Bitcoin prices rose on Tuesday, in tandem with the rise of high-risk assets, as Bitcoin increased by 8.4% over the past 24 hours to reach $56,250. The currency had fallen to its lowest level at $49,000 before recovering slightly.
However, analysts believe that Bitcoin’s recovery is fragile amid a wave of risk aversion, as achieving a larger rebound remains in doubt due to ongoing concerns about a recession in the United States and a prolonged downturn in stock markets.
Bitcoin prices have already been affected by reports indicating that the U.S. government has amassed at least $2 billion worth of tokens for potential sale. Uncertainty surrounding the regulatory outlook for cryptocurrencies, with the 2024 presidential election approaching, has also kept traders hesitant about cryptocurrencies.
Data from digital asset management firm CoinShares on Monday showed that cryptocurrency investment products witnessed outflows of around $528 million last week, with Bitcoin and Ethereum accounting for most of the outflows.
Trading volumes in cryptocurrency investment products also remained significantly below annual averages, as the recent launch of spot exchange-traded funds for Ether generated little optimism.
Cryptocurrency prices also tracked gains in U.S. stock index futures and Asian markets, where stocks appeared somewhat stable after Monday’s sharp decline.
