Bitcoin rises above USD56K amid market volatility
(MENAFN) Bitcoin experienced a resurgence on Tuesday, briefly surpassing the USD56,000 mark after a period of significant losses due to a wave of risk aversion in global markets. The world's largest cryptocurrency saw a 3.48 percent increase, partially recovering from a steep sell-off that had previously dragged its value below USD50,000. Similarly, Ethereum, the second-largest cryptocurrency, suffered a significant decline, marking its most substantial drop since the collapse of the FTX exchange in 2022. By Tuesday, Bitcoin was trading at USD55,770 and Ethereum at USD2,509, both showing nearly a 3 percent increase. Despite these gains, traders remain cautious, fearing that the recovery might be temporary and contingent upon a broader improvement in the macroeconomic environment, especially as tensions in the Middle East ease.
The recent volatility in the cryptocurrency market has led to substantial liquidations. Data from CoinGlass indicates that total liquidations in cryptocurrency bets reached approximately USD1.1 billion on Monday, marking one of the largest liquidation events since early March. This substantial figure underscores the heightened uncertainty and risk that currently pervades the market. Investors are closely monitoring these developments, as the significant liquidations reflect the broader market sentiment and the challenges facing digital currencies in maintaining stable value amidst fluctuating global economic conditions.
Bitcoin's sharp decline over a mere 36-hour period resulted in a massive loss of over USD150 billion in its total market value. This dramatic drop has had a ripple effect on related financial instruments, prompting investors in U.S. exchange-traded funds (ETFs) that invest directly in Bitcoin to withdraw approximately USD423 million of their funds. This mass exodus highlights the heightened risk aversion among investors and the growing concerns about the stability and long-term viability of cryptocurrency investments. The swift and severe market reactions illustrate the ongoing volatility and the precarious nature of investing in digital assets, emphasizing the need for cautious and informed investment strategies.
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