Investing.com — Bitcoin prices rose on Tuesday, extending a rally in recent sessions as last week's steep losses brought bargain buyers into cryptocurrency markets.
But Bitcoin's rally was limited by anticipation of key US inflation data this week. Sustained capital outflows also showed that sentiment towards cryptocurrencies remains weak.
rose 3.4% to $56,715.3 at 01:10 ET (05:16 GMT).
Bitcoin has recorded strong losses since last week
Cryptocurrency markets suffered heavy losses over the past week, amid a broader decline in risk-driven markets as traders grew increasingly concerned about an economic slowdown.
This drop caused Bitcoin to fall to $52,000, although the token managed to recover in the last two sessions.
Hot-sells played a major role in supporting Bitcoin as recent capital flow data showed institutional investors largely turning averse to cryptocurrencies.
Cryptocurrencies see significant weekly outflows
Cryptocurrency markets saw outflows totaling about $726 million last week, their largest weekly outflow since March, data from digital asset manager CoinShares showed on Monday.
Traders were seen increasing their short positions on Bitcoin, while altcoins were sold off across the board.
Fears of a slowdown in economic growth and expectations of a smaller interest rate cut by the Federal Reserve drove these outflows, as did a broader risk-averse movement in global financial markets.
“The cryptocurrency market is in an unusual state of suspended animation. Trading volumes and liquidity have taken a hit in recent weeks, coupled with persistent ETF outflows and the waning popularity of once-booming basis trading. It's as if the entire sector is holding its breath, waiting for a catalyst,” Kristian Haralampiev, head of structured products at Nexo, told Investing.com.
Haralampiev noted that a divergence was emerging between speculation on Ether and , with a bias towards Solana reflecting some market hedging for further gains on the token.
Trump-Harris presidential debate in focus
Cryptocurrency markets were looking ahead to the first presidential debate between Donald Trump and Kamala Harris, which will take place later on Tuesday.
Any signs of Trump gaining an advantage in the presidential race will likely boost cryptocurrency prices, given that the Republican candidate has maintained a largely pro-cryptocurrency stance in his campaign efforts.
But a series of polls released in late August showed Harris holding a slim lead over Trump, especially after her official nomination as the Democratic presidential candidate.
Cryptocurrency price today: Altcoins regain ground, CPI expected
Cryptocurrency prices in general followed Bitcoin's recovery. The world's second-largest cryptocurrency rose 2.1% to $2,344.98.
and increased between 1% and 5%, while among meme tokens, they added 7.7%.
Attention turned to upcoming US inflation data, due on Wednesday, for further clues on interest rates.
The reading comes just a week before a G20 meeting, where the central bank is widely expected to cut interest rates by 25 basis points.
