By Rae Wee, Tom Westbrook, Amanda Cooper and Gertrude Chavez-Dreyfuss
SINGAPORE/LONDON/NEW YORK, Feb 6 (Reuters) – Bitcoin climbed back above $70,000 on Friday, after sinking to a 16‑month low earlier, lifted by a sharp rebound in technology shares and precious metals following a global rout that had hammered a broad swathe of risk assets.
The world’s largest cryptocurrency was last up nearly 11% at $70,042 , as it rose to a high of $71,464.96, recouping losses after having slid to a low of $60,017.60 earlier on. Bitcoin was on track for its largest one-day gain since March 2023, but was down roughly 9% so far this week.
“It feels like a day of consolidation for risk assets that have been under pressure this week,” said Shaun Osborne, chief currency strategist, at Scotiabank in Toronto.
The digital currency market has struggled for months since a record crash last October sent bitcoin tumbling from an all-time peak and investor sentiment toward these assets has cooled.
Friday’s low was its weakest level since early October 2024. That was just before bitcoin’s rally accelerated as Donald Trump closed in on winning the U.S. presidential election, having signalled his intention to support crypto on the campaign trail.
Market participants, however, were leery about Friday’s recovery.
The options market showed that investors are anticipating further losses in bitcoin, as demand for downside protection increased. Data from Derive.xyz, a decentralized options platform, showed a significant build-up of put open interest in bitcoin, or expectations that the price will fall further.
Traders focused on the $60,000 to $50,000 strikes for the February 27 expiry. Those bets suggested that investors are wagering that bitcoin will end up near or at those levels by that date.
“It’s a one-way market. Demand for downside protection is extreme,” said Sean Dawson, head of research at Derive.xyz. “While longer-term fundamentals for bitcoin remain intact, the options market is clearly signalling that this aggressive grind lower may persist in the near-term.”
Ether was last up 10.7% at $2,045, having similarly slid close to a 10-month low of $1,753.98 earlier in the session. The second-largest cryptocurrency was on pace for its largest daily gain since October last year. On the week, however, it was still down more than 10%.
STILL $2 TRILLION LOST SINCE OCTOBER
Still, the global crypto market had lost some $2 trillion in value since hitting a peak of $4.379 trillion in early October even with Friday’s bounce-back, CoinGecko data showed, with more than $1 trillion wiped out over the past month alone.
Sentiment towards crypto had been affected by the latest sell-off in precious metals and stocks. Gold and silver, for instance, have caught the market’s attention due to their extreme volatility as a result of leveraged buying and speculative flows.
On Friday, both gold and silver regained their footing, with silver up 8.3%, while gold rose about 4%.
Bitcoin’s fortunes have also been tied to the broader tech sector for some time. The price tended to rise, particularly on the back of investor enthusiasm over artificial intelligence.
The S&P 500 and the Nasdaq snapped three straight losing sessions, while the Dow briefly scaled a peak as some bargain-hunters stepped in to buy the dip. Chip stocks, caught in the crosshairs of the tech selloff, were the main drivers of the day’s rally.
“Bitcoin drifting back toward $60,000 is not crypto dying, it is the bill coming due for Treasuries and funds that treated bitcoin as a one-way asset without real risk controls, just as we have seen sharp corrections in self-proclaimed safe-haven assets like gold and silver when leverage and narrative ran ahead of reality,” said Joshua Chu, co-chair of the Hong Kong Web3 Association.
“Those who bet too big, borrowed too much or assumed prices only go up are now finding out the hard way what real market volatility and risk management look like.”
Analysts from Deutsche Bank said in a note that U.S. spot bitcoin ETFs witnessed outflows of more than $3 billion in January, following outflows of about $2 billion and $7 billion in December and November, respectively.
“February is not panning out well for stock market bulls so far, we shall have to see if bitcoin’s recovery above $65,000 is a sign that a deeper recovery is on the cards,” XTB research director Kathleen Brooks said.
(Reporting by Rae Wee and Tom Westbrook in Singapore, Amanda Cooper in London and Gertrude Chavez-Dreyfuss in New York; Editing by Jacqueline Wong, Michael Perry, Susan Fenton and Diane Craft)
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