Bitcoin Rebounds as Crypto and Other Risk Assets Recover from Sell-Off

Cryptocurrencies made a comeback on Tuesday, recovering some of the previous day’s losses after Bitcoin briefly dipped below $50,000 for the first time in six months. The flagship cryptocurrency climbed by 6% to $56,438.59. Ether also rose by 6%, reaching $2,546.77.

This recovery was part of a broader market bounce, including crypto-related stocks. Coinbase gained 1%, and MicroStrategy increased by 2%, while mining companies Marathon Digital and Riot Platforms remained mostly unchanged.

The sell-off on Monday was attributed to a combination of factors: crypto traders unwinding their carry trade positions, growing concerns about a potential U.S. economic recession, escalating tensions in the Middle East, and increasing uncertainty surrounding the upcoming U.S. presidential election. For much of the day, Bitcoin traded below the $55,000 support level that has held it up for most of the year, as it struggled to regain its March highs.

Despite the volatility, investors remain confident in the long-term value of Bitcoin. Matt Hougan, chief investment officer of Bitwise Asset Management, sees this dip as a buying opportunity.

While Bitcoin and Ether have fallen 14% and 22%, respectively, for August, they have still managed to gain 32% and 11%, respectively, for the year.