Bitcoin prices have experienced a notable recovery lately, climbing after falling to nearly $43,000 yesterday afternoon.
The world’s largest digital currency by market value rose to as much as $49,520.72 earlier today, Fintech Zoom data shows.
At that point, it was up roughly 15% from the multi-week low of $43,119.16 it reached the day before, additional Fintech Zoom figures reveal.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
When explaining these latest gains, analysts pointed to several factors.
John Todaro, director of institutional research for TradeBlock, spoke to the gains that risk assets enjoyed today, following a recent decline.
“Yields have risen recently to the highest level in a year and on the back of that you saw tech stocks sell off, corresponding with the pull-back in bitcoin prices,” he noted.
“During times of market uncertainty, bitcoin does still have elements of a risk-on asset and rises and falls in tandem.”
He also emphasized the key role played by leverage.
“I think outside of the broader market moves, you had a considerable amount of leverage happening in the crypto markets.”
“After much of that leverage was flushed out after the crash down to $43k, you alleviated some of that downward pressure.”
‘Simply A Reaction’ To Weekend Drop
Tim Enneking, managing director of Digital Capital Management, offered a different take on the situation.
“We saw a fairly standard Monday morning EST rebound – building off the equally standard Monday morning recovery (yesterday, North America time) in Asia.”
“The move was simply a reaction to the drop to $43k over the weekend, coupled with the generally positive Citibank report on BTC, plus the small, additional MicroStrategy buy,” he asserted.
“The market is already falling back from its $49.5k high and we would expect that to continue. The downward corridor since February 21 is still very much intact.”
Bitcoin’s ‘Positive Landscape’
While Enneking spoke to the short-term losses that bitcoin might experience, other market observers emphasized the bullish developments surrounding the cryptocurrency.
Constantin Kogan, managing director of Wave Financial Group, pointed out several of these factors.
“With MicroStrategy investing another $15 million in Bitcoin, increasing its reserves to 90,859 BTC and Goldman Sachs restarting Bitcoin futures trading, in addition to exploring the potential of Bitcoin ETFs – we are looking at a positive landscape,” he stated.
Kogan emphasized that “more publicly traded companies are adding bitcoin to their balance sheet.”
“Speaking with other big institutions, they are ready to invest in digital gold via regulated entities. Even the most skeptical players are now considering an allocation under several major criteria: decrease in volatility, an increase in liquidity, and the third is regulatory certainty.”
Sergey Nazarov, cofounder & CEO of Chainlink Labs, also weighed in, providing a bullish outlook for the world’s most prominent digital currency.
“While some people might see Bitcoin as risky on a day to day basis, over a multi-month time horizon, it has stably continued to rise, through the continued adoption of an entirely new asset class that stands counter to modern monetary policy theory,” he stated.
“While some day to day movements might coincidentally look related to the larger market’s sentiment around risk, the overall curve of Bitcoin over the last 6 months appears unrelated to the larger financial market.”
“It is however heavily correlated to people’s growing concerns about inflation, unchecked money printing and modern monetary policy’s inherent limitations,” said Nazarov, pointing out several concerns that could motivate investors to purchase bitcoin.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.