Bitcoin increased 2.3% as investors show signs of renewed risk appetite following a volatile week across financial markets
by NURUL SUHAIDI / Pic by BLOOMBERG
THE pressure on bitcoin will continue and may even intensify if the price of the crypto unit remains under consolidation and fails to maintain its recent minimum bullish sentiment.
Bitcoin increased 2.3% to US$42,655 (RM178,298) at the time of writing as investors show signs of renewed risk appetite following a volatile week across financial markets.
On Feb 4, the largest cryptocurrency by market value jumped as much as 10% to US$40,730, the most since Oct 1.
Ether climbed as much as 12%. Even SOL, the native currency of the Solana blockchain that has tumbled in the wake of the Wormhole project hack, surged about 12%.
According to CoinGecko, total crypto market capitalisation added 0.2% to US$1.79 trillion as of last Thursday.
The FxPro senior market analyst Alex Kuptsikevich said most cryptocurrencies were under pressure from declines in US tech stocks last week.
However, the bitcoin’s dominance index remained unchanged while its volatility has fallen to 15-month lows in recent days.
In US, the first cryptocurrency was also hit by a shutdown of mining farms in Texas caused by bad weather and a snowstorm.
As noted by Luno weekly report, bitcoin’s fall comes as major global equity markets continue to decline in January with the Nasdaq last week saw its worst week performance-wise since March 16, 2020,
Luno Malaysia country manager Aaron Tang said the cryptocurrency market continues to be under pressure due to the hawkish statements from the Federal Open Market Committee meeting, as well as ongoing geopolitical tensions between Ukraine and Russia.
Overall, the growing uncertainty and current volatility has challenged market participants causing many to be on the fence with their market decision.
“While we are seeing substantial recovery with bitcoin volumes picking up substantially, given the lack of confidence across the spectrum, it may take a while for the market to become bullish again,” Tang said.
On the other hand, the reduction in volatility in bitcoin allows for an optimistic outlook on altcoins as it gains momentum on the crypto market dynamic.
Kuptsikevich said, despite the calming sentiment on bitcoin last year, altcoins have steadily returned on its growth and outperformed the first cryptocurrency. The trend might stand in the short term.
Down the chain, the US stock market dynamics now determine corporate investor sentiment towards crypto units like bitcoin and ethereum (ETH).
Excluding bitcoin, the cryptocurrency market capitalisation has been hovering around the US$1 trillion mark for over a week and approached the upper end of that range last Friday morning.
“As for ETH, the essential boundary will be the US$3K mark. If the price rises over this level, it could entice more buyers and reject the idea of a crypto-winter following the example of 2018.” Tang added
He added that a Bitcoin price consolidation above US$40k and Ethereum above US$3k would shift the altcoin recovery to a new speed and restart the process of bitcoin share contraction in the entire market.
“The US$90 mark for Solana has attracted sufficient buyer demand. However, it will be too early to discuss a sustained recovery to the upside, after a short period of stabilisation,” Kuptsikevich concluded.