Bitcoin Recovers Above $40K After Dipping Earlier to 6-Week Low
Bitcoin is trading at about $40,100 after falling nearly to $38,200.
Bitcoin (BTC), after a big price swing over the past week, traded earlier Monday at its lowest point in almost six weeks.
As of press time the largest cryptocurrency by market capitalization was up 1.3% in the past 24 hours, trading at $40,127. Earlier, the bitcoin price fell as low as $38,202, the lowest since March 15.
- “Recent volatility has been driven by factors such as inflation, the Ukraine crisis [caused by Russia’s invasion] as well as contractionary monetary policies,” said Daniel Khoo, research analyst at Nansen. “This has affected not only the stock market but also the crypto market, which seems to follow in tandem recently.”
- Khoo said this fall in prices could be driven by the short-term negative sentiment as people go risk-off on volatile assets.
- “Many investors are also shifting towards [stablecoins] given the uncertainty and short-term bearish outlook as the market has become too hot and periods of extreme euphoria were followed by market corrections historically,” Khoo said.
- “The crypto markets tumbled this morning, as bitcoin failed to hold the $40K level,” wrote Marcus Sotiriou, analyst at the U.K.-based digital asset broker GlobalBlock. “Fears about a 50-basis point rate hike have strengthened after Federal Reserve Chairman Jerome Powell’s comments last Thursday.”
- Powell said Thursday that “it is appropriate, in my view, to be moving a little more quickly.” He said raising the benchmark U.S. interest rate by 50 basis points (0.5 percentage point) “will be on the table” for the next Federal Open Markets Committee (FOMC) meeting in May, in remarks at the International Monetary Fund debate.
- “Even though we have a more hawkish Federal Reserve which could lead to more pain for global markets in the short term,” said Sotiriou, “I am still cautiously bullish.”
- “Bitcoin’s on-chain metrics are contrastingly bullish,” wrote Sotiriou. “Data from Glassnode shows that the percentage of bitcoin’s supply that has not moved in one year is at an all-time high. I think this data tells us that whilst these macro headwinds are ongoing, bitcoin is being distributed from those who see it as a risk-on asset, to long-term holders who have strong conviction in bitcoin’s long-term potential.”
- Ether (ETH) was up 0.87% in the past 24 hours, trading at $2,972.
- U.S. stocks were mixed as China’s COVID-19 restrictions stiffened, with the S&P 500 down 0.7% and the Nasdaq up 0.2%.
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