Could the crypto craze be on the rise again?
The price of Bitcoin (BTC) and other cryptocurrencies soared this week. Bitcoin rose more than 8% today, sitting at $23,500 at the end of the stock-trading day (though cryptos trade constantly). In mid-June, the leading crypto plummeted from $30,000 to as low as $18,000. It had reached its all-time high of $65,466 in November.
“Bitcoin is back above the $20,000 level as Wall Street becomes a little more upbeat on risky assets,” Oanda analyst Edward Moya told Barron’s.
June was a brutal month for cryptocurrencies. Bitcoin dropped 37.3% in June alone, giving it the largest fall since 2011. The sell-off was triggered by inflation fears and investors trying to liquidate. The major sell-off caused job cuts in many crypto companies and even forced some lenders to pause withdrawals.
“This was one of the worst quarters on record pretty much everywhere across the equity market, across the bond market, across a lot of different places,” said Jeff Dorman, chief investment officer at the digital-asset manager Arca Funds.
Bitcoin isn’t the only cryptocurrency gaining momentum this week. The second largest token Ethereum (ETH) also hit its highest level in more than a month—gaining 11%, taking it to $1,500. The infamous “memecoins” also hit highs this week. Dogecoin (DOGE) rose by 7% and Shiba Inu (SHIB) by 9%. These meme coins were originally created as Internet jokes, but gained a big following in 2021 after celebrities like Elon Musk and Mark Cuban began to promote them.
All of this movement in the market could be suggesting that investors are becoming hopeful. “The crypto market has seen a relief rally,” said Marcus Sotiriou, an analyst at digital asset broker GlobalBlock. “When the market starts reacting positively to negative news, this is a signal that a local bottom could be in for now.”
Other experts say although Bitcoin is up, the crypto market may not have hit the bottom yet and prices could drop even lower over the coming weeks. “There still remains a good chance that we will see stocks make fresh lows, but now appears to be the time for some traders to test the waters,” says Moya.
