of the past few days abates and the world economy is buffeted by trouble in Turkey.
However, nervousness remains with market participants wondering aloud if bitcoin could fall to $4,000. Bitcoin market dominance now stands at 51.1% as top alts continue to underperform bitcoin and the overall market cap of crypto is $217 billion which is the lowest level since November last year.
Although it is too early to really say, the troubles on equity markets in the wake of Turkey’s depreciating lira should help to support bitcoin and crypto more generally.
Turkey, emerging markets hot money
Emerging markets in particular are susceptible to contagion from the implosion of the Turkish economy, where inflation is running at 16.5% and interest rates are already at 17.75% with international financiers demanding they go much higher to stabilise the currency. A number of major European banks are thought to have loans outstanding to the commercial sector in Turkey. The Turkish economy has grown with 6% annual growth figures in recent years as credit expansion via dollar and euro-denominated loans mushroomed.
Problem in other struggling emerging market sovereigns, notably Venezuela and Iran, could also help to increase buying of bitcoin and this even before pressures build on other emerging market economies where dollar borrowing and rising interest rates present similar dangers to those on display in Turkey.
Currently, however, bitcoin’s lack of correlation with other asset classes is not in evidence, with investors perhaps preferring safe haven in the Japanese a yen and Swiss Franc and the US dollar as interest rates start to rise, especially in the US.
It is worth noting that compared to the Turkish lira bitcoin is relatively stable at this juncture.
In the alts world, Stellar is threatening to push EOS into sixth place as it approaches a market cap of $4.44 billion compared to EOS’s $4.68 billion.
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK’s second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane