Bitcoin price rises more than 20% after market falters – here’s why

Bitcoin price has rebounded again recently, rising more than 20% in less than 48 hours after approaching the $25,000 level.

The digital currency, which is the largest when measured by total market capitalization, jumped nearly $31,000 earlier today, according to CoinDesk figures.

At this point, it is up 21.9% from the $2,5402.04 price it hit earlier the day before, additional CoinDesk data revealed.

While the cryptocurrency has managed to recover some of the gains it lost recently, it is still down more than 50% from its all-time high of $69,000 reached in November.

[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.]

Several analysts have provided explanations for these recent price movements, as well as helping describe them in relation to broader market trends.

Investor sentiment

In explaining these recent price movements, many analysts have emphasized the key role of market sentiment.

Ben Tsai, President and Managing Partner of Wave Financial Group, commented on this situation.

“As there are more investors and traders in cryptocurrency, especially the significant overlap between tech/meme stocks and crypto traders, the on/off sentiment is driving the market more because these are the marginal buyers/sellers,” he said.

“With sentiment generally recovering, people are buying everything including bitcoin,” Tsai added.

He noted that previously, “the cryptocurrency market was oversold as there was a domino effect of liquidation and liquidation caused by the break-up of terrestrial treasuries/LUNA. This was over 10 billion terrestrial treasuries that were unlinked to LUNA, then liquidated, and also liquidated.” Lots of bitcoin collateral trying to defend the pair.”

“This created very negative sentiment and drove the entire market lower,” Tsai said.

Budd White, co-founder and chief product officer of Tacen, a crypto regulatory software company, spoke about similar issues, emphasizing the important role Terra Luna’s status plays and how it affected the mindset of global market participants.

He also referred to the latest inflation figures from the US Bureau of Labor Statistics, in which the all-item index rose at an annual rate of 8.3% in April.

That number exceeded estimates provided by a Dow Jones survey, according to CNBC.

“The recent sell-off was related to the negative sentiment coming from the recent CPI numbers, which were higher than expected, along with the massive pressure from the collapse of the Terra ecosystem,” White said.

“The recent event was almost unprecedented for the crypto industry in general. After all, it’s not every day that one in ten crypto assets worth several billion dollars in market capitalization suddenly hits zero, or at least gets close to zero.

“If anything, when you step back and examine the broader picture, it is very nice to see how well Bitcoin has managed to survive despite chaotic markets. It is clearly on the path towards broader adoption and maturity.”

Wider downtrend

While White offered an optimistic assessment of the cryptocurrency’s prospects, not every analyst offered such a bullish perspective.

The digital currency has been following a broader downtrend for several months now, after reaching its highest level late last year.

Julius de Kempenaer, chief technical analyst at StockCharts.com, commented on this situation.

He noted, “In any case, the trend (daily time frame) is still bearish, characterized by a series of lower highs and lower lows.”

“This sharp rebound does not change that rhythm, so it is just a rally inside an existing downtrend,” said de Kempiner.

Disclosure: I have some bitcoin, bitcoin cash, litecoin, ether, EOS, and sol.

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