The key driver behind the recovery in Bitcoin, Ethereum, and Solana today

Are investors putting the Celsius debacle behind them?

| More on:
three children lie on the floor with heads together with thermometers in their mouths. They are looking sick with eyes half closed and one is holding a cold pack to his forehead.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

It's perhaps too soon to call today's rebound in the crypto world sustainable. Indeed, this weekend brought yet another plunge to major cryptocurrencies, with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) dropping to $17,708 and $896, respectively. For Bitcoin, this was its lowest level since 2020, and for Ethereum, this was the token's lowest level since early 2021.

However, the story has changed as of 9:30 a.m. ET on Monday. Bitcoin and Ethereum have rebounded 5.5% and 8.7%, respectively, in the past 24 hours. These gains built on the upticks seen yesterday. At the time of writing, these tokens trade for around $20,500 and $1,130 apiece. 

Proof-of-stake blockchain Solana (CRYPTO: SOL) also experienced similar price action. Solana dropped as low as $26.06 this weekend. However, today's 11.4% 24-hour move (at 9:30 a.m. ET) along with some strong price action yesterday has this token trading above $35, matching its highest level in over two weeks earlier this morning. 

So what

The ongoing fallout from the implosion of Terra (CRYPTO: LUNA) and the more recent collapse of Celsius (CRYPTO: CEL) continue to provide significant headwinds for this sector. Whether algorithmic stablecoins are likely to be a thing of the past is up for debate. However, seeing a centralized exchange such as Celsius fall under the pressure of declining crypto prices is concerning for many investors.

One beacon of light which appears to be buoying top tokens such as Bitcoin, Ethereum, and Solana today is news that Celsius has put forward a recovery plan, and its community is rallying behind this project. This morning, CEL tokens reached their highest levels in more than a month, as investors bank on this recovery plan resulting in a resolution of claims in short order. Experts suggest that claims could be resolved within nine months, saving this exchange from liquidation.

Now what

Bitcoin, Ethereum, and Solana are among the most-traded and most-utilized tokens in the market. The significant declines these top tokens have seen in recent weeks have provided long-term investors with the ability to accumulate at much more attractive prices. We've seen some indication of mass retail buying of Bitcoin, for example, with a reported 13,000 new holders of a whole Bitcoin ("whole Bitcoiners") materializing over the past week. 

That said, it's also true that the downside pressure on the crypto sector from macro forces appears unrelenting. This has been the worst quarter ever for the crypto sector, which really says something, given the gravity of previous declines. Perhaps we're not out of the woods yet.

Indeed, concerns around the potential for a recession are pertinent. The Federal Reserve is hiking rates at its fastest rate in nearly two decades, and as more outsized rate hikes materialize, liquidity will continue to be drained from the system. For most cryptos, which have been the beneficiaries of the incredibly cheap liquidity that's been pumped into the market, this is a tough time to suggest the next bull run is right around the corner.

That said, 2022 will likely shape up to be a year where fortunes are made or lost. Depending on one's view on the sector (and time horizon), I think both are possible, given the volatility we've seen of late. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Chris MacDonald has positions in Ethereum and Solana. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin, Ethereum, and Solana. The Motley Fool Australia owns and has recommended Bitcoin, Ethereum, Solana and Terra. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. 

More on International Stock News

A man looking at his laptop and thinking.
International Stock News

Why Alphabet stock was sliding today

Let's take a look.

Read more »

A man looking at his laptop and thinking.
International Stock News

Nvidia's stock was down despite its amazing earnings. Here's what history says is coming next

Although it might seem to defy logic, it's not an uncommon phenomenon.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Nvidia share price slips despite 94% revenue growth

Q3 earnings beat expectations, but what about guidance?

Read more »

high, climbing, record high
International Stock News

Could the S&P 500 Index hit 6,500 by the end of 2025?

Could the index climb higher?

Read more »

a small child holds his chin with his head on the side in a serious thinking pose against a background of graphic question marks and a yellow lightbulb.
International Stock News

Is it too late to buy Nvidia shares?

Is Nvidia stock a buy ahead of its third-quarter earnings report tomorrow?

Read more »

a group of people stand examining a large glowing cystral ball held in the hands of one of the group members while the others regard it with various expressions of wonder, curiousity and scepticism.
International Stock News

Here's what to expect from Nvidia on November 20

Can Nvidia score another win?

Read more »

Two people lazing in deck chairs on a beautiful sandy beach through their hands up in the air.
International Stock News

2 no-brainer Warren Buffett stocks to buy right now

While replicating Buffett's success isn't possible, there are a handful of his investments that are no-brainer buys.

Read more »

A man with a beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.
International Stock News

3 reasons to buy Nvidia stock before November 20

This week marks a big moment for tech investors as perhaps the most anticipated earnings of the year will be…

Read more »