- Bitcoin rose above $US50,000 ($AU70,266) on Tuesday, as investors jumped in after the coin’s dive at the weekend to two-month lows.
- The recent sell-off was prompted by a combination of worries regarding the Omicron covid variant and Fed.
- Metaverse tokens mana and sand climbed as much as 24% and 18%, respectively.
Bitcoin gained for a third day on Tuesday, rallying above $US50,000 ($AU70,266) after investors bought into the 20% drop at the weekend that was triggered by a combination of concern about the impact of the Omicron variant and large crypto holders selling aggressively.
Bitcoin rose 9% in 24 hours to stand at $US51,511.24 ($AU72,390) at 07:18 a.m. ET, while ether climbed 12% to touch $US4,424.44 ($AU6,218), according to Coinmarketcap. On Saturday, a sell-off gained momentum, as larger investors piled in and pushed the price down by as much as 20% to below $US43,000 ($AU60,429), while smaller cryptocurrencies tumbled.
By Tuesday, the gains in bitcoin and ether spread to other coins, such as the native tokens of the polkadot, avalanche and terra blockchains, which rose by more than 12% on the day.
“I believe this is due to existing investors taking the opportunity to buy the dip as well as new investors seeing the 20% drop as a good opportunity to get exposed to bitcoin after a period of market greed and price surge,” Nicolai Qvale Fredriksen, analyst at Arcane Research, said.
Bitcoin is still around 25% below the record $US69,000 ($AU96,967) set in November. The price had been gradually drifting thanks to the strength of the dollar and to investors cashing in on this year’s vast gains. The most recent catalyst came from the emergence of the Omicron coronavirus variant, although some of the concern over the risk it poses to the global economy has receded.
With US growth and inflation picking up, this has raised the chances of more rapid action from the Federal Reserve, which has signaled it will tighten monetary policy. Rising interest rates often lure investors out of the more expensive areas of the market.
Fredriksen said that he was seeing a new resistance level of around $US55,000 ($AU77,293) in the short term for bitcoin.
Bitcoin is still the largest cryptocurrency by market value, but its dominance has declined as other coins have gained in value this year. It now accounts for around 40% of total market value, down from 70% in January Fredriksen said.
Metaverse tokens like Decentraland’s mana and Sandbox’s sand, which are less liquid than bitcoin, rose sharply. Mana was last up around 16%, while sand gained 13% and Axie Infinity’s axs token climbed 11%.
“Ever since Facebook announced their transition to Meta, there has been significantly more eyes on meta-verse related projects,” Danial Daychopan, CEO of Plutus.it said.
“Those who missed the initial rally after the Facebook news emerged have been waiting for a good opportunity to buy-in, and the recent market crash presented exactly that.”
The metaverse has resulted in non-fungible token linked cryptocurrencies being the best performing digital assets in November, according to Kraken exchange data. Investors have been spending millions on the digital world in the last few weeks. A plot of virtual land recently sold for $US4.3 ($AU6) million in The Sandbox.
“The metaverse industry is in my opinion only just getting warmed up, relative to their long term value,” Marcus Sotiriou, analyst at UK based and Canada listed digital asset broker GlobalBlock said.