Bitcoin and crypto prices were under pressure in 2022 as traders felt the effects of a series of major crashes in the industry.
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bitcoin jumped above $22,000 on Monday, hitting its highest level in more than a month as the cryptocurrency market hoped the contagion and shake-up of the past few weeks was coming to an end.
The world’s largest cryptocurrency ended Monday at $21,610.59, up 2.76%, according to CoinMetrics. Bitcoin hit a high of $22,757.36, its highest level since June 16th.
Other cryptocurrencies also rebounded, with ether up 8.94% to $1,466 by the end of the day on Monday.
Contributed to the bullish mood stock market rally in Europe and Asia. US stock futures also rose. Cryptocurrencies, in particular bitcoin, are closely related to trading in the stock market. Often, rising stocks also lift the mood in the cryptocurrency market.
But investors are also watching to see if the carnage of the past few weeks is over, which saw bitcoin drop nearly 70% from its all-time high in November and wiped billions of dollars off the market.
The fall in prices led to the collapse of several well-known companies in the space, most notably the hedge fund. Capital Three Arrows as well as crypto lender celsiusboth of which filed for bankruptcy.
These collapses are caused an infection throughout the industry and have seen other related companies come under pressure.
This was largely due huge amounts of leverage and borrowing what happened in this last cryptocycle. For example, Three Arrows Capital took out loans that it could not repay after the cryptocurrency crash occurred. Celsius, which was offering customers over 18% returns for depositing their digital coins, has taken on a high-risk trading activity to earn interest to try and get it back for its users.
Cryptocurrency companies are selling off all the assets they have to try and meet their obligations, putting pressure on the wider market.
Analysts say there are signs that the spread of the infection may be slowing down.
“The worst of the market contagion has probably run its course and most of the forced selling is behind us,” David Moreno, an analyst at CryptoCompare, wrote in a research note.
Despite the rally, the cryptocurrency market is still suffering. Both Bitcoin and Ethereum have fallen over 50% this year. Bitcoin Survives Worst Quarter more than a decade in the second quarter.
Analysts remain unsure of any significant upside move in the near term.
“Given the sharply negative dynamics in the second quarter, it is not surprising that there was a “lite” rebound. We believe the market will continue to be range-bound in the coming months,” Moreno said.