Despite the 8% jump on Monday, investors are still on edge as the price of the digital currency teeters around the $20,000 mark.
At 03:20 a.m., the world's largestcryptocurrencies was worth $19,935.98. According to data from coin desk. In the last 24 hours, it rose as high as $20,000 and fell as low as $18,262.50.
The price of the virtual currency fell as low as $17,603.58.
ether was trading above $1,000 at 03:13 a.m. According to data from coin desk.
The rebound will be good for investors, but the price is still 70% below its all-time high hit last year.
Industry watchers said the rally might be short lived.
The vice president of corporate development and international at Luno told CNBC that the odds of a dead cat bounce are very low.
He said that a bounce was expected.
The collapse of terraUSD and associated token luna was the first of many issues in the broader market.
Users are turning to companies that promise high yields for deposits of digital coins. Last week, Celsius, a company with 1.7 million customers and nearly $12 billion ofcryptocurrencies under management, paused withdrawal of funds for customers, sparking concerns that it is bankrupt.
There have been layoffs in the market. Last week it was announced that it will cut 18% of full-time jobs. Last week, BlockFi said it will lay off a fifth of its staff.
Upcoming rate hikes from the U.S. Federal Reserve are weighing on the market.
The risks of a recession are high when inflation is on the doorstep and rate hikes are on the way, according to Charles Hayter, CEO of CryptoCompare.
People are bracing and paring back because of the higher rates, and digital assets are suffering.
A number of systemic issues have been uncovered by the pull back in the digital assetecosystem.
Some observers said that a bottom to the market could be close given the recent fall in prices.
Giles Keating told CNBC on Monday that a bottom can be formed if excess leverage is driven out of the system.
Investing in borrowed money to make trades is called leverage. Bigger exposure to positions with less initial capital can be given to investors. It requires investors to ensure they have enough capital to meet the margin requirements in order to trade that way. Their position is liquidated if they don't. Market moves are influenced by those liquidations.
Keating thinks the majority of the selling is done.
If we were to break significantly lower, there would be another wave of liquidations.
The risk is always there. I think that the double digit rebound in ether was a sign that a lot of the large liquidations are done and that the base is being formed.
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