Bitcoin Rebounds Above $20,000 After Plunging Below Its 2017 High

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Ether vs Bitcoin
Ether vs Bitcoin

Bitcoin rebounded on Monday after the digital toke plummeted below its 2017 high over the weekend, but traders remained in extreme fear due to a plethora of disappointing crypto headlines and macro factors keeping pressure on sentiment.

The world’s largest cryptocurrency by market value surged above the $20,000 mark for much of the day Monday. Nonetheless, it last dipped again by roughly 1% to $20,005.46, according to Coin Metrics. Over the weekend, Bitcoin slipped as low as $17,601.58. Meanwhile, Ether climbed less than 1% to $1,102.86.

Although investors are positive about the rebound, BTC is still 70% lower than its November all-time high of around $69,000. It’s down 57% year-to-date. With the continuous economic mayhem, bitcoin could potentially see more downside, according to Yuya Hasegawa, a crypto market analyst at Japanese bitcoin exchange Bitbank.

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“Bitcoin’s weekend dip was, to put it simply, not deep enough,” he said. “The macro-environment has not really changed from last week’s FOMC meeting: there still has not been a clear sign of inflation coming down and the Fed may still drive the economy into recession by raising rates too aggressively or simply by failing to tame inflation.”

Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC that unless the price of bitcoin closes above $23,000 on a daily time frame basis, “the odds are this is a dead cat bounce.”

“We’re oversold, so a bounce was expected,” he added.

The focus in the crypto industry has shifted toward crypto lending companies that promise users high yields for depositing their digital coins. Last week, Celsius, a firm with 1.7 million customers and nearly $12 billion of crypto assets under management, paused withdrawal of funds for customers, sparking concerns that it is insolvent.

“When inflation is on the doorstep and with rate hikes in the offing, the risks of a recession round the bend are high,” Charles Hayter, CEO of CryptoCompare, told CNBC via email.

“The push me pull you of higher rates sapping cash from mortgaged house owners means people are psychologically bracing and paring back and digital assets are suffering thus.”

“Coupled with this, the pull back in the digital asset ecosystem has uncovered a number of systemic issues.”