After being in the red for over a month, cryptocurrency markets have pared some of their losses and are trading up about 10 percent over the last week.
Global cryptocurrency market capitalisation also briefly reclaimed the $1 trillion mark.
The world’s largest digital currency by market cap, Bitcoin (BTC), is above the psychological level of $21,500, up 10 percent for the week and up 5 percent on Friday alone.
The second-largest digital currency, Ethereum (ETH) is up 15 percent for the week, trading around the $1,220 level, and a rise of around 3 percent on Friday
Other major cryptocurrencies like Binance coin, Solana, Shiba Inu, and Ripple’s XRP have gained 10 percent, 11 percent, 7 percent, and 5 percent respectively in the past week.
Anndy Lian, Chief Digital Advisor of the Mongolian Productivity Organization, said BTC rallying together with US stocks was a cause of concern and the rally may be shortlived.
Investors should watch the US jobs report on Friday closely in the short term and until something concrete is set in stone, should not drop their guard, Lian said.
“Also bearing in mind that BTC is still down by around 70 percent from its all-time high and 50 percent lower in 2022. The short-term bull is not sustainable. The threat of more deleveraging is still a key concern for crypto. The global economic uncertainties and risks remain high. A wait-and-see mindset would be more suitable at this point in time,” Lian said.
Raj Kapoor, founder of India Blockchain Alliance, a think-tank, said BTC’s price rose thanks in part to a stock market rally following the release of the Federal Reserve’s minutes and cautioned that while prices have rebounded, the crypto market has not hit the bottom yet and crypto prices can be expected to drop further over the coming weeks or months.
“There are several reasons - starting off from bearish crypto headlines that continue to drag down bitcoin below key technical levels, intermittent talk of recession, many crypto deals falling apart. To add to that surging inflation, geopolitical crises, and rising interest rates continue to drive extra short-term volatility in the crypto and stock markets. The crypto market has continued to move in tandem with the stock market in recent months, which makes it even more intertwined with global economic factors,” Kapoor said.
Crypto exchange Kraken’s Dan Held argued that the “mass contagion” of the domino effect of one cryptocurrency over the other seems to have been “contained” by FTX crypto exchange, whose CEO Sam Bankman-Friend recently said he and his company still had a "few billion" on hand to shore up struggling firms that could further destabilize the digital asset industry.
He added that crypto lending firm Celsius paid off all its outstanding loans for BTC, bankruptcies have already been filed and inflation fears are cooling off.
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