After a sharp drop below $30,000, the bitcoin He recovered on Tuesday morning. The cryptocurrency rose as much as 5.4% before giving up some gains and trading at around $31,500. Other digital tokens, such as the Ether, rose more than 6%. While coins like Solarium Y avalanche they were also green.
The cryptocurrency rally came as stocks advanced across the board. Europe, highlighting how the two asset classes trade together. Bitcoin’s recent slide has pushed it to levels last seen in mid-2021, reversing a bull market that peaked in November.
Whether the calm will last is an open question. Tightening monetary policy to combat rising inflation is holding back liquidity, creating a formidable hurdle for speculative assets like cryptocurrencies.
Michael Novogratzthe billionaire cryptocurrency investor who leads Galaxy Digital HoldingsHe warned that he expects things to get worse before they get better. One of the challenges facing digital assets is that they are increasingly trading in line with tech stocks, which are being hit by rising interest rates, Bloomberg reported.
“Crypto trades are likely to be correlated to the Nasdaq until we hit a new equilibrium,” Novogratz said, adding that investors may see “a very choppy, volatile, tough market for at least the next few quarters before people are having the feeling that we are in a balance.
The crypto market is also monitoring TerraUSD, an algorithmic stablecoin that aims to maintain a one-to-one parity with the dollar. Bitcoin is down more than 50% since hitting a record high of nearly 69,000 in November and has underperformed both global stocks and gold so far in 2022.