Bitcoin and Ether Claw Back from Steep Losses as Investors Buy the Dip

Bitcoin inched back to top US$56 000 while second-ranked token Ether rose as much as 4,9 percent to more than US$2 500.

Bitcoin and Ether rebounded from steep losses on Tuesday, but the gains may be short-lived without a broad improvement in the macro-economic environment.

Bitcoin rose as much as 3,9 percent to top US$56 000 and was trading around that level at 4:35 p.m. in New York, while second-ranked token Ether gained 4,9 percent to more than US$2 500.

The moves represent a partial recovery from a frantic selloff on Monday that saw Bitcoin sink below US$50 000 for the first time since February. Ether suffered at one point its steepest fall since 2021.

The rout marks the first major stress test for digital assets since a group of spot-Bitcoin and Ether exchange-traded funds debuted in the US in January and July, respectively.

Investors in the Ether ETFs bought the dip to the tune of a US$49 million net inflow for the crop of nine products, according to data collected by Bloomberg, more than offsetting outflows from the Grayscale Ethereum Trust.

The Bitcoin ETFs suffered a US$168 million net outflow on Monday, following heavy outflows last week.

Solana’s SOL was one of the biggest gainers among altcoins, with the native token of the blockchain favoured by memecoin issuers jumping as much as 14 percent. It had tumbled by as much as 20 percent on Monday.

But the gains in Bitcoin, Ether and other tokens on Tuesday may be short-lived without a broad 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 were about US$1,1 billion on Monday, one of the largest recordings since early March this year, according to Coinglass data. –Bloomberg

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