Bitcoin (BTC) tops $22,000, ethereum jumps as crypto market rallies

Bitcoin bounced above $22,000 on Monday, hitting its highest level in more than a month as the cryptocurrency market held out hope that the contagion and shakeout of recent weeks is coming to an end.

The world’s largest cryptocurrency ended Monday at $21,610.59, up 2.76%, according to CoinMetrics. Bitcoin hit a high of $22,757.36, its highest level since June 16.

Other cryptocurrencies also bounced, too ether up 8.94% to $1,466 by the end of the day Monday.

The bullish sentiment was helped by a rally in European and Asian stock markets. US stock futures were also higher. Cryptocurrencies, particularly bitcoin, have been closely correlated with stock trading. Often, a rise in shares will also lift sentiment in the crypto market.

But investors are also watching whether the carnage of recent weeks, which has seen bitcoin close to 70% of its all-time high hit in November and billions of dollars wiped out of the market, may be over.

The price crash has led to the downfall of several high-profile companies in the area, notably hedge fund Three Arrows Capital and crypto lender Celsius, both of which have filed for bankruptcy.

These collapses have caused contagion across the industry and seen other affiliates come under pressure.

Much of this has been caused by the massive amounts of leverage and borrowing that have taken place in this last crypto cycle. Three Arrows Capital, for example, took out loans it was unable to repay when the crypto collapse took place. Celsius, which offered customers a return of over 18% for depositing digital coins, took on high-risk trading activities to earn interest in trying to give back to users.

Crypto companies have been selling off what assets they have to try to meet their liabilities, putting pressure on the broader market.

Analysts say there are signs that this contagion may be slowing.

“The worst of the market contagion has likely run its course, with the majority of forced selling behind us,” David Moreno, research analyst at CryptoCompare, wrote in a research note.

Despite the rally, the crypto market is still suffering. Both bitcoin and ether are down more than 50% this year. Bitcoin had its worst quarter in more than a decade in the second quarter.

Analysts remain unconvinced of any significant upward growth in the near term.

“Given the severely negative performance in Q2, it is not surprising that a ‘relief’ has occurred. We believe the market will remain range-bound over the coming months,” Moreno said.