Bitcoin and cryptos bounce, driven by markets and whale activity
Bitcoin and cryptocurrencies extend their rebound on Friday, as stock markets in general are doing, erasing much of their earlier losses, as investors try to put aside concerns stemming from the Russia-Ukraine conflict. On Thursday, the price of Bitcoin plunged to nearly $34,500 but currently trades near $38,800, up 10% during the past 24 hours. Similarly, Ethereum has also advanced nearly 13% and is hovering around $2,600. Whales also showed 5 times more trading activity since the day the war started.
Following the invasion of Ukraine by Russian forces, traders portrayed unusual behavior in the buying and selling of cryptocurrencies. Blockchain analytics firm Santiment warned that several traders saw the price decline as an opportunity to increase their 'crypto' holdings. Resistance from high-net-worth investors to the sell-off halted the plunge and pushed the price of Bitcoin, along with other digital currencies in the market, to higher levels.
"Bitcoin has recovered after falling below the $35,000 level, although the price action paralleled that of other risk assets, as the rebound came as Nasdaq stocks also advanced sharply," stated Ipek Ozkardeskaya, senior analyst at Swissquote. "We will see how Bitcoin will behave over the weekend, when there will be no clue as to how other assets will react. Risks are tilted to the downside due to the intensifying geopolitical situation," the expert noted.
The rest of the electronic currencies market will also move without references as soon as the financial markets close on Friday, but experts recall that even before the conflict between Russia and Ukraine, cryptocurrency prices "had been under immense pressure due to the hawkish stance of the Federal Reserve and the aggressive tapering of bond purchases, which will likely lead to higher interest rates next month." "As a result of these measures, liquidity is being withdrawn from financial markets, restricting investors' ability to take positions in risky assets.
This shift dragged the Bitcoin price from its unprecedented peak of nearly $69,000 reached in November last year to January lows below $33,000," recalled Naeem Aslam, analyst at AvaTrade.
As for the rest of the market, "when Bitcoin sneezes, the whole crypto space catches a cold," Ozkardeskaya stressed, a maxim that also works in the opposite direction, so the recovery is just as intense in tokens such as Avalanche, Cardano, Solana or Terra -up 30%. Total capitalization advances by $200 billion to $1.72 trillion, up from just over $1.5 trillion on Thursday.