Bitcoin rose Thursday after a similar rise in U.S. stocks. However, investors still feel the effects of a dramatic plunge that saw the largest cryptocurrency in the world drop to $20,000.
At 3:40 a.m. According to CoinDesk data, bitcoin traded at $21,667.90 ET. This is almost 3% more than the previous day.
Bitcoin is currently at levels not seen in bitcoin since December 2020. The digital currency has fallen by 27% over the past week, and is now down 70% from November’s all-time high.
Other cryptocurrencies, such as ether, also saw higher prices in the past 24 hours.
Bitcoin is closely linked to stock indexes, particularly the Nasdaq which rose Wednesday after the U.S. Federal Reserve raised interest rates by 0.75 percent. Bitcoin rose slightly on Thursday because of this.
There are still many issues that weigh on the crypto market.
After the collapse, sentiment is still shaken by the and of so-called algorithmic stabilitycoin TerraUSD.
A stablecoin, a type cryptocurrency, is meant to be tied to a real-world asset. Many of these coins are pegged one to one to the U.S. dollars. Some, like tether or USDCoin are backed with real assets such fiat currencies and government bond. Many algorithmic stablecoins like TerraUSD don’t have any assets in reserve. Instead, an algorithm governs the $1 peg.
The bear market is often called a new “crypto winter” and is testing other projects.
An algorithmic stablecoin USDD also lost the dollar peg earlier in the week. Tron DAO Reserve is responsible for USDD’s $1 peg and holds other cryptocurrencies in its reserve including USDC and tether.
All eyes are now on Celsius, a crypto lending platform that may be insolvent. This has sparked fears of contagion to the wider market. Celsius stopped withdrawing funds earlier this week for customers.