Bitcoin bounces back after record weekly losing streak
World’s largest cryptocurrency jumps 5% to go back above $30,000
Bitcoin led a wider cryptocurrency market recovery on Monday morning, rising by 5.3% to $30,671.
This bullish momentum came only hours after the world’s first and largest cryptocurrency recorded its longest weekly losing streak on record.
Between March 29 and May 29, the price of bitcoin fell from $47,454 to $29,008, a 38.8% drop. The crypto’s market capitalisation sank from $900bn to $548.4bn in the same period.
Market sell-off
The sell-off has partly been attributed to the changing monetary landscape seen across the globe, with central banks tentatively raising interest rates to combat runaway inflation.
This shift also triggered a cycling out of high-growth technology stocks, prompting tech-heavy indices such as the Nasdaq to fall by as much as 23% between late March and May.
Although the collapse of Terra’s UST/USD stablecoin exacerbated the sector turmoil, much has been made of the fact that the direction of cryptocurrency markets has arguably been closely correlated with that of equities.
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This thesis came under pressure in the past week when cryptocurrencies continued to trade downwards after the likes of the Nasdaq, Dow Jones and S&P 500 closed the week up by 6.4%, 5.8% and 2.5%, respectively.
Indeed, Bitcoin was set to close May down by more than 22%, which would have been the second-worst May in its 14-year history.
Monday’s morning’s revival, in which the total capitalisation of the cryptocurrency market stood 5.5% higher at $1.2trn, showed that the equities correlation argument is not entirely without merit, even if there is something of a delay in momentum.
Novogratz may be vindicated
Should Bitcoin’s recovery continue, then the argument recently put forward by the US venture capitalist Mike Novogratz that it “will ultimately lead the next rally” may well be vindicated.
Novogratz, the CEO of Galaxy Investment Partners, said: “This industry will not go away. We are just adjusting to the popping of an asset bubble caused by the Fed. Building revolutionary tech and change isn’t supposed to be easy.”
