Bitcoin rises slightly as crypto and other risk assets look to rebound from sell-off

Cryptocurrencies on Tuesday recovered some of the previous day’s losses after bitcoin briefly fell under $50,000 for the first time in six months.

The price of the flagship cryptocurrency was last higher by 3.5% at $55,051.74, according to Coin Metrics. Ether, rose more than 2% to $2,457.73.

Markets broadly bounced early Tuesday, including stocks tied to the price of bitcoin. Coinbase, MicroStrategy and mining companies Marathon Digital and Riot Platforms all added about 2% each in premarket trading.

The sell-off took place as crypto traders were caught in a storm of carry traders unwinding their positions, heightened concerns about a U.S. economic recession, escalating tensions in the Middle East and increasing uncertainty about the outcome of the U.S. presidential election.

For much of the day, bitcoin was under the $55,000 floor that has supported it for most of this year as it struggles to reclaim its March highs. Investors say the case for holding on to bitcoin over a long term and its setup for the remainder of the year is unchanged. While it may have been painful, it’s a buying opportunity, said Matt Hougan, chief investment officer of Bitwise Asset Management.

“We have a global capital market sell-off that impacted the crypto market on a low liquidity weekend, but nothing has changed fundamentally about bitcoin or about crypto except that we’re closer to the Fed lowering rates, we’re closer to quantitative easing,” he told CNBC. “I see that as more of a catalyst than a headwind.”

Bitcoin and ether are down 16% and 25%, respectively, for August. For the year, they’re up 29% and 7%, respectively.