Bitcoin (BTC) is in recovery mode today after a Monday wipeout that saw the world’s largest cryptocurrency plummet to a six-month low of $49,000.
Risk assets of all stripes faced a mass sell-off amid heightened recession fears in the US and concerns over recent earnings results in the technology sector.
The latter particularly affected bitcoin, initially causing a 16% fall on the BTC/USD pair.
But the bulls have managed to reclaim a fair whack of these losses, with bitcoin’s spot price recovering above to $55,000 at the time of writing.
The rollercoaster start to the week has underscored the intense volatility at the heart of the bitcoin markets and their tendency to move in line with large-cap US tech stocks.
Yet there are also signs of greater underlying support for the asset class ever since spot-bitcoin exchange-traded funds were approved in the US in January.
Bloomberg ETF analyst Eric Balchunas noted that ETF trading volumes remained “not too crazy” amid yesterday’s tumultuous session.
“You actually DONT want to see crazy volume today as ETF volume on bad days is a pretty reliable measure of fear,” he explained in a Tweet.
“On flip, deep liquidity on bad days is part of what traders and institutions love about ETFs, so you also want to see volume too, good for the long term,” he added.
Bitcoin ETFs have traded about $2.5b so far, a lot for 10:45am, but not too crazy (full history below). If you bitcoin bull you actually DONT want to see crazy volume today as ETF volume on bad days is a pretty reliable measure of fear. On flip, deep liquidity on bad days is part… pic.twitter.com/TOQRjyriqp— Eric Balchunas (@EricBalchunas) August 5, 2024
Given the rebound, not just in cryptocurrency prices, but US tech stocks (the Nasdaq 100 was up 150 points in Turesday’s pre market), there is evidence to suggest the recent market turmoil was more of a blip than a prolonged trend.
Time will tell.