The leading cryptocurrency by market capitalization, Bitcoin, is mounting a tentative recovery that's seen it climb by 4% over the past 24 hours. Ethereum, the second-largest cryptocurrency, has mounted a more impressive 6.5% rally over the same period.
This bullish action comes just days after the industry faced a flash crash over the weekend, shaving roughly $400 billion of the entire industry, according to CoinGecko.
On Friday, Bitcoin fell from more than $57,000 to near the $46,000 level the next day. Likewise, Ethereum $4,600 to $3,800. Neither cryptocurrency has recouped all of its losses, but the broader market has rebounded some on Tuesday.
Bitcoin is back trading around $51,000 and Ethereum is holding steady at around $4,350.
Alongside the two leading cryptocurrencies, Solana, Cardano, Polkadot, and Terra have also recovered some of the ground lost in the crypto crash. Terra’s native LUNA token even managed to hit an all-time high on Sunday while the rest of the market slumped.
Many market watchers cited renewed coronavirus fears, amid the continued spread of the Omicron variant around the globe. Traditional markets were also deeply affected, with the S&P 500 also dropping by just under 2%.
The crypto industry was hit especially hard, according to Sam Trabucco, CEO and trader at Alameda Research, due to the low liquidity in the market at the time of the crash.
“Part of the reason [the crash] was still substantial was the low liquidity,” he tweeted on Saturday. “On various exchanges, [Bitcoin] got sub-$30k for a moment! And that was because of how little liquidity sits on the book during super-off-hours.”
A few features of this move were important:
- the price of BTC, for instance, was nearing in on a longtime local minimum -- sub-$53k hadn't happened since early October, the same day it crossed $50k
- it was late Friday U.S. / early weekend Asia, among the lowest-liquidity times pic.twitter.com/UaGTDqHdC1— Sam Trabucco (@AlamedaTrabucco) December 4, 2021
Low liquidity, plus enormous leverage that has become a hallmark of crypto, led to the weekend’s double-digit tumble.
Since then, however, the total capitalization of all crypto has bounced back more than 7%, hovering around $2.5 trillion.
This is still around $500 billion short of the industry’s all-time high.
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