Bitcoin’s price rose on Sunday, after it snapped a six-day losing streak and avoided a drop below the key psychological level of $40,000 that some cryptocurrency analysts had warned might trigger a steeper sell-off.
As of press time, bitcoin (BTC) was changing hands at around $42,100, up 2% over the past 24 hours, based on CoinDesk pricing. The cryptocurrency had been on the verge of a seven-day losing streak that would have been its longest since 2018, but the price turned around on Saturday, eking out a small gain, and has stayed on an upward trajectory since.
The price hadn’t fallen below $40,000 since September, and is well off its all-time high of nearly $69,000 reached in November, and so there had been speculation that a drop below $40,000 might spur a deeper retrenchment.
“If the market has based at these levels, we might get that short squeeze we’ve been waiting so patiently for,” Singapore-based crypto trading firm QCP Capital wrote Sunday on its Telegram channel.
January tends to be a seasonally weak month for bitcoin, but this year has been especially harsh, with the largest cryptocurrency by market cap still down 9% so far in 2022.
The market was roiled last week by the release of Federal Reserve minutes signaling that officials at the U.S. central bank were starting to discuss whether to take more aggressive steps to tackle an inflation rate now at its highest in almost four decades.
Many investors say bitcoin has benefited in recent years from the Fed’s ultra-loose, emergency monetary policy since the coronavirus hit the economy – including printing more than $4 trillion to bolster ailing traditional markets.
So a reversal of those policies was seen as a fresh headwind for bitcoin.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.