Cryptocurrency prices recovered on Tuesday from six weeks of lows sparked by the deepening Evergrande crisis as fears of a default eased.
But investors were still braced for more volatility after a heavy selloff overnight. Bitcoin, the biggest and the best known cryptocurrency, traded at around $43,000, recovering from a fall to $40,192 earlier in the session. It hit a four-month high of $52,000 on September 6.
Smaller rival ether, the coin linked to the Ethereum blockchain, rose 1% to $3,012 after falling below $3,000 for the first time since early August.
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Global markets started the week on a turbulent note after fears that Evergrande’s troubles could lead to a slowdown of the Chinese and global economies prompted a sell-off of riskier assets.
“We can’t take a very positive view just as yet until we get through the next few days,” said Matthew Dibb, chief operating officer at crypto index fund provider Singapore-based Stack Funds.
“This is purely sentiment driven right now, and it’s actually been off very low liquidity,” he said, adding that it would be better to wait on the sidelines as crypto markets will continue to be affected by the contagion.
The drop in cryptocurrencies comes at a time when institutional interest in the space has risen and made it more mainstream, with many investment banks taking a more bullish stance.
- Reuters with additional editing by Sean O’Meara