Bitcoin’s value has been on a rollercoaster ride this week. After lingering below $22,000, the world’s largest cryptocurrency by market capitalization surged past $25,000 for the first time since August, before quickly retreating below the threshold. Bitcoin was recently trading at about $24,920, up more than 9% over the past 24 hours, continuing its momentum from Wednesday.
As Bitcoin’s value soared, other major digital assets followed. Ether, the second-largest cryptocurrency, climbed above $1,700 for the second consecutive day, rising nearly 9% from Wednesday. Other major digital assets were firmly in the green, with MATIC, the token of the layer 2 platform Polygon Network, and APT recently climbing 12% and 9%, respectively.
Crypto-related stocks also surged. Exchange giant Coinbase (COIN) and business software provider MicroStrategy (MSTR), a major bitcoin holder, rose 3% and 2%, respectively. Shares of bitcoin miner company Marathon Digital Holdings (MARA) rose by more than 4%.
In contrast, equity markets were mostly ticking down, with the Nasdaq and S&P 500 each off about a half-percentage point.
Decoupling from Equities
Bitcoin’s recent surge is notable, as it has decoupled from equities. According to Mark Connors, head of research for Canadian crypto asset manager 3iQ, “from a technical standpoint, weak hands were washed out of crypto in the aftermath of the [Terra] and FTX failures so (there was) more upside risk for BTC.”
Rebounding from Oversold Positions
Richard Mico, the US CEO of crypto payment-and-compliance infrastructure provider Banxa, wrote in an email to CoinDesk that digital assets have continued to rebound from oversold positions late last year.
“The December lows followed just extreme volatility because of the FTX debacle, with the major crypto assets back then looking extremely oversold. It also appears there was significant tax-loss harvesting in December”
Richard Mico US CEO of Banxa
“Now, there are not that many forced sellers left in this market. They’ve already been washed out with various short squeezes,” he said.
The regulatory crackdown on stablecoins and the latest tepid inflation data did not deter investors from investing in cryptocurrencies. As the market continues to be volatile, Bitcoin and other digital assets have remained a reliable store of value. However, investors should remain cautious and conduct thorough research before investing in cryptocurrencies.
Conclusion
Bitcoin’s value surge to over $25,000 for the first time since August was significant, given the market’s volatility. As Bitcoin and other digital assets continue to rebound from oversold positions and decouple from equities, investors are becoming increasingly interested in these digital currencies. However, the market is highly speculative and requires careful consideration before investing. As always, it is recommended that investors conduct thorough research and consult with a financial advisor before investing in cryptocurrencies.
