and other cryptocurrencies were rising Wednesday, buoyed by an improvement of investor sentiment in wider markets as digital assets continue to face significant headwinds from the bankruptcy of crypto exchange FTX.
The price of Bitcoin has risen 6% over the past 24 hours to $16,600. While the largest crypto has left behind two-year lows near $15,500, representing a recent bottom, Bitcoin remains down more than 20% in just a couple of weeks amid a bout of selling that has gripped markets amid the failure of FTX and its fallout. Bitcoin continues to trade for a fraction of its all-time high of nearly $69,000 reached in November 2021.
“Bitcoin is in the green for a second day,” said Craig Erlam, an analyst at broker Oanda. “The headlines are far from favorable due to the fallout from the FTX collapse. Everyone is wondering who the next victim will be and whether this debacle will uncover similar practices in other areas of the market.”
Market participants and members of the digital asset industry are concerned that more failures are still to come. Worries have recently spread over the finances of crypto broker-dealer Genesis, and how that might impact asset manager Grayscale, which operates the largest fund holding Bitcoin. The two firms share the same parent company, Digital Currency Group.
“Sentiment in the Bitcoin and digital asset market is about as bearish as I’ve seen it,” said R.A. Wilson, the chief technology officer at token exchange 1GCX. “The negative knock-on effect of FTX has created a tremendous amount of uncertainty that, in turn, is pulling prices down significantly.”
Cryptos were moving higher in line with stocks, as the
Dow Jones Industrial Average
rose Tuesday and were poised for more gains Wednesday ahead of the release of closely watched meeting minutes from the Federal Reserve.
The fact that digital assets remain correlated with equities—a link that has strengthened this year due to a tough macro backdrop, but faded amid crypto-specific volatility—may be a comfort to traders. But make no mistake: analysts remain largely downbeat about the outlook for Bitcoin and its peers.
“Bitcoin is back above the $16,000 level but still remains in the danger zone as everyone waits for the next crypto domino to fall,” said Edward Moya, an analyst at broker Oanda. “Bitcoin could continue to stabilize here if Wall Street rebounds, but that seems unlikely as this bear market for stocks has yet to bottom out. Bitcoin has support ahead of the $15,500 level but if that does not hold, technical selling could send prices toward the $13,500 region.”
Oanda’s Erlam has an even more dire forecast, detailing that it seems more likely that Bitcoin will plumb even deeper two-year-plus lows rather than recover above levels at which it traded just weeks ago.
“It’s hard to imagine Bitcoin managing any kind of significant, sustainable recovery,” Erlam said. “The next area of resistance falls around $17,500, a break of which could make things more interesting. But that could be very difficult to overcome. There’s arguably a greater case for the price to fall to $10,000 at the moment, than rising to $20,000.”
—the second-largest token—rose 8% to $1,175. Smaller cryptos or altcoins were similarly buoyant, with
and Polygon each 6% higher. Memecoins also gained, with
10% and 9% in the green, respectively.
Write to Jack Denton at firstname.lastname@example.org