Dead Cat Bounce for cryptos?; "We could see sharp declines"

Is a Dead Cat Bounce ocurring? Cryptocurrencies rebound strongly on Wednesday after several days of declines and cuts and have added approximately $60 billion to the total market capitalization in the last 24 hours. Bitcoin (BTC) scores a 5% rise to $16,500 after touching 2020 lows, while Ethereum (ETH) is approaching $1,200 after soaring 6% and coming perilously close to losing $1,000.

"Bitcoin is trading higher, but for how long?" questioned Craig Erlam, senior markets analyst at Oanda, while stressing that the gravity of the repercussions of the FTX collapse are still being discovered, with a new name being added to the list of those affected every few days.

"Confidence in the markets has been shattered and may take time to rebuild. There remains a great deal of uncertainty and as long as this remains the case, any rallies we see in cryptocurrencies may simply become dead cat bounces, rather than market bottoms. The last one was around $15,500, from where it bounced a couple of weeks ago, and a break of this level could trigger another sharp drop," the Oanda expert explained.

"It is hard to imagine Bitcoin achieving a meaningful and sustainable recovery. The next resistance zone is around $17,500, the break of which could make things more interesting. However, it could be very difficult to overcome. There is arguably more of a case for the price to fall to $10,000 at this point, than for it to rise to $20,000," concluded Erlam.

Meanwhile, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noted that traders "remain on edge" following news that a "substantial amount" of FTX assets were stolen or have gone missing. He also stated that although the price of BTC has recovered, risks "remain tilted to the downside."

James Bromley, an attorney representing FTX in the bankruptcy case, asserted that the company's assets remain at risk from cyberattacks and that some assets have even been stolen or are unaccounted for.

"We're not just talking about cryptoassets, or cash assets, or physical assets. We're also talking about information, and information here is an asset. Unfortunately, a significant amount of the assets were stolen or have disappeared. We are experiencing cyber-attacks, both on the petition date and in the days following, and we have hired sophisticated experts to protect us against the hacks, but they continue," he explained before the Delaware bankruptcy court.

In other market news, the rebound rubbed off on the major 'altcoins'. Ripple (XRP) increases 6%, while Cardano (ADA) rises 5% and Dogecoin (DOGE) soars 10%, and so does Polygon (MATIC). Polkadot (DOT) and Shiba inu (SHIB) increase 8%, while Litecoin (LTC) soars 27% and Solana (SOL) rises 15%, although it is still worth just over a third of what it was before the FTX bankruptcy.