Bitcoin had a bad week: falling below $40,000 (£29,162) on Tuesday, before rallying through Thursday and Friday, but still notching up losses of 6.5% over five days.
Sentiment turned sour for all risk assets on Monday as China came into deep focus. Property group Evergrande was feared to be close to collapse and likely to default on bond payments, while geopolitical sabre rattling followed the announcement of a pact between the US, UK and Australia.
On Monday, bitcoin (BTC) started the week at $47,239, but lost 9.2% on that day alone as the concerns over Evergrande deepened. Further losses on Tuesday took the price to a six-week low of $39,647, but analysts noted that its recovery back above $40,000 on the same day showed that a significant support level remained intact.
Shaky start hits confidence
While the week’s losses were not recovered, a rally through Wednesday and Thursday helped restore some confidence in the crypto market.
Jeremy Ong at Delphi Digital said: “The wider crypto market seems to be experiencing some relief on the back of receding volatility expectations following the market sell-off earlier this week.”
He added: “Chinese authorities appear to be preparing for a worst-case scenario in which Evergrande collapses. With this in mind, the relief rally across global markets could be partly driven by a perceived higher probability of government intervention to manage and mitigate its potential spillover effects.”
On Friday, BTC was up 1.6% at $44,950, leading a broadly flat cryptocurrency market as ether (ETH), the number two crypto by market capitalisation, slipped 1.3% to $3,104.