One expert said that the 15% decline on Monday and the subsequent rebound are both signs of a healthy market.
The market cap for all cryptos has increased 8.5% in the past 24 hours to $2.2 trillion.
(Unsplash/Mick Haupt)
Posted August 8, 2024 at 5:57 pm EST.
With a surge in the late morning ET on Thursday to just under $60,000, the price of bitcoin has completely erased the dramatic 15% loss it experienced on Monday.
Over the last 24 hours, bitcoin’s price has risen more than 8% to $59,706 at the time of writing. ETH and SOL have followed suit, both increasing more than 9% over the last 24 hours to trade at $2,586 and $156, respectively.
Among the top 100 coins by market cap, XRP leads the pack, rising 26% to trade at almost 63 cents. On Wednesday, a district court judge imposed a fine of $125 million on Ripple, an amount well below the nearly $2 billion that the SEC was seeking.
Jim Hwang, chief operating officer of crypto investment firm Firinne Capital, told Unchained he was surprised about how quickly BTC and the broader crypto market has been able to rebound. Hwang said that he and his colleagues at Firinne “debated how this [rebound] was a strong possibility and how quickly… attitudes can change.”
Hwang pointed to the Bank of Japan recently committing to keep interest rates steady rather than raising them, as well as expectations that the US Federal Reserve will lower rates by between 50 and 100 basis points as being favorable for crypto prices. “I think [these two things] relieved a lot of people,” Hwang said to Unchained in a text message.
According to Hwang, lower rates are good for risky and growth assets such as tech stocks and cryptocurrencies, because lower rates motivate investors to look for assets with higher expected returns. “Mathematically, with lower discount rates, present values are higher on assets with a longer time to pay off,” he added.
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While some were surprised about the speed with which the crypto market appears to have bounced back, others were not. Suki Yang, the founder of Solana-based memecoin trading platform LMAO and a data scientist at Electric Capital, told Unchained she expected the market to recover quickly from the decline early in the week.
“When liquidation levels were triggered, and prices plunged, it was the perfect buying opportunity for retail and institutions,” said Yang, who noted that a substantial amount of capital was liquidated when BTC was trading around $55,000-$56,000 and ETH was changing hands near $2,400.
“Year-to-date, BTC stabilized around $60,000, and so I expected to see a correction against the large selloff,” she added.
That the market has been able to quickly erase its recent losses is a sign of strength, Yang added. “It…shows we are in the middle of the bull market— the springtime and not the summer. Seeing corrections is healthy and helps with long-term sustainability for a bull market, unlike up only,” she said.
Data from CoinGecko shows that the market cap of all cryptocurrencies combined increased 8.5% over the past 24 hours to almost $2.2 trillion at presstime.
