Cryptocurrencies have resumed their upward price rally, after experiencing a sharp massive decline earlier in the week due to a global market sell-off.
Recall that the crypto market on Monday 5, 2024, had experienced a significant downturn, erasing $270 billion in market value as major digital assets recorded sharp declines.
Lately, several of these digital assets have begun to gain lost ground with Bitcoin trading above the $60,000 price. According to Coin Metrics, the price of the flagship cryptocurrency was last higher by 11% at $61,232.36, rising above the $55,000 price.
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Bitcoin, which had been trading close to $70,000 the previous week, briefly dipped below $50,000. Concerns began to mount late last week, particularly after the July jobs report came in weaker than expected. However, the price of the crypto asset has surged, currently trading at $60,585 at the time of writing this report.
The price of Ethereum surged 12% to $2,644, Dogecoin rose 5.72% to $0.105, and BNB increased 5.08 percent to $513.45 after leading declines in cryptocurrencies and related stocks Wednesday. Solana, on the other hand, has been one of the best-performing cryptocurrencies after Monday’s crisis, recording a notable performance. Other altcoins, like Cardano and Polkadot, are also on an upward trend.
The crypto market is attempting to stabilize after Monday’s sharp decline, triggered by the unwinding of the yen carry trade, which led to deleveraging across markets. This rebound is indicative of growing confidence in digital assets, as market participants increasingly turn to cryptocurrencies to hedge against broader financial uncertainties and volatility. The surge in Bitcoin’s value highlights its potential role as a hedge during times of market stress and shifting investor sentiment.
As the market rebounds, investor optimism has been revived by positive news regarding the institutional adoption of cryptocurrencies. Major companies and financial institutions continue to invest in Bitcoin and other cryptocurrencies like Solana, which has spurred massive purchases.
However, in the broader global market, analysts predict that this week’s huge selloff, triggered by an unwinding of yen-funded trades, is far from over and could eventually spread to credit markets, impair some banks, and possibly hurt the U.S. dollar.
By Thursday, market volatility had subsided but stock markets struggled for direction and investors tried to guess how many more yen-funded leveraged trades remained to be unwound.
Commenting on the global market sell off which impacted banks and the US dollar, chief global strategist for LPL Financial Quincy Krosby said,
“The concern is if anything blows up and loans can’t get paid back. One of the things we’re watching is if any banks are under pressure right now because they’ve been lending too much, either to hedge funds or retail investors. It’s buried under the larger equation of how we look at the carry trade.”