Bitcoin tops $22,000 as crypto market hopes contagion and shakeout is over; ether jumps 10%
Bitcoin jumped above $22,000 Monday as the cryptocurrency market hoped that the contagious and chaotic events of the past week were over.
At 6:30 a.m., the world’s largest cryptocurrency traded at $22,228.70 ET is up around 4% according to CoinDesk data. Bitcoin traded at $22,493.61 during the last 24 hours, its highest level since June 16.
Other cryptocurrencies bounced as well, with ether rising more than 10% compared to the price 24 hours earlier and Polygon’s MATIC token rising 21%
A rally on stock markets in Europe, Asia and Africa helped to boost bullish sentiment. U.S. stock futures were also more volatile. The rise in U.S. stock futures was also higher. A rise in stock prices will often lift sentiment in crypto markets.
Investors are also watching to see if the chaos of the past few weeks that saw bitcoin drop nearly 70% from its November all-time high and saw billions of dollars disappear from the market, may be over.
Many high-profile companies in this space have been affected by the price crash. These include Three Arrows Capital , a hedge fund , and crypto lender Celsius. Both of these companies have filed for bankruptcy.
These collapses have led to contagion in the industry, putting other companies under severe pressure.
This is largely due to the large amounts of leverage and borrowing which have taken place during this crypto cycle. Three Arrows Capital, for instance, took out loans that it couldn’t repay after the crypto crash. Celsius, which offered customers yields exceeding 18% when they deposit their digital coins, engaged in high-risk trading to earn the interest it wanted to give back.
To meet their liabilities, crypto companies have been liquidating assets to make way for new ones. This has placed pressure on the wider market.
Analysts believe there are signs that this contagion might be slowing.
In a research note, David Moreno, a CryptoCompare research analyst, stated that the worst market contagion had likely ended with most of the forced selling behind them.
Despite the rally, crypto market continues to suffer. Bitcoin and ether have fallen more than 50% in the last year. Bitcoin experienced its worst quarter for more than a decade during the second quarter.
Analysts remain skeptical about any move higher in the short term.
“Given Q2’s severely poor performance, it is not surprising that there has been a relief bounce. Moreno stated that he believes the market will remain range-bound for the next few months.