Bitcoin – and the cryptocurrency market in general – rebounded today after a worrying start to the week for investors, helped by an announcement from the Federal Reserve and good news from Chinese real estate developer Evergrande.
The largest digital asset by market capitalization traded at $43,796, up 3.8% in 24 hours, according to data from CoinGecko.
Ethereum , the second largest cryptocurrency by market cap , also posted promising 5.3% gains in 24 hours and traded at $3,089. It was hit hard on Monday, stronger than Bitcoin , and traded below $3,000 yesterday, the first time it has fallen that low since August 6.
The broader cryptocurrency market followed suit and was largely in the green today. Solana , the sixth largest cryptocurrency by market cap, traded at $148.49, up 14% from yesterday. It is still down 25% from its all-time high above $200 earlier this month.
And Dogecoin , billionaire Elon Musk’s favorite cryptocurrency and the 10th largest digital asset by market cap, posted modest gains of 1.5%; it was trading at $0.22 at the time of writing.
The cryptocurrency market struggled on Monday and Tuesday, along with the global stock market, in part due to concerns about potential global financial fallout from Chinese real estate giant Evergrande. The company has $300 billion in debt that some analysts say it won’t be able to pay off.
The situation has caused some to wonder if this could be equivalent to the one in China.” Lehman moment ”, suggesting that the country could be on the verge of a financial crisis on a par with that caused by the collapse of Lehman Brothers in 2008.
Today, however, the Shenzhen-based company Ella Said agreed to settle interest payments on a domestic bond. This has calmed previously spooked global markets.
But what do global stocks and China, the world’s second largest economy, have to do with cryptocurrencies like Bitcoin and Dogecoin?
Cryptocurrencies like Bitcoin are generally perceived as speculative and risky assets. And when there is global financial uncertainty, big investors tend to sell riskier assets, like cryptocurrencies or certain stocks. This is what seemed to happen yesterday and Monday, according to some analysts.
Meanwhile, as fears over Evergrande seemingly subsided, so did the US Federal Reserve, which announced today it would keep key interest rates pegged near zero. It also raised inflation expectations and moved the timetable for the central bank’s tapering of bond purchases to 2022.
When this has happened before , Bitcoin and other cryptocurrencies have increased in value. This is because interest-bearing investments, such as bonds or debt-based financial instruments, do not earn interest and are therefore less attractive to investors.
Therefore, alternative assets, such as Bitcoin, become more attractive. I Investors losing faith in the US dollar due to inflation could mean more money flowing into assets like Bitcoin, which could help explain current market moves.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.
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– BTC: 14xsuQRtT3Abek4zgDWZxJXs9VRdwxyPUS
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– BNB: 0x2fdb9034507b6d505d351a6f59d877040d0edb0f
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