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Monday’s trading session saw a return to form for bitcoin (BTC) and other leading cryptocurrencies, which made up most of last week’s losses, according to crypto-metrics platform CoinGecko.
Bitcoin is currently trading at $53,250, up 6.2% on the day and down 5.4% this week. Ethereum (ETH), the second largest cryptocurrency by market cap, is also trading well at $2,476 (+5.7% on the day).
The cryptocurrency market is growing again. Image: CoinGecko
Digital assets such as Binance Coin (BNB), Ripple’s XRP, Cardano (ADA), Polkadot (DOT), Uniswap (UNI) and Litecoin (LTC) are also in the green, although some have not yet fully recovered on the 7-day chart.
As we reported, the equity, commodity and cryptocurrency markets were rocked by massive selling last week after rumors of possible changes to the US tax code surfaced. Sources close to the Biden administration said Thursday that policymakers plan to raise the tax on wealthy investors to 43.5 percent on profits of more than $1 million.
Bitcoin price (BTCUSD chart via TradingView)
Sensitive to rumours
Among other things, the buzz proved again how sensitive bitcoin and other digital currencies are to general sentiment and negative or positive news, said Jason Dean, an analyst at cryptocurrency research firm Quantum Economics.
Bitcoin is still a young asset class and volatile enough to be directly affected by news announcements – both positive and negative – even if that news doesn’t directly affect the asset itself, he said, commenting on cryptocurrencies’ price movements.
According to him, the crypto market’s latest decline began before Biden’s tax panic. Last week, hash values on the bitcoin blockchain dropped by about 25 percent following the emergency closure of coal mines in China’s Xinjiang province, where about 80 percent of bitcoin mining activity is located.
The decline likely began as a result of what was misconstrued as a network problem due to power problems in China’s Xinjiang province, and the recent downturn was likely fueled in part by technical support and news that JP Morgan Chase will now offer an actively managed bitcoin fund to its clients, Dieng noted.
Not out of the woods yet
However, last week a JPMorgan analyst said the bitcoin market was showing signs of weakness, with the flow of capital placed in BTC drying up. Additionally, despite the overall positive market sentiment, the Crypto Fear and Greed Index moved a bit further into fear territory today, up 27 points from yesterday.
Overall, it seems that most cryptocurrency enthusiasts are still in standby mode to see where the market will take us.
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