Bitcoin rebounded to $41,000 and Ethereum regained the $3,000 mark

Reporter | Si Linwei

The continued downturn in the cryptocurrency market ushered in a rebound.

In the early morning of February 5, Beijing time, market data showed that the price of bitcoin rose rapidly, rising more than 11% in 24 hours, the latest quotation was $41280, the highest rebound to $41900, and re-stood on the $40,000 mark.

Ethereum, which followed, also surged more than 10%, breaking through $3,000 in a 24-hour high and the latest offer at $2,967.

Currently, Bitcoin and Ethereum account for 40% and 18% of the total market capitalization of cryptocurrencies, respectively, benefiting from the rebound of the two cores, according to Coingecko, the total market capitalization of cryptocurrencies has soared by 9.3%, and the current market capitalization has reached $1.97 trillion, close to the $2 trillion mark.

The rally is the first time since the great dive in the cryptocurrency market on January 21 that the price of Bitcoin has reached the $40,000 mark, and the price of Ethereum has touched the $3,000 mark for the first time.

After the sharp decline on January 21, the cryptocurrency market continued to slump, with the total market capitalization diving to $1.7 trillion, a decline of more than 43% from the peak of $3 trillion in 2021.

The high volatility of the spot price can be seen in bitcoin's risk asset properties. Since its official birth in 2009, Bitcoin's positioning has changed several times.

At first, according to Satoshi Nakamoto's white paper, Bitcoin existed as an electronic payment system. But because this positioning has a certain conflict with currencies such as the US dollar, only the small country of El Salvador is currently experimenting.

At present, the mainstream large funds led by Wall Street in the United States gradually regard it as a kind of "digital gold", due to the concurrent relationship between Bitcoin and blockchain technology, the total amount of bitcoin is limited to 21 million pieces, and can not be overdone, so naturally has mathematical scarcity, and gold has a physical scarcity similar, so including Tesla, grayscale capital, A16z and other large funds in the United States will be regarded as "gold" in the digital age as an alternative to the risk of inflation, Bitcoin is gradually becoming an alternative "safe-haven asset."

But with the crazy influx of big money in the United States, in the second half of 2020, the price of bitcoin began to rise rapidly, climbing as high as around $70,000, and the price fluctuations between it and the dollar did not weaken, and showed an increasing correlation with the US stock market. This has also made Bitcoin gradually become one of the risk assets in the global equity and debt market system.

According to CoinMetrics' chart data, the correlation coefficient between bitcoin and the S&P 500, one of the three major U.S. stock indices, has reached 0.49, close to the previous extreme value of 0.54. The higher the value, the stronger the correlation between Bitcoin and the S&P 500.

From the perspective of market trends, the linkage between Bitcoin and U.S. stocks is also increasing, from the collapse of U.S. stocks in March 2020 to the decline of U.S. stocks in January 2022, the cryptocurrency market has not come out of an independent market, but has shown a market trend that rises and falls with some technology stocks.

Taking this round of rally as an example, while Bitcoin rose 11%, the S&P 500 closed red on the day, up 0.53%. After the opening of the US stock market on February 4, technology stocks rebounded collectively, and as of the close of the day, Amazon rose 13.54%, the largest one-day increase since 2015, and the market value increased by more than $190 billion, creating the largest single-day stock market value increase in the US market. Tesla closed up 3.6 percent, Snap up 58.8 percent and Twitter up more than 7 percent.

However, the background of the surge in US stock technology stocks is the collective plunge of the market on February 3, and meta-universe leader Meta Platforms has fallen 21% this week, the largest weekly decline since Facebook's US IPO.

But it can be seen from this that while large US funds are pouring into the crypto market, they have also incorporated Bitcoin into the system of traditional risk assets.