Bitcoin has rebounded to around $43,000 on Tuesday from a six-week low of $40,200 as fear of the contagion risk posted by Chinese real estate developer Evergrande eases.
The cryptocurrency
BTCUSD,
recorded a 3% loss over the past 24 hours.
Ether
ETHUSD,
has returned to above $3,000, after it fell to around $2800 earlier on Tuesday, the first time since early August.
The rebound is in line with other financial assets, as the U.S. stock indexes
DJIA,
recorded a modest recovery.
Analysts are questioning if cryptocurrency should still be considered as a safe haven asset, which has been a popular narrative among its supporters.
“Since cryptocurrencies don’t have fundamentals like stocks and bonds. Their movements are driven purely by news,” Anthony Denier, CEO of trading platform Webull wrote to MarketWatch through email. “If the news is sending many financial assets lower, Bitcoin is not immune.”
“Bitcoin, specifically, and the cryptomarket, in general, have shown a close correlation to the movement of stocks and other risk-on assets,” Denier wrote.
Some others are concerned about cryptocurrency’s volatility. “For cryptocurrencies to gain wider credibility, we can’t continue to have these wild price swings where the market plummets ten percent,” Don Guo, CEO of multi-asset liquidity provider Broctagon wrote to MarketWatch through email.
Nayib Bukele, president of El Salvador, where bitcoin was adopted as a legal tender, said the country bought another 150 bitcoins, pushing up its total reserve to 700.
Bukele made the announcement on Sunday night, after which the cryptocurrency’s price declined up to 12%.
