Bitcoin Claws Back From Steep Losses as Crypto Traders Buy Dip

(Bloomberg) — Bitcoin briefly rose above $56,000 on Tuesday after risk aversion in global markets led to major losses in most major cryptocurrencies.

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The world’s largest digital asset surged as much as 3.48% on Tuesday after a frenzied sell-off that sent the token below $50,000 and sent second-placed Ether into its biggest decline since the FTX crash in 2022. Bitcoin was trading at $55,770 as of 10:13 a.m. Tuesday in Singapore, while Ether was trading at $2,509, up nearly 3%.

Traders are concerned that the gains could be short-lived until there is a general improvement in the macroeconomic environment and an easing of tensions in the Middle East.

“We’re seeing buying on the dip,” said Sean McNulty, director of trading at Arbelos Markets. “But the overall sentiment is still cautious with concerns that this is the start of a larger deleveraging process,” he added. Total liquidations in crypto bets were around $1.1 billion on Monday, one of the largest since early March of this year, according to Coinglass data.

Bitcoin’s sudden crash wiped out more than $150 billion in value in just 36 hours, prompting investors in U.S. exchange-traded funds that directly invest in the token to withdraw an estimated $423 million from their products.

Some investors are hoping for a recovery to happen just as quickly. “The BTC community was arguably at its most optimistic just nine days ago,” said Rich Rosenblum, co-CEO and co-founder of GSR Markets. “BTC could rally above $70,000 as fast as it’s selling off.”

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