Bitcoin is heading for its best week since October as the crypto collapse stabilizes

In October, the price of Bitcoin broke the threshold of $66,895 for the first time in history.

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The price of Bitcoin eased a bit this week as investors hoped the worst of the crypto-liquidity crisis was over.

By Friday, bitcoin was up 13.63% in the seven-day trading week that began Sunday, marking its best week since October, according to Coin Metrics. At one point, the price rose to $22,478.37, down from a low of around $17,000 in June.

It last traded less than 1% higher on the day at $21,798.40 at 4:00 PM ET, according to CoinMetrics.

“Many insolvencies and liquidations in terms of volume are behind us,” said Felix Hartmann, managing partner of Hartmann Capital. “Three Arrows filing for bankruptcy was the final straw in that.”

Three Arrows, a crypto-focused hedge fund, filed for bankruptcy last week after a sharp drop in digital currency prices revealed a liquidity crisis at the firm.

Market contagion may spread to smaller crypto exchanges or funds, Hartmann added, but a bigger and more spectacular domino has yet to fall. According to him, if the crypto industry can survive a month without bad news or bankruptcy, it is “very likely” that this market could double.

However, this would only push Bitcoin’s value back to April’s level. It is now about 70% below its November all-time high of $68,982.20.

Looking for stability

Grit Trakulhun, lead crypto analyst at Titan, called bitcoin’s weekly rally “much-needed” short-term relief after the massive capitulation in May when the Terra stablecoin project collapsed. Indeed, when digital currency prices fell and reduced liquidity, crypto lenders and other firms also suffered.

Traculhoon added that having an unofficial lender of last resort, such as Sam Bankman-Fried, to bail out some struggling crypto lenders also helps investors. FTX’s CEO said this week that he and his company still have “several billions” to prop up struggling firms, which could further destabilize the digital asset industry.

Traculhoun said $22,500 to $23,000 is a resistance level to watch for bitcoin. If it crosses that threshold, it should rise “quite quickly” to the next stop: $28,000, he added.

Ryan Shea, an economist at Trakx, noted this week’s news that Federal Reserve officials said another interest rate hike of 50 or 75 basis points is likely at their July meeting. That, combined with growing signs that the U.S. economy is slowing more markedly than policymakers had expected, has investors viewing the Fed’s aggressive stance “with more caution,” he said.

“Essentially, they are considering a hike and are instead focused on waiting for the Fed to finally capitulate, which is a positive scenario for crypto prices and risk assets in general,” Shi said.

Bitcoin is heading for its best week since October as the crypto collapse stabilizes

Source link Bitcoin is heading for its best week since October as the crypto collapse stabilizes

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