Yahoo Finance Bitcoin bounces back to above $50,000
Cryptocurrencies recovered from the battering they received at the weekend as concerns around the Omicron COVID-19 variant eased in the global market.
Bitcoin (BTC-USD) was up 7.5% at the time of writing, to trade at $51,442 (£38,833), bouncing back above a key level of $50,000. During the weekend it had fallen to about $42,000, almost 30% down from its all-time high of $69,000, which it hit last month.
Bitcoin had been trading near two-month lows at $42,000 – levels last seen in the first few sessions of October of 2021.
Ethereum (ETH-USD), the world’s second biggest crypto by market cap, surged almost 10% and was trading at $4,415.
Solana (SOL1-USD), which some analysts believe has the potential to outperform both bitcoin and ethereum, rose 11% to trade at $203.
Read more: Live crypto prices
"After such a big fall where vast amounts of leverage have been wiped out, it is very common to see buyers stepping in," said Marcus Sotiriou, analyst at digital asset broker GlobalBlock.
He said that though crypto markets have crashed recently in part due to fears surrounding global markets, due to the Omicron variant, "fundamentally for crypto, nothing has really changed in the past few weeks from when Bitcoin was around $60k."
“Investors should understand that there is a clear positive correlation between broader stock markets and crypto markets, as evidenced by the price of digital coins over the last few days. Cryptocurrency prices fell in tandem with stock market indices,” said Naeem Aslam, chief market analyst at Ava Trade.
He said this occurred despite the fact that cryptocurrencies are regarded as a potential alternative to gold and a hedge against inflation. This hypothesis, however, has been tested time and again as cryptocurrencies have followed the stock market swings, albeit with greater volatility.
“Investor sentiment has improved and major stock market indices have recovered. Similarly, the price of bitcoin has also been able to surpass $50,000, which is very encouraging for the blockchain space as we approach the end of 2021.”
Read more: Do bitcoin charts foretell an impending crash in 2022?
He had earlier said the weekend sell-off brought a lot of newer buyers into the market and believed "once the dust settles, we are likely to see more funds reporting their new positions in bitcoin.” This comes as many analysts have forecast bitcoin will hit $100,000 by year-end.
Farah Mourad, senior market analyst at brokerage firm XTB MENA, told Yahoo Finance UK some believe the recent price action was triggered by liquidation of excessive leverage positions rather than change in overall market sentiment.
In the past, crackdown on crypto by regulators has impacted their price.
The most recent example is India, where the government plans to introduce legislation in the ongoing parliament session and may give crypto holders a deadline to declare assets.
Anyone not willing to comply may be fined up to INR200m (£2m, $2.7m) or imprisoned for 1.5 years.
The country is also considering appointing its capital markets regulator to oversee cryptocurrencies and potentially classify them as financial assets.
"Even though these actions may seem strict, I am looking forward to the prospect of the industry gaining more certainty from governments as to what their rules are and where they stand – this could then instigate a further wave of institutional money who are waiting for clarification from governments," said Sotiriou.
