Bitcoin (BTC-USD) extended a modest bounce on Wednesday, surging to a two-week high as traders hunt for evidence that the larger crypto market may be regaining its footing after a prolonged selloff.
The first cryptocurrency reached its highest intraday level since November 17, rising as much as 2.6% to over $93,965. It then surrendered part of those gains, trading at roughly $93,380 in early morning in New York. Ether and other key tokens also edged higher.
After a brutal selloff that started in early October, only days after Bitcoin reached a high of more than $126,000, the digital assets market is still unstable.
Since then, the value of the cryptocurrency market has lost almost $1 trillion. Still, a degree of confidence is surfacing with investors believing the recovery might build.
“Bitcoin fans will be rightly cautious about this rally in the cryptocurrency, having seen so many false dawns in recent months, but it looks like the recovery in stock market risk appetite is finally leaching across into the crypto space,” Chris Beauchamp, UK chief market analyst at investment and trading platform IG, said in a note.
“Last week’s bounce faltered at $93,000, so with the price nudging above this in early trading there is some hope of a more sustained move higher.”
As traders wager that economic data due later on Wednesday would bolster expectations for an interest-rate cut next week, US stock futures indicate a second day of modest increases. Crypto traders have experienced a rocky ride this week.
Token values plummeted on Monday following statements by Strategy Inc.’s Chief Executive Officer Phong Le that the Bitcoin accumulator could resort to selling the cryptocurrency if needed to make debt payments.
Strategy, formerly known as MicroStrategy, claimed later that it was constructing a $1.4 billion reserve to have funds readily available.
The Securities and Exchange Commission Chairman Paul Atkins' plan to reveal the details of a "innovation exemption" for digital asset companies and Vanguard Group's decision to permit exchange-traded funds and mutual funds that mainly hold cryptocurrencies to be traded on its platform were two reasons why Bitcoin then gained ground on Tuesday.
Those occurrences, coupled with a fresh bottom appearing for Bitcoin this week, have formed “a series of vital signs of an upward trend forming,” according to FxPro’s Chief Market Analyst Alex Kuptsikevich.
Even so, caution has lingered, with some warning that investors scarred by the fall may be reluctant to chase the advance. "We don't see a lot of buyers on the top side," stated Sean McNulty, FalconX's APAC derivatives trading lead. “Sentiment is still fragile.”
The group of 12 US-listed ETFs investing in Bitcoin, which saw what McNulty referred to as a "feeble" $59 million influx on Tuesday, is one indicator of investor confidence, according to statistics collated by Bloomberg.
According to Coinglass statistics, the most recent rise has resulted in the liquidation of almost $400 million worth of bearish bets across all tokens in the last 24 hours.
In an interview with Bloomberg TV, Melvin Deng, CEO of QCP Group, stated, "This rebound is actually just a relief rally." But Bitcoin might “reclaim some momentum” from here, he continued. “This is a great point for those who are under-deployed to look at some entry level.”
