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This past 24 hours, the price of Bitcoin climbed 2 percent to $20,500 after it recaptured the $20,000 milestone on Wednesday, which it had lost a week earlier. At a fraction of its all-time high at $69,000 in November 2021, the biggest digital asset is already far over its $18,000 low, which was struck during the trough of a selloff in mid-June.
Oanda broker analyst Jeffrey Halley noted, “Bitcoin has clung around the $20,500 level, but it may certainly credit its Nasdaq connection for that.” Even though there have been more credit explosions in the crypto industry because of the reality of concentration risk in a lending portfolio.
Indeed, the recent gains in digital assets might be attributed to the recent optimistic behavior in the stock market. Coins like Bitcoin and Litecoin, although ostensibly decoupled from traditional financial instruments, are linked to the performance of stock markets, particularly those in the technology sector.
This connection has been difficult for the most part. S&P 500SPX +0.36% and tech-heavy Nasdaq COMP +0.35% are both in bear markets as investors worry about the likelihood of recession and interest rate rises by the Federal Reserve—an atmosphere that is not favorable to risky investments like Bitcoin.
However, since investors returned from the July 4 long weekend, markets have reversed direction, gaining slowly but steadily. And cryptos will benefit as a result.
Cryptos aren’t doing themselves any favors with this. Many high-profile failures in the crypto world have exacerbated the digital asset meltdown, which recently saw Bitcoin record its worst quarter since 2011, the year in which it crossed the $1 barrier for the first time. Terra’s demise, Celsius and Vauld’s failures, and the collapse of a large hedge fund have all contributed to the industry’s current instability.
Much of the digital asset market was boosted, not just Bitcoin. Second-largest cryptocurrency EtherETHUSD +1.74 percent increased 3.5 percent to $1,200 in the first half of 2017. As for smaller tokens, or altcoins, both Solana and Cardano gained 2 percent. Dogecoin DOGEUSD +1.93 percent and Shiba Inu SHIBUSD +1.92 percent were the two most popular meme coins.
Analyst at digital asset trader GlobalBlock Marcus Sotiriou noted on Wednesday that a “negative mood among market players” still exists.
Short-Bitcoin strategy inflows at CoinShares came barely a week after institutional investors withdrew $423.5 million from crypto-focused funds, Sotiriou added.
Analyst: “This is due to present macroeconomic uncertainties as recession prospects grow,” he stated. “The asset is seen as risky by financial institutions.”