Is the Crypto Crash Over? Bitcoin, Ether, and Other Tokens Bounce Back After Devastating Drop.

Top line

Bitcoin, ether and other leading cryptocurrencies gained on Tuesday, partially recouping losses after the market suffered one of its worst sell-offs in years as Wall Street and global markets were shaken by fears of a U.S. recession.

Bitcoin prices rose on Tuesday after falling the previous day.

AFP via Getty Images

Main elements

Bitcoin prices rose nearly 8% and traded above $55,000 around 7 a.m. ET on Tuesday morning.

While the jump has eased some of the massive losses Bitcoin suffered after falling to a six-month low yesterday, the token is still down about 17% from the same time last week.

Ether, the world’s second-largest cryptocurrency by market value, also rebounded on Tuesday, gaining as much as 9 percent to above $2,450.

As with bitcoin, ether’s rally represents only a partial recovery, and despite gains on Tuesday morning, the token has lost a quarter (25%) of its value over the past seven days.

Other major cryptocurrencies also mirrored Bitcoin and Ether’s trajectory, with small gains on Tuesday partially offsetting devastating losses from the previous day. Binance’s BNB, Solana’s Sol, Ripple’s XRP, Dogecoin and Cardano’s Ada all rose at least 8% despite weekly losses ranging from 15% to 25%.

Big number

$2.07 trillion. That’s the total value of the cryptocurrency market. It grew by about 8% in the last 24 hours, with rising prices for Bitcoin and Ether accounting for about 53% and 15% of the market, respectively. Similarly, the crypto market’s gains over the past day only modestly offset a significant decline last week, when the market shrank by more than 16% and lost more than $400 billion in value.

News Latch

Cryptocurrency markets crashed on Monday in one of the sector’s worst declines since the two major crypto assets entered the mainstream this year with the launch of spot-bitcoin and spot-ether exchange-traded funds in the U.S. in January and July, respectively. Ether recorded its worst day since 2021 in the decline, while other assets such as bitcoin and dogecoin also fell to six-month lows. Despite the contraction, the market is still up about 70% since the same period last year, with bitcoin reaching an all-time high of around $74,000 earlier this year. The decline has fueled fears that the broad upward trajectory the market has been on since emerging from the depths of crypto winter in late 2022 — when the market’s overall value fell below $1 trillion, less than Bitcoin alone today — could be coming to an end. Volatile crypto assets are risky investments and can sometimes react sharply to unpredictable stimulus, most recently developments in the presidential race between Donald Trump and Kamala Harris (and Joe Biden, before he pulled out). Monday’s decline came after dismal U.S. employment data that intensified fears of a U.S. recession on the horizon. Markets in Europe, Asia and North America tumbled as investors hedged against potential volatility amid a sell-off. Major U.S. stock indexes such as the S&P 500, Nasdaq Composite and Dow closed at their lowest prices in months, with the S&P 500 companies losing a combined $3.5 trillion in market value by the end of the day.

Will Bitcoin, Ether and Cryptocurrency Markets Revive Soon?

It’s unclear whether Monday’s crash will be short-lived or signal the start of a broader market decline. Crypto markets are highly volatile and unpredictable, but they tend to largely mirror sweeping movements in more traditional financial markets. A continued decline in the economy could herald further declines. The possibility of an expanding war in the Middle East and similar events have historically been reflected in the crypto market.