Market News

BY  Melos Ambaye, Suvashree Ghosh and Sidhartha Shukla

(Bloomberg) -- Bitcoin is reclaiming its place among the favorite assets of thrill-seeking speculative traders.

On Friday, the original digital currency surged the most in almost three years to recoup almost all of the losses registered during Thursday’s crypto market meltdown that had dragged the token down more than 50% from its October peak. The dizzying swings of around 13% have helped to reignite a jump in the volatility that traders traditionally relish because of the potential profit opportunities.

Bitcoin rose as much as 13% to $71,469 on Friday. Earlier in the session, it came close to falling below $60,000 for the first time since October 2024. Still, the token is down more than 15% for the week, after closing last Friday at over $84,000.

Other, smaller, less-liquid tokens also rebounded on Friday. Ether and Solana both rose around 11%, while XRP surged about 25%. Bitcoin accounts for almost 60% of the $2.4 trillion crypto market’s value.

Cryptocurrencies have been on shaky ground ever since a brutal series of liquidations in October that sapped market confidence. The selling picked up steam this week in line with the unwinding of leveraged bets and broader market turbulence.

“It feels like a relief bounce after the wave of selling got exhausted,” said Noelle Acheson, author of Crypto is Macro Now newsletter, adding that gold and silver also bottomed and recovered at the same time.

The bounce back from $60,000 suggests there’s “strong support there,” said Damien Loh, chief investment officer at Ericsenz Capital. Still, traders shouldn’t “expect a sharp rally back up” as sentiment remains cautious, he added.    

Choppy trading in the past 48-hours underscores a sharp rise in volatility.

Bitcoin is experiencing its most volatility since the collapse of crypto exchange FTX, with failed rebounds leading to new waves of forced selling. Market depth remains more than 35% below October levels, a drop last seen after FTX collapsed in late 2022, according to Kaiko. In such low liquidity, even modest flows can amplify price swings and trigger more liquidations.

The Bitcoin Volmex Implied Volatility Index — designed to reflect the market’s expected 30-day volatility of Bitcoin, and derived from real-time crypto options prices — surged to over 97% from 57% on Thursday.

“Bitcoin volatility has doubled from last week,” said Pratik Kala, head of research at Apollo Crypto, a digital-assets hedge fund. “Players like us and others have realized that this is a ‘blood on the streets’ moment and are bidding.”

About $1.3 billion of bullish bets across all cryptocurrencies were liquidated in the past 24 hours, according to CoinGlass data.

Bitcoin hoarders are among those feeling the pinch. In an earnings announcement Thursday, Michael Saylor’s Strategy Inc. confirmed a net loss of $12.4 billion for the fourth quarter, driven by the mark-to-market decline in its vast holdings. Still, shares of Strategy jumped 26% on Friday with Bitcoin rallying.

“It’s always difficult for Bitcoin as a store of value during such market conditions,” said Fabian Dori, chief investment officer at Sygnum Bank. “But I think what’s important to keep in mind is that Bitcoin is not a short-term store of value or a hedge against short-term market turbulence.”

Investors pulled $434 million from US exchange-traded funds for Bitcoin on Thursday,  helping to leave market observers cautious.

“I don’t see any major catalyst right now, this is just a symptom of the market right now,” said Adam McCarthy, a research analyst at Kaiko. “There’s a lot less activity so any small amount of dip buying can lead prices to bounce back up, but I would be shocked to see this continue, there’s still no improved sentiment more broadly and far more headwinds than tailwinds.”

--With assistance from Anna Irrera.