Bitcoin Prices Rally More Than 20% After Market Rout-Here’s Why – Forbes
Bitcoin prices bounced back today, after falling below $25,500 yesterday.
Bitcoin prices have bounced back lately, climbing more than 20% in under 48 hours after approaching the $25,000 level.
The digital currency, which is the largest when measured in terms of total market value, climbed to nearly $31,000 earlier today, CoinDesk figures show.
At this point, it was up 21.9% from the price of $25,402.04 it reached early the day before, additional CoinDesk data reveals.
While the digital currency did manage to recover some of the gains it has lost recently, it is still down more than 50% from its all-time high of nearly $69,000 reached in November.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Several analysts offered explanations for these latest price movements, in addition to helping describe them relative to broader market trends.
When clarifying these latest price movements, several analysts emphasized the key role of market sentiment.
Ben Tsai, president and managing partner of Wave Financial Group, commented on this situation.
“As there are more investors and traders in crypto, especially a large overlap between the tech/meme stock and crypto traders, the risk on/off sentiments are driving the market more as these are the marginal buyers/sellers,” he stated.
“With sentiments recovering overall, people are buying into everything including Bitcoin,” Tsai added.
He noted that previously, “the crypto market was oversold as there was a domino effect of unwinding and liquidation stemming from the UST/LUNA unwind. That was over 10bn of UST being unwound to LUNA, then liquidated, and a lot of Bitcoin collateral also getting liquidated in trying to defend the pair.”
“This created a very negative sentiment and drove the whole market down,” said Tsai.
Budd White, co-founder and chief product officer of Tacen, a crypto regulatory software firm, spoke to similar matters, emphasizing the important role played by the terra luna situation and how it affected the mindset of global market participants.
He also pointed to the latest inflation figures released by the U.S. Bureau of Labor Statistics, in which the all items index rose at an annualized rate of 8.3% in April.
This figure surpassed the estimate provided by a Dow Jones poll, according to CNBC.
“The recent sell-off had to do with negative sentiment coming from the recent CPI numbers, which were higher than expected, coupled with the enormous pressure from the collapse of the Terra ecosystem,” stated White.
“The latter event was nearly unprecedented for the crypto industry more generally. After all, it’s not every day that a top-ten crypto asset worth many billions of dollars in market capitalization suddenly goes to zero, or at least near zero,” he noted.
“If anything, when you step back and examine the broader picture, it’s pretty remarkable to see how well Bitcoin has held up despite chaotic markets. It’s clearly on the path toward wider adoption and maturation.”
While White provided an optimistic assessment for the digital currency’s prospects, not every analyst offered such a bullish perspective.
The digital currency has been following a broader downtrend for several months now, after reaching its record high late last year.
Julius de Kempenaer, senior technical analyst at StockCharts.com, commented on this situation.
He noted that “In any case the trend (daily time frame) is still down characterized by a series of lower highs and lower lows.”
“This sharp bounce is not changing that rhythm and therefore it is just that: a rally within an existing downtrend,” said de Kempenaer.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.
via Inferse.com https://www.inferse.com
May 14, 2022 at 12:00AM