New Delhi: After Wednesday’s big crash, almost all cryptocurrencies — Bitcoin, Ethereum (Ether), XRP, Cardano, Chainlink, Litecoin and even Dogecoin — have staged a sharp recovery on Friday. Bitcoin started to rebound on Thursday as it held on to gains even during the times of higher volatility in the crypto market. It held on even after the US Treasury Department announced the need for new rules which will make the large cryptocurrency transfers to be reported to the Internal Revenue Service (IRS).
Earlier on Wednesday, Bitcoin and all other cryptocurrencies fell sharply which resulted in panic selling leading to a sharp decline in the overall crypto market valuation. However, crypto rates started stabilizing on Thursday as all popular virtual coins have recovered losses.
Bitcoin’s price has now reached the point where it trading in early February which is a positive sign for investors. Bitcoin was just above $40,000, up over 6 per cent on Friday morning. Ethereum, the second-most popular crypto, was also trading 14 per cent higher after slipping nearly 30 per cent on Wednesday.
Even Dogecoin, the meme currency that is backed by Tesla CEO Elon Musk, went up sharply after falling on Wednesday. It is trading over 15 per cent higher than its price 24 hours ago.
The cryptocurrency market could have had a worse collapse if not for the prominent backers such as Ark Invest’s Cathie Wood and Tesla CEO Elon Musk who once again showed their support on Wednesday.
Wood said that she is still sticking to her $500,000 forecast, on the other hand, Musk tweeted a ‘diamond hands’ sign to indicate that Tesla will hold on to its Bitcoin investments.
Tesla has ? ?
— Elon Musk (@elonmusk) May 19, 2021
Even though the cryptocurrencies have rebounded, analysts say that there is still extreme volatility around the asset at the moment. Analysts also believe that new investors should stay away from the crypto market for the time being if they are not ready to take risks. The fluctuation on Wednesday was the highest in over a year.
Whereas, some retail investors are seeing the price dip as an opportunity to pick up the digital assets in the hopes of higher long-term gains.
