New York: Bitcoin hovered near the $40,000 mark and Ether rebounded in early U.S. trading as investors tried to make sense of the crash that wiped away billions and shattered the notion of crypto as a maturing asset class.
"You can't keep a good dip buyer down for long in the financial markets these days, and cryptos are no different," said Jeffrey Halley, a senior market analyst at Oanda. "The mass liquidation yesterday will have thinned out the ranks of believers."
Volatility has dominated crypto markets, with Bitcoin plunging and surging more than 30% within a few hours on Wednesday. The carnage kicked off last week, when Tesla Inc. billionaire Elon Musk criticized Bitcoin for wasting energy and backtracked on a decision to allow crypto transactions. Losses accelerated after China warned that digital tokens can't be used for payments.
While all were proximate causes cited for the rout, the liquidation frenzy Wednesday morning was sentiment-driven and disorderly, with the coin dropping thousands of dollars in a matter of minutes. Selling gave way to more selling as investors lured into crypto in search of a quick buck bolted for the exits. It accelerated when Bitcoin fell below its average price for the past 200 days.
On Thursday, the mood in the market was quieter, with traders looking for the next technical levels and speculating whether prices have become oversold. Bitcoin gained 4 per cent to $40,036 as of 6:44 a.m. in New York. Ether added 6 per cent to $2,677.
Halley at Oanda said Bitcoin's round numbers will be important to watch. "$30,000.00 is the line in the sand now, and another capitulation wave will follow if it breaks," he said, adding that if prices can hold above $40,000, then it'll draw investors looking to get back into the action.