Last week, cryptocurrencies had their first Black Friday in two months, when Bitcoin experienced its worst day in two months. However, by Monday, things were beginning to look up.
On Monday, Bitcoin, along with other riskier assets, is making a recovery from its Black-Friday lows.
During the day, the largest digital asset increased as high as 3.4 percent to $58,266. Other coins experienced a rebound as well, with the Bloomberg Galaxy Crypto Index rising 5.5 percent at one point. Alternative coins like Polkadot and Dogecoin also grew in popularity.
Investors fled a range of risky assets, including cryptocurrencies, in a violent selloff on Friday, with Bitcoin marking its worst day in over two months. The thrashing came after the discovery of a novel coronavirus type known as omicron in southern Africa, which specialists are still attempting to figure out.
The session’s decline saw Bitcoin drop 20% below a record high notched earlier in November, which for many strategists showcases the coin’s tendency to closely track moves of the broader stock market.
“It highlights that Bitcoin is a risk-on/risk-off asset,” said Matt Maley, chief market strategist for Miller Tabak + Co.
Meanwhile, in a development that is quintessentially cryptonian, a coin called Omicron crashed and then recovered as news of the eponymous variant spread. Though little is known about the coin thus far, data on CoinGecko.com shows it’s been in existence for a few weeks and that its market cap hovers around $370 million.
Bitcoin has been under pressure after hitting a high of about $69,000 on November 10 as investors flocked to the first U.S. exchange-traded fund connected to bitcoin futures. However, since then, a number of factors have weighed on returns, including increased regulatory risks and the fact that many tokens have skyrocketed in value in a short period of time. Bitcoin’s recent swings, according to Maley, demonstrate that cryptos could be vulnerable if the Federal Reserve withdraws its stimulus in a more aggressive manner next year.
Bitcoin, according to Fiona Cincotta, senior financial markets analyst at City Index, tends to behave like a riskier asset that tracks stock market moves, but there are times when that relationship isn’t as strong — for example, when inflationary prints are hotter than expected, Bitcoin can hold up well during those periods.
“So there are times when I think Bitcoin does act as a riskier asset and it traces the stock market higher, but there are times as well when that’s not necessarily the case,” she said by phone. “It does have other contributing factors which drive it.”
Now, nervous traders are again turning to technicals for clues as to where certain cryptocurrencies could head next. Bitcoin on Sunday bounced off its 100-day moving average, an intermediate-term trendline. Meanwhile, Ether on Monday sprung off its 50-day moving average, which many chart-watchers see as a bullish development.
Despite this, Peter Tchir, head of macro strategy at Academy Securities Inc., says the coronavirus news surprised him in Bitcoin’s Friday selloff. According to him, there appears to be a group of strong risk-takers who buy crypto and, more than likely, some high-flying tech companies.
“If they go in lockstep, they may be obliged to sell one or the other,” Tchir added. “Bitcoin’s rise reduces that stress. We’ll see if it lasts now that we’ve had what appeared to be a likely rally — everyone discounting omicron fears.”
Source: Al Jazeera
Flexgigzz is the Asia leading marketplace for freelancers service and together with SOHO Learning Hub which is an online platform for short courses and both of them aims to be the number one provider in Asia. For growth industries such as E-Sport Authority which is dedicated to providing independent media coverage to all E-Sport News related from around the world and for the art world, there is Atelier Auction which is an investable art auctioneer and being in the art scene for decades.