On Monday, the largest digital asset rose as much as 3.4% during the session to trade around $58,266. Other so-called alternative coins such as Polkadot and Dogecoin also showed gains.

Friday's brutal sell-off saw investors flee a number of riskier assets, including cryptocurrencies, with Bitcoin posting its worst day in about two months. This came amid the announcement of a new coronavirus variant named omicron, which has been discovered in southern Africa and which experts are now trying to understand. This decline saw Bitcoin fall 20% below the record high reached earlier in November. For many strategists, this is an indication of the coin's tendency to closely track the movements of the broader stock market.

"It highlights that Bitcoin is a risk-on/risk-off asset," said Matt Maley, chief market strategist for Miller Tabak + Co.

Bitcoin has been under pressure since hitting a high of around $69,000 per coin on November 10 on enthusiasm over the first US exchange-traded fund linked to futures on the digital asset. However, a multitude of factors has weighed on returns since then, including increased regulatory risks and the fact that many tokens have grown very quickly in a short period of time. Maley says Bitcoin's recent moves also show that if the Federal Reserve withdraws its stimulus more aggressively next year, the cryptocurrency could become vulnerable.

Fiona Cincotta, the senior financial markets analyst at City Index, says Bitcoin does tend to act like a riskier asset that tracks moves in the stock market. However, there are times when that relationship isn't as strong, for instance, when hotter-than-expected inflationary prints come through, Bitcoin can hold up well during those periods.

"So there are times when I think Bitcoin does act as a riskier asset and it traces the stock market higher, but there are times as well when that's not necessarily the case. It does have other contributing factors which drive it," she said.

Worried traders are again turning to technicals for clues as to where certain cryptocurrencies could head next. On Sunday, Bitcoin rebounded from its 100-day moving average, an intermediate-term trendline. Meanwhile, Ethereum rose from its 50-day moving average on Monday, which many chart watchers see as bullish development.

Peter Tchir, head of macro strategy at Academy Securities Inc., says he was surprised by Bitcoin's Friday selloff based on the coronavirus news. He believes it seems there is a group of aggressive risk-takers who own crypto and likely also own some high-flying tech stocks.

"They could be forced to sell one or the other if they move in tandem. Bitcoin going up relieves that pressure. Now that we've had what seemed like a likely rally - everyone dismissing omicron fears - we can see if it lasts," he added.