(Bloomberg) — Crypto markets were calm on Tuesday as investors boosted hopes that FTX’s losses could remain somewhat contained.
The largest token, bitcoin, rose 4.4% to $17,102, while the second-ranked ether rose as much as 5%. Smaller cryptocurrencies, known as altcoins such as Solana and Polkadot, also advanced for a second day.
The modest gains will provide much-needed relief after the recent downturn. Bitcoin fell to its lowest price since November 2020 last week as crypto exchange FTX discouraged investors.
Investors have been wary of Sam Bankman-Fried’s digital empire since it filed for Chapter 11 bankruptcy protection on Friday. Even so, major crypto-related entities have not seen similar results since then, adding to optimism that the decline may be more muted than once feared.
“It looks pretty bad, but we’ve seen a lot of smoke but we haven’t seen a lot of fire yet,” said Ilan Solot, co-head of digital assets at Marks Solutions. “It gives a little sense of calm.”
Cryptocurrencies rose along with broader markets, while gains in the technology sector lifted US stocks. The S&P 500 rose as much as 1.8 percent after the producer price index confirmed a slowdown.
Fairlead Strategies’ Will Tamplin said the crypto stabilization comes after last week’s oversold conditions.
According to Solot, bitcoin futures will slide below the spot price. Those conditions could be the result of “speculative shorts” or “proxy hedges,” he wrote in a note.
Despite the gains, Bitcoin’s price has fallen about 18% in the past week, and the token has fallen above $17,000 over the past several trading days.
“Loss deficits have led to short-term distortions in the spreads market and hurt liquidity,” Arcan Bendik Shay and Vettel Lundde wrote in their note. “We believe this will result in long tailwinds related to pollution, regulation and institutional availability.”
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