[NEW YORK] Bitcoin rebounded from the four-month low reached earlier in the week with other risky assets bouncing back from the recent turmoil seen in global markets.
A wave of tariffs put forward by US President Donald Trump and a potential government shutdown triggered economic uncertainties and sell-offs across a range of asset classes including cryptocurrencies.
“As we conclude a week marked by widespread selling of risk assets, markets are experiencing a relief rally from oversold conditions,” said Ravi Doshi, co-head of markets at FalconX. “The avoidance of a US government funding shutdown has alleviated uncertainty in the market.”
The original cryptocurrency rose as much as 6.2 per cent to US$85,301 on Friday (Mar 14), while many smaller, less liquid digital assets jumped even more. Solana climbed more than 9 per cent, Chainlink increased 13 per cent and XRP pushed almost 8 per cent higher at one point.
Bitcoin had slumped to around US$77,000 on Tuesday, the least since just after the election of Trump in November. That was about a 30 per cent drop from the all-time high of US$109,000 reached on inauguration day in January.
The slide helped to trigger record outflows from Bitcoin exchange-traded funds, and large liquidations of long positions in crypto derivatives markets. Bitcoin options traders were hedging against a drop to US$70,000 in late February.
“Crypto markets are bouncing with other risk assets as macro-driven liquidations appear to be at least taking a break today,” said Stephane Ouellette, co-founder at FRNT Financial. “We expect that further macro stability will continue to be a tailwind for crypto prices.”
At a crypto summit hosted by Trump last week at the White House, the inclusion of a Bitcoin strategic reserve in an executive order and the dropping of multiple lawsuits against major crypto firms have given a little boost to Bitcoin prices while investors continue to focus on macroeconomic events such as inflation and tariffs.
“Crypto’s recent recovery seems tied mainly to global macro factors, especially lower than expected inflation figures easing fears about the US economy,” said James Davies, CEO at on-chain futures and options trading platform Crypto Valley Exchange. BLOOMBERG