It has been a wild week for bitcoin with the largest cryptocurrency by market capitalization reaching multiple six-month highs before retreating suddenly late Thursday. However, it rallied again on Friday.
Bitcoin (BTC) was recently trading over $24,557, up almost 3.1% over the past 24 hours and off a weekly high early Thursday when BTC surpassed $25,000 for the first time since August.
The Thursday drop notwithstanding, bitcoin was still changing hands 13% higher than it was seven days ago.
Late Tuesday, investor optimism about a stablecoin crackdown and tepid Consumer Price Index (CPI) sent bitcoin, ether and most other cryptos soaring. In an interview with CoinDesk, Riyad Carey, research analyst at crypto data firm Kaiko, said that bitcoin’s upturn was “a bit of a euphoric rally that regulatory issues have cooled off temporarily.”
Earlier in the week, Darius Tabatabai, co-founder of Vertex Protocol, a London-based decentralized exchange, said that the rally was a result of investors looking for safety in more established coins like bitcoin and ether.
Bitcoin’s price plummeted more than $1,000 in a few hours after Federal Reserve officials made hawkish remarks, the SEC announced a lawsuit against a disgraced co-founder, and a disappointing wholesale prices report suggested that inflation remained stubbornly resilient. This suggests that BTC’s intermediate-term overbought conditions provide a headwind, with important resistance around $25,200 nearby.
Edward Moya, senior market analyst for foreign exchange market maker Oanda, noted in an email Friday that the market’s appetite for risky assets may be waning. “After Bitcoin tested the $25,000 level and failed to extend higher, many active traders locked in profits. This could support a Bitcoin consolidation as long as a regulatory crackdown does not take down a key stablecoin or crypto company.”
By Friday afternoon, investors seemed to have shaken off the latest discouraging news and were cautiously buying back into the market. Bitcoin, in particular, appeared to be finding support at the $25,000 level.
Oanda’s Moya believes that the larger outcome of the new U.S. crypto regulatory push won’t be apparent for a while, allowing markets to sort themselves out. In the meantime, the industry remains flush with interesting projects.
“There’s always a period when the regulators and lawmakers want to hear from the market that they’re going to impact,” Moya told CoinDesk in an interview. “But I haven’t seen anything that take away from this market from continuing to grow.”
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