One expert said both Monday’s 15% drop and subsequent recovery were signs of a healthy market.
The market capitalization of all cryptocurrencies has increased by 8.5% to $2.2 trillion in the last 24 hours.
(Unsplash/Mick Haupt)
Posted on August 8, 2024, 5:57 PM EST.
With a rise in late morning ET on Thursday to just under $60,000, the price of Bitcoin has completed the dramatic 15% loss it experienced on Monday.
Over the past 24 hours, Bitcoin price has risen by more than 8% to $59,706 at the time of writing. ETH and SOL have followed suit, both gaining more than 9% over the past 24 hours to now trade at $2,586 and $156, respectively.
Among the top 100 coins by market capitalization, XRP is at the top, rising 26% to almost 63 cents. On Wednesday, a district judge ruled imposed A fine of $125 million for Ripple, an amount well below the nearly $2 billion demanded by the SEC.
Jim Hwang, chief operating officer of crypto investment firm Firinne Capital, told Unchained he was surprised at how quickly BTC and the broader crypto market were able to recover. Hwang said he and his colleagues at Firinne “discussed how strong this (recovery) was possible and how quickly… attitudes can change.”
Hwang pointed to the Bank of Japan’s recent pledge to keep interest rates stable rather than raising them, as well as expectations that the U.S. Federal Reserve will cut rates by 50 to 100 basis points, which has a positive impact on crypto prices. “I think (those two things) have been a relief to a lot of people,” Hwang said in a text message to Unchained.
According to Hwang, lower interest rates are good for risky and high-growth assets such as technology stocks and cryptocurrencies because lower interest rates motivate investors to look for assets with higher expected returns. “Mathematically, at lower discount rates, the present values of assets with a longer payback period are higher,” he added.
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While some were surprised by the speed at which the crypto market has seemingly recovered, others were not. Suki Yang, the founder of Solana-based memecoin trading platform LMAO and a data scientist at Electric Capital, told Unchained she expects the market to quickly recover from the drop earlier in the week.
“When the liquidation levels were reached and prices collapsed, it was the perfect buying opportunity for retail traders and institutions,” said Yang, who noted that a significant amount of capital was liquidated when BTC was trading at around $55,000-$56,000 and ETH was changing hands at around $2,400.
“BTC has been stabilizing around $60,000 since the start of the year, so I expected a correction after the big sell-off,” she added.
The market’s ability to quickly recoup its recent losses is a sign of strength, Yang added. “It … shows that we are in the midst of a bull market – spring, not summer. Seeing corrections is healthy and contributes to the long-term sustainability of a bull market, as opposed to a pure uptrend,” she said.
Data from CoinGecko shows that the market capitalization of all cryptocurrencies combined has increased 8.5% over the past 24 hours to nearly $2.2 trillion at press time.
