Cryptocurrencies saw a huge rebound on Tuesday, breaking the cycle of major losses that the market saw in the last few days.
Financial markets saw immense volatility as investors moved their cash to safer haven assets. The scrutiny surged after the Federal Reserve’s first policy meeting of the year this week. The Fed hinted that they’ll raise interest rates sooner than expected. Consequently, risky assets saw huge liquidations, while Bitcoin shed 50% of its value.
Technology stocks and speculative assets like Bitcoin and other cryptocurrencies were the largest beneficiaries of the ultra-low interest rates and inflation. However, the era comes like its coming to an end as the Fed moves to raise interest rates. For instance, the Nasdaq 100 index of tech stocks entered the correction territory, while Bitcoin is now trading around the $36,500 level — nearly 50% down from its all-time high of $69,000 that the digital currency reached in November.
However, Bitcoin surged 8% in the last 24 hours after plummeting to a six-month low price of $33,000 this week. Ether, the second-largest cryptocurrency by market value was up 7% at around $2,416, but the digital token is still down 23% on a weekly basis according to data from CoinMarketCap.
“As seen last week, the risk-off nature of markets at the moment is not isolated to equities. Crypto, basically risk assets on steroids, continues to face headwinds, with bitcoin now down more than 50% from the November peak, and looking ready for a test of the psychologically important $30,000 mark,” Caxton FX strategist Michael Brown said.
Crypto Fear and Greed Index Suggests “Extreme Fear” in the Market
Other altcoins saw severe losses amid the bearish market, but the cosmos network’s Atom crypto saw the biggest gains. Atom is up 16% in the last 24 hours, trading around $35,60.
According to market analysts, the recent bridge to the Polkadot network contributed to the outperformance in cosmos. The recent link will allow the two blockchains to exchange data in-between them.
Despite the rally on Tuesday, extremely negative sentiment is still surrounding the crypto market. The Crypto Fear and Greed Index was at 12, the lowest level since January 8, suggesting “extreme fear”. Meanwhile, a reading above 40 would indicate “greed” and the index reached this level in late December.