Crypto rebounds, bitcoin hits $55,000

The bounce back occurred as U.S. equity markets also cut some of their early-morning plunge, with the Nasdaq down 3.6% shortly prior to the close versus an earlier slide of more than 6%

Crypto prices rebounded a bit with bitcoin reaching $55,000 during the U.S. trading session Monday after earlier in the day slumping to just above $49,000.

Bitcoin was trading at $53,000, down 10% over the last 24 hours.

Ether ETH, which saw an even sharper decline exacerbated by large crypto trading firm selling the asset, saw a similar bounce, but stays 13% lower for the session.

The bounce back occurred as U.S. equity markets also cut some of their early-morning plunge, with the Nasdaq down 3.6% shortly prior to the close versus an earlier slide of more than 6%.

It was only a week ago when bitcoin traded near $70,000 with traders ecstatic about a likely Trump presidency and hopes of making the biggest crypto a strategic asset. Since then, prices declined 30% from peak to trough, making it the sharpest decline during this market cycle.

While the action felt brutal, the magnitude of the drawdown was typical during previous bull markets, Alex Thorn, head of firmwide research at Galaxy, noted Monday.

The quick pace of the drawdown was reminiscent of the Covid-19 triggered crash of 2020, according to Daniel Cheung, co-founder of Syncracy Capital, even though this was less severe. Bitcoin plunged 57% in six days in mid-March.

Expect crypto to recover relatively quickly given most of the selling at this point is forced and complete panic, Cheung added. Ironically, the floodgates to a much greater bull market have been opened.

Matt Hougan, Chief Executive Officer of Bitwise, also compared this weekend's crash to March 2020 in a market update.

It felt as if we might never recover. The media claimed bitcoin had failed its test as a hedge asset, Hougan said. Emotions aside, history suggests that this weekend’s sell-off is a buying opportunity.