Bitcoin climbed into positive territory after falling below $33,000 to a new low.
The No. 1 cryptocurrency and ether are sitting about 45% and 49% from their respective all-time highs.
The steep declines have been correlated to the selling seen in higher risk assets like technology stocks as investors prepare for higher interest rates and tighter monetary policy from the Federal Reserve.
Bitcoin bounced into positive territory Monday after initially continuing its slide from last week.
On Monday, bitcoin fell to $32,982.11, its lowest point since July, according to Coin Metrics, but the largest cryptocurrency by market cap was up 5.6% in afternoon trading, to $37,183.25, as broader equities reversed course and ended the day higher. Earlier in the session, the Dow fell as much as 1,115 points and the S&P 500 briefly fell into correction territory.
Ether plunged to as low as $2,176.41, its lowest since July, according to Coin Metrics. It last rose 1.1% to $2,444.85. Bitcoin and ether are about 45% and 49% off their respective all-time highs.
Cryptocurrencies have been moving in tandem with stocks, which have continued to fall since the beginning of the year and just came off of their worst week since March 2020. Investors have been selling risk assets like technology stocks, as they prepare for tighter monetary policy from the Federal Reserve.
“It’s possible that macroeconomic concerns, such as the Fed’s response to inflation rates, have facilitated more de-risking activity in general,” said Juthica Chou, head of OTC options trading at Kraken. “The recent price drop, coupled with high volatility, could be leading to further selling as participants look to reduce risk.”
Investors also are assessing the impact of further regulation on the cryptocurrency market. Last week, Russia’s central bank proposed banning the use and mining of cryptocurrencies.
Given current market sentiment, bitcoin is likely to test the $30,000-$32,000 range, according to Vijay Ayyar, Luno’s vice president of corporate development and international expansion. If the cryptocurrency holds above $30,000 for as long as one week, there could be a base formed at those levels before the market moves higher, he said. However, it could be some time for the market to turn bullish given the lack of confidence across the spectrum, he added.
Several other analysts have said they see $30,000 as the next level of support for the cryptocurrency to test. However, analyst John Roque of 22V Research said bitcoin could fall even further. He also has been using $30,000 as a target but noted the median historical bear market for bitcoin is down 78%.
CNBC
