Bitcoin Inches Back to Briefly Top US$56,000 after Bout of Risk Aversion in Global Markets

The world's largest digital asset rose as much as 3.48% on Tuesday to partly recover from a frantic selloff that saw the token sink beneath $50,000

Bitcoin rose again on Tuesday to briefly hit $56,000, recovering some of the steep losses incurred by most major cryptocurrencies amid a wave of risk aversion in global markets.

The world's largest digital asset rose as much as 3.48% on Tuesday, partially recovering from a sharp selloff that saw the token briefly fall below $50,000, while second-ranked Ether suffered its steepest decline since the collapse of FTX in 2022. Bitcoin was trading at $55,770 and Ether at $2,509, up nearly 3%, as of 10.13am in Singapore on Tuesday.

But traders said the gains are likely to be short-lived until they see a broader improvement in the macro-economic environment and an easing of tensions in the Middle East.

"We are seeing buying on the dip," said Sean McNulty, director of trading at Arbelos Markets. "But generally, sentiment is still cautious on concerns that this is the start of a larger deleveraging process," he added.

Total liquidations in bets on crypto amounted to about $1.1 billion on Monday, among the largest recordings since early March this year, according to Coinglass data.

Bitcoin's sharp decline saw more than $150 billion being wiped out in just 36 hours, prompting investors in United States exchange-traded funds that invest directly in the token to withdraw roughly $423 million from the products.

Some traders are, however, hopeful for a quick turnaround to take effect just as quickly. "It was only nine days ago that the BTC community was arguably the most bullish it's ever been," said Rich Rosenblum, co-chief executive officer and co-founder of GSR Markets. "BTC could rally back to $70,000 plus, just as quick as it sold off."

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