Bitcoin Prices Rally More Than 20% After Market Rout-Here's Why

Bitcoin prices have bounced back lately, climbing more than 20% in under 48 hours after approaching the $25,000 level.

The digital currency, which is the largest when measured in terms of total market value, climbed to nearly $31,000 earlier today, CoinDesk figures show.

At this point, it was up 21.9% from the price of $25,402.04 it reached early the day before, additional CoinDesk data reveals.

While the digital currency did manage to recover some of the gains it has lost recently, it is still down more than 50% from its all-time high of nearly $69,000 reached in November.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Several analysts offered explanations for these latest price movements, in addition to helping describe them relative to broader market trends.

When clarifying these latest price movements, several analysts emphasized the key role of market sentiment.

Ben Tsai, president and managing partner of Wave Financial Group, commented on this situation.

“As there are more investors and traders in crypto, especially a large overlap between the tech/meme stock and crypto traders, the risk on/off sentiments are driving the market more as these are the marginal buyers/sellers,” he stated.

“With sentiments recovering overall, people are buying into everything including Bitcoin,” Tsai added.

He noted that previously, “the crypto market was oversold as there was a domino effect of unwinding and liquidation stemming from the UST/LUNA unwind. 

That was over 10bn of UST being unwound to LUNA, then liquidated, and a lot of Bitcoin collateral also getting liquidated in trying to defend the pair.”

Budd White, co-founder and chief product officer of Tacen, a crypto regulatory software firm, spoke to similar matters, emphasizing the important role played by the terra luna situation and how it affected the mindset of global market participants.

He also pointed to the latest inflation figures released by the U.S. Bureau of Labor Statistics, in which the all items index rose at an annualized rate of 8.3% in April.

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