On Tuesday, the price of bitcoin rose along with other risky assets that were recovering from significant falls during the previous session, when the world's largest cryptocurrency dropped to its more than five-month low.
Writes UNN with a link to Investing.
Over the past 24 hours, bitcoin has risen by 8.2% to $55,690.4 as of 02:15 EDT (06:15 GMT). The token fell as low as $49,000 before recovering slightly.Prices for broader cryptocurrencies also recovered some of Monday's drops, following the recovery in stock markets. But sentiment towards risky assets is still quite fragile.
Bitcoin recovery uncertain as risky assets fall Although the world's largest cryptocurrency has recovered some of its recent losses, a more significant recovery remains doubtful amid ongoing fears of a US recession and a prolonged slump in stock markets. Cryptocurrency markets have been particularly vulnerable to risky declines due to their highly speculative nature.
Sentiment toward bitcoin was already tense due to reports that the US government has mobilized at least $2 billion in tokens for potential sale.
Over the past day, bitcoin has risen by 8.2%, reaching $55,690.4. After falling to $49,000, the cryptocurrency has partially recovered its position. Prices for other cryptocurrencies also recovered slightly after Monday's decline, following the positive changes in the stock markets. However, sentiment toward risky assets remains uncertain.
Bitcoin's recovery remains fragile amid concerns about a potential recession in the United States and prolonged losses in the stock markets. Cryptocurrency markets have been particularly hard hit by the decline in the market value of risky assets due to their high speculative nature. Sentiment towards bitcoin was already under pressure due to news that the US government could sell assets worth around $2 billion.Ahead of the 2024 presidential election, uncertainty over regulatory changes is also contributing to traders' cautious approach to cryptocurrencies.
Concerns over potential government asset sales and economic difficulties have caused outflows from cryptocurrencies. According to digital asset management company Coinshares, approximately $528 million was withdrawn from cryptocurrency investment products last week.
The vast majority of these withdrawals were in bitcoin and ether, reflecting the general pessimism in the market. Inflows were recorded only in short bitcoin instruments, especially after the latest news about the government's actions.
Trading in crypto investment products remained well below average, and the recently launched spot exchange-traded funds trading in ether failed to generate much optimism.
Cryptocurrency prices rebounded today, following bitcoin's rise, recovering some of its recent sharp losses, but they still remain well below last week's levels.Ether, the second most popular cryptocurrency, was up 11.7% to $2,522.25, while ADA, SOL and XRP were up 10-22%.
The DOGE memo token is up 15.9%. The rise in cryptocurrency prices was driven by the rise in US stock futures and Asian markets, which seem to have stabilized somewhat after a strong drop on Monday.
The prospect of lower interest rates in the US also had a positive impact on sentiment, as markets expect further cuts in September due to deteriorating economic conditions.However, the recovery in cryptocurrencies remains rather uncertain, and the highly speculative nature of the sector remains at risk of a potential new sell-off.
Recall
On Monday, the price of bitcoin fell to its lowest level in five months, reflecting a general drop in financial markets due to growing fears of a slowdown in US economic growth, which has reduced interest in risky investments.