Bitcoin Price Spikes After Weeks Of Declines

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Bitcoin rises more than 7 percent to over $31,000 after eight weeks of declines, but crypto transaction volumes still low after collapse of Terra and Luna coins

The price of Bitcoin spiked by more than 7 percent on Monday, briefly rising above $32,000 (£25,300) at 22:22 GMT before settling to around $31,500 after eight consecutive weeks of declines.

The largest cryptocurrency is now 25 percent above this year’s low of $25,401.05 from 12 May.

Ether also jumped 9.8 percent to over $1,900 on Monday as industry commentators said selling pressure appeared to have eased in the short term.

“The price action appeared to have bottomed for the time being,” said blockchain analysis firm Glassnode in a research note.

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The improvement came on a day when US markets were closed for the Memorial Day holiday, meaning trading activity was light, with crypto exchange LMAX Digital saying this meant the fluctuations should be taken with a grain of salt.

Stocks meanwhile rose in Asia and Europe after China said it was easing Covid-19 lockdowns, which is expected to have a positive effect on manufacturing supply chains.

Bitcoin has begun to more closely mirror the rises and falls in conventional assets as larger institutional investors have bought into it, but the correlation broke down last week with the US S&P index rising while Bitcoin continued to fall.

Analysts said this seemed to indicate Bitcoin was due for a rally of its own.

Terra collapse

The cryptocurrency world was rocked earlier this month by the dramatic collapse of the TerraUSD and Luna coins, which lost nearly all of their value in a matter of hours.

Investors spooked by the collapse appear not to have yet returned to active trading.

Transaction fees on the Ethereum blockchain are currently at a record low of around $3.70, according to on-chain data, down from $38 to $52 at the beginning of the year, indicating low transaction volume and reduced congestion.

Rising interest rates around the world have spurred a selloff in risk assets this year, causing Bitcoin’s price to drop by 34 percent since 31 December.