The cryptocurrency market hoped that the contagion and shakeout of the last few weeks was about to end as Bitcoin surged above $22,000 on Monday, reaching its highest level in more than a month.
According to data from CoinDesk, the biggest cryptocurrency in the world was up almost 4% and trading at about $22,228.70 at 6:30 a.m. ET. On the previous day, the price of bitcoin reached $22,493.61, the highest level since June 16.
Other cryptocurrencies also rebound, with ether rising more than 10% from its price 24 hours earlier and Polygon’s MATIC token rising by 21%.
The uptick in the stock markets in Europe and Asia contributed to the euphoric mood. Futures for U.S. stocks increased as well. Bitcoin, in particular, has been strongly associated with trading on the stock market. A gain in equities frequently improves market sentiment for cryptocurrencies.
However, investors are also checking whether the recent carnage, which saw bitcoin fall by about 70% from its all-time high, set in November and billions of dollars wiped off the market, could be over.
Numerous well-known businesses in the sector have fallen victim to the price collapse, most notably the hedge fund Three Arrows Capital and the cryptocurrency lender Celsius, both of which have declared bankruptcy.
These failures spread throughout the sector and put other connected businesses under duress.
The massive amounts of leverage and borrowing that have occurred in this most recent crypto cycle are largely to blame for this. For instance, once the cryptocurrency market collapsed, Three Arrows Capital could not repay the debts it had taken out. Therefore, in an effort to return income to its consumers, Celsius, which promised clients returns of over 18% for depositing their digital tokens, engaged in high-risk trading operations.
The general market has been under pressure as cryptocurrency corporations have been trying to pay off their creditors by selling off any assets they have.
According to analysts, there are indications that the epidemic may be slowing.
According to David Moreno, a research analyst at CryptoCompare, “the majority of forced selling is likely behind us, and the worst of market contagion has largely run its course.”
The cryptocurrency market is still in trouble despite the surge. This year, bitcoin and ether prices have fallen by more than 50%. In addition, the second quarter marked Bitcoin’s worst quarter in more than a decade.
Analysts are still not persuaded that prices will rise much in the foreseeable future.
“A’relief’ bounce has happened, which is not surprising given the really poor performance in Q2. In the upcoming months, we anticipate that the market will remain range-bound, Moreno stated.
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