Bitcoin Rebounds 15% As Risk Appetite Bounces Back

Bitcoin has been crushed at times over the last week, but the improvement markets have seen in risk appetite has given it a big boost. It is now recovering around 15% from yesterday’s lows and is up more than 2% today.

Bitcoin is the ultimate risk asset, and if sentiment remains positive, it may not be long until it recaptures $40,000 and traders will be discussing $45,500 again.

Yesterday was a strange day. The S&P 500 went straight down to 4,115 well below support at 4,180 I mentioned on Wednesday, and then went straight back up 4,295. Stock markets in Europe are rebounding strongly Friday, just one day after plunging on the back of Russia’s invasion of Ukraine.

It’s a remarkable turnaround when traders and investors consider that the invasion is still taking place and sanctions are being drawn up. There is still huge uncertainty around how bad the situation will get, given how quickly it has escalated over the last few days, which makes the shift in risk appetite all the more surprising.

With oil trading back below $100 a barrel and gas prices falling after yesterday’s surge, it would appear traders are anticipating minimal disruption to Russian exports, either directly as a result of the invasion or from sanctions imposed. The latter is understandable as the proposed measures so far have underwhelmed, to say the least.

Considering how rapidly this has evolved and how volatile the markets have been for weeks, I wouldn’t be surprised to see sentiment continue to bounce back and forth. There’s nothing stable about this situation and that will likely continue to be reflected in the markets.