Investing.com — Bitcoin prices rose on Tuesday, gaining in tandem with broader risk-driven assets as they recovered from steep losses in the previous session, which also saw the world's largest cryptocurrency fall to more than five-month lows.
The token rose 8.2% over the past 24 hours to $55,690.4 as of 02:15 ET (06:15 GMT). The token had fallen as low as $49,000 before regaining some ground.
Cryptocurrency prices in general also recovered some of Monday's decline, following the rally in stock markets. But sentiment towards risk assets still remains largely fragile.
Bitcoin's recovery is tenuous amid a risk-averse slump
While the world's largest cryptocurrency has recouped some of its recent losses, a further recovery remains doubtful amid lingering concerns about a U.S. recession and a prolonged slump in stock markets.
Cryptocurrency markets were especially vulnerable to the risk-averse plunge, given their highly speculative nature. Sentiment towards Bitcoin was already strained by reports showing the US government mobilized at least $2 billion worth of tokens for possible sale.
Uncertainty over the regulatory outlook for cryptocurrencies as the 2024 presidential election approached also kept traders on edge toward cryptocurrencies.
Fears of government sell-offs and economic woes drive crypto outflows
Cryptocurrency investment products saw outflows of around $528 million last week, data from digital asset manager Coinshares showed on Monday.
Bitcoin and Ether accounted for the bulk of outflows, which appeared to be driven by a broad decline in sentiment. Instruments with short positions on Bitcoin were among the few products that saw inflows, especially after reports of government mobilization last week.
Trading volumes in cryptocurrency investment products also remained well below annual averages, and the recent launch of spot Ether exchange-traded funds generated little optimism.
Cryptocurrency price today: Altcoins follow Bitcoin's rally, but still suffer losses
Broader cryptocurrency markets followed Bitcoin's recovery, recouping some of their heavy losses but still remaining well below levels seen last week.
The world's No. 2 token rose 11.7% to $2,522.25, while Ethereum rose between 10% and 22%.
Among meme tokens, they increased by 15.9%.
Cryptocurrency prices rose following gains in U.S. stock index futures and Asian markets as stocks appeared to be stabilising somewhat after a sharp drop on Monday.
The prospect of interest rate cuts in the US also helped sentiment, with markets betting on a further reduction in September amid worsening economic conditions.
But the cryptocurrency recovery remains relatively fragile, and the speculative nature of the sector keeps the risk of another potential crash in play.
