Bitcoin Reboots After Dramatic Sell-Off

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Triggered by Russia’s invasion of Ukraine, the cryptocurrency market experienced a drop of about $150 billion on Thursday. This drop, however, wasn’t long-lived.

Within a 24-hour period, Bitcoin’s price fell to a low of $34,338.57 on Thursday and quickly rebounded by more than 10% to mid $39K, according to CoinMarketCap. Ethereum, as well as other cryptocurrencies, showed respectable gains.

U.S. stocks also saw an impressive recovery, with major indices showing an uptick. Layer 1 coins like LUNA, FTM, and DOT were among those that saw a significant rise, along with GNT, the native coin of the decentralized peer-to-peer network Golem. In general, trending patterns of Bitcoin and the broader crypto markets tend to follow that of other asset securities such as stocks. 

European and Asian stocks also gained some momentum as sanctions on Russia were less than feared. 

There is rising optimism that crypto markets will continue to recover based on projections by traders along with a glint of optimism on the war front. 

Hua Chunying, a spokeswoman for China's Foreign Ministry, tweeted: "President Xi Jinping has just spoken with his Russian counterpart on the phone. President Vladimir Putin said that Russia is willing to have a high-level dialogue with Ukraine,"

Mikkel Morch, Executive Director at ARK36, who is following the price movements closely, shares his thoughts:

“After hitting its range lows yesterday at around $34K, Bitcoin briefly touched the strong $40K resistance following a relief rally and is now trading at $38K again, virtually erasing all Thursday's losses.”

ARK36 is an EU-regulated alternative investment fund (AIF). It is among the first fully licensed investment funds in Europe, investing exclusively in bitcoin and other crypto-assets.

Morch and his colleagues have been trading crypto and other assets since 2012 and have chosen to register their fund in Cyprus due to the growing cryptocurrency economy there and the forward-looking regulatory regime; Grant Thornton Cyprus is working closely with ARK36 as fund administrators. 

Morch points out that in contrast to major stock indices, Bitcoin hasn’t actually recorded a lower low.

“This small detail could be of great significance in terms of the talk around Bitcoin as a safe haven asset.”

Morch goes on to say that contrary views point to gold as actually proved to be a safe haven while Bitcoin reacted like a typical risk asset.

“Bitcoin’s strong recovery does, however, suggest that for investors with a higher tolerance for risk or looking for a high risk-to-reward ratio, buying Bitcoin in a risk-off environment may be a good bet against uncertainty in the long term.”

The price of cryptocurrencies will continue to fluctuate in light of the ongoing attack by Russia.

“The situation is still volatile and the $40K levels are still the resistance. Unless Bitcoin meaningfully breaks this barrier, revisiting the range lows or even the $30K support is still very much on the table in the short term.”





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