Bitcoin is making a comeback along with other riskier assets on Monday, bouncing off Black Friday lows.
The largest digital asset rose 3.4% in a session to $ 58,266. Other coins also saw a pullback, with the Bloomberg Galaxy Crypto Index up 5.5% at one point. So-called alternative coins such as Polkadot and Dogecoin have also arrived.
A brutal sell-off on Friday saw investors abandoning a number of riskier assets, including cryptocurrencies, with Bitcoin posting its worst day in roughly two months. This happened after the announcement of a new variant of the coronavirus called omicron, which was discovered in southern Africa and which experts are now trying to understand. The session dip saw bitcoin plummet 20% below its all-time high reached earlier in November, which for many strategists demonstrates the coin’s tendency to closely monitor the broader stock market.
“This underscores that Bitcoin is a risk-free and risk-free asset,” said Matt Meili, chief market strategist at Miller Tabak + Co.
Meanwhile, during the development, which is typically Kryptonian, the coin called Omicron crashed and then recovered as news of the eponymous variant spread. While little is known about the coin so far, data from CoinGecko.com shows it has been around for several weeks with a market cap of around $ 370 million.
Bitcoin has been under pressure since hitting a record of nearly $ 69,000 on November 10 amid enthusiasm for the first U.S. exchange-traded fund linked to digital asset futures. But many factors have impacted profitability since then, including increased regulatory risk and the fact that many tokens have grown very quickly in a short period of time. Maylie says Bitcoin’s recent moves also show that if the Federal Reserve rolls out its incentives more aggressively next year, the cryptocurrency could become vulnerable.
Fiona Cincotta, Senior Financial Markets Analyst at City Index, says Bitcoin tends to act as a riskier asset tracking stock market movements, but there are times when that relationship isn’t as strong – like when it’s hotter than expected. With inflationary fingerprints emerging, Bitcoin may hold up well during these periods.
“So there are times when I think Bitcoin is indeed acting as a riskier asset and tracking the rise of the stock market, but there are also times when it doesn’t have to be,” she said by phone. “He has other factors that drive him.”
Now, nervous traders are again turning to technical specialists to understand in which direction certain cryptocurrencies might be moving. Bitcoin bounced off its 100-day moving average on Sunday, its mid-term trendline. Meanwhile, Ether rallied from its 50-day moving average on Monday, which many chart watchers see as bullish.
However, Peter Cheer, head of macro strategy at Academy Securities, says he was surprised by Friday’s Bitcoin selloff based on coronavirus news. In his opinion, there is a group of aggressive risk-takers who own cryptocurrency and probably also own shares in high-tech companies.
“They can be forced to sell one or the other if they move in tandem,” Chir said. “Bitcoin’s rise is relieving this pressure. Now that we’ve had what appeared to be a likely rally – everyone rejects the omicron’s fears – we can see if it lasts. “