Bitcoin regained some of its value to temporarily surpass the $56,000 mark on Tuesday, after a wave of risk aversion in global markets caused heavy losses for most major cryptocurrencies.
The world’s largest cryptocurrency rose 3.48% on Tuesday, partially recovering from a sell-off that sent the digital token below $50,000, while Ethereum, the second-largest cryptocurrency, suffered its biggest drop since the collapse of the FTX exchange in 2022. Bitcoin was trading at $55,770 and Ethereum at $2,509, up nearly 3%, at 10:13 a.m. Singapore time on Tuesday.
Traders fear that these gains will be short-lived, and are anticipating a broad improvement in the macroeconomic environment as Middle East tensions ease.
Cautious optimism on cryptocurrencies
“We are seeing an increase in crypto buying amid the price decline, but sentiment remains cautious due to concerns that this could be the start of a new wave of investors moving away from riskier assets,” said Sean McNulty, head of trading at Arbelos Markets.
According to Coinglass data, total liquidations in cryptocurrency bets reached about $1.1 billion on Monday, one of the largest liquidations since early March.
In just 36 hours, Bitcoin’s sharp decline wiped out more than $150 billion of its total value, prompting investors in U.S. exchange-traded funds that invest directly in Bitcoin to withdraw about $423 million of their funds.
However, some traders are hoping for a reversal as fast as the drop. Rich Rosenblum, co-CEO and co-founder of GSR Markets, said the Bitcoin community was at its most bullish just nine days ago, and the cryptocurrency could surge above $70,000 as quickly as it fell.
