Bitcoin rebounded from six-months lows as a ‘dead-cat bounce’ in global equity markets helped, for now at least, calm investor fears and prompted bargain hunters to take advantage of the 50% falls in some crypto currencies.
Bitcoin was up 2.77% at US$36,000 in morning deals, having fallen below the key US$33,000 level yesterday. Ethereum also found some support but peers Cardano and XRP continued to languish.
The world’s two leading digital tokens have slumped over 50% since record highs in November as investors seek safe havens from rising inflation and as China banned crypto mining amid fears of tightening global regulation. The falls have mirrored a volatile ride on stock markets with fears over the health of the global economy prompting wide-spread sell-offs.
“It is crystal clear that crypto markets are positively correlated to equity markets,” Naeem Aslam, a market analyst at Avatrade, said. “The drop in market sentiment owing to various risks, such as tighter monetary policy and global geopolitical tensions, has persuaded investors to withdraw capital from the volatile digital sector,” said Aslam.
And now is the perfect time to buy cryptos thanks to the bargain prices, which Aslam claims are likely to rebound.
“Cryptocurrency markets are supported by strong fundamentals, and hence, investors should take this opportunity to bag cryptocurrencies at bargain prices,” Aslam added.
Ethereum, the second largest coin by market cap, was down 0.2%, at US$2,398 – a relative calm following a 25% drop in the last week.
Cardano, XRP and Dogecoin were all down - 1.38%, 1.28% and 1.14%, respectively, at $1.03, US$0.59 and US$0.13.
It was more positive news for Solana and Terra, two alt-coins which experienced mini recoveries.
Solana was up by 4.46%, trading at US$91.38 while Terra was up 1.93% at US$64.99.