Top Line
Bitcoin, Ethereum and other major cryptocurrencies rallied on Tuesday, partially clawing back losses after the market suffered its biggest sell-off in years, as fears of a U.S. economic recession rattled Wall Street and global markets.
Bitcoin prices edged up on Tuesday after plummeting the previous day.
Key Facts
Bitcoin prices rose about 8% and were trading above $55,000 around 7 a.m. ET on Tuesday.
The surge has mitigated some of the heavy losses suffered after Bitcoin plummeted to a six-month low yesterday, but the token is still down nearly 17% from the same time last week.
Ether, the world’s second-largest cryptocurrency by market capitalization, also rebounded on Tuesday, rising 9% to above $2,450.
Like Bitcoin, Ethereum’s rally is only a partial recovery, with the token still losing a quarter (25%) of its value over the past seven days, even including Tuesday morning’s rally.
Other major cryptocurrencies mirrored the trajectory of Bitcoin and Ether, with modest gains on Tuesday partially offsetting the previous day’s devastating losses, with Binance’s BNB, Solana’s Sol, Ripple’s XRP, Dogecoin and Cardano’s ADA all rising by at least 8% despite weekly losses of between 15% and 25%.
Big numbers
$2.07 trillion. That’s the total value of the cryptocurrency market. It increased by nearly 8% in the past 24 hours, driven by rising prices in Bitcoin and Ether, which make up roughly 53% and 15% of the market, respectively. Similarly, the cryptocurrency market’s gains over the past day only slightly offset last week’s steep declines, when the market contracted by more than 16%, shedding more than $400 billion in value.
News Peg
The cryptocurrency market crashed on Monday, one of the worst crashes in the sector since the two major crypto assets went mainstream with the launch of spot Bitcoin and spot Ethereum exchange-traded funds in the US in January this year, respectively. Ethereum recorded its worst day since 2021 in the downturn, while other assets such as Bitcoin and Dogecoin also sank to six-month lows. Despite the contraction, the market has grown about 70% since the same time last year, with Bitcoin reaching an all-time high of about $74,000 earlier this year. The downturn has raised concerns that the broad upward trajectory the market has been on since emerging from the depths of the crypto winter in late 2022 (when the overall market value fell below $1 trillion, below the value of Bitcoin alone today) may be over. Volatile crypto assets are risky investments and can react sharply to unpredictable stimuli, most recently the unfolding of the presidential election between Donald Trump and Kamala Harris (and Joe Biden before his withdrawal). Monday’s declines followed a gloomy U.S. jobs report that stoked fears that a U.S. recession is on the way. Markets in Europe, Asia and North America tumbled as traders hedged against potential swings amid selling pressure. Major U.S. stock indexes including the S&P 500, Nasdaq Composite and Dow Jones Industrial Average closed at their lowest in months, wiping a combined $3.5 trillion from the market capitalization of S&P 500 stocks at the close.
Will Bitcoin, Ether and the cryptocurrency market recover soon?
It is unclear whether Monday’s crash will be short-lived or signal the beginning of a broader market decline. The cryptocurrency market is highly volatile and unpredictable, but it tends to mirror larger movements in traditional financial markets. A continued economic downturn could signal further declines. Historically, the prospect of escalating war in the Middle East or similar events has also had a ripple effect on the cryptocurrency market.
References
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