Bitcoin’s Price Breaks Above for the First Time in Weeks

Bitcoin rose more than 8% over the last seven days, breaking above $31,000 over the weekend. It’s trading near $32,00 Tuesday, a significant increase since hitting a six-month low earlier this month.

This is the first time bitcoin has broken above the $31,000 mark since early May. Its price has been hovering near or below $30,000 over the last few weeks as stock and crypto markets struggled to recover from multiple weeks of declines.

 

“Bitcoin finally sees relief as institutions buy the dip,” Sotiriou said in a note Tuesday. “I think this is further evidence that whilst the current macro headwinds exist, Bitcoin’s supply is being transferred from weak hands to those with long-term conviction.”

Data from the crypto research firm CoinShares shows that crypto funds saw inflows of $87 million last week after the previous week saw outflows of $141 million. Positive year-to-date inflows is “promising when taking into consideration the negative price action we have seen over the past seven months,” according to Marcus Sotiriou, analyst at digital asset broker GlobalBlock. Sotiriou says the majority of inflows were dominated by Bitcoin since it is the most popular crypto investment for institutions.bixem.com

 

Several factors — such as rising inflation, geopolitical crises, and shifting U.S. monetary policy —  continue to drive extra short-term volatility to the crypto and stock markets. The crypto market has increasingly tracked the stock market in recent months, which makes it even more intertwined with global economic factors.

The Fed raised interest rates in May by 0.50%, the largest move since 2000, in an effort to combat inflation. The Fed also detailed plans on unwinding its nearly $9 trillion balance sheet starting in June. The April consumer price index,dhaka which measures changes in the cost of food, housing, gasoline, utilities, and other goods, remained at 8.3% from a year ago. The war in Ukraine also continues to contribute to increased market volatility.

TerraUSD (UST), one of the largest stablecoins, also likely played a part in Bitcoin’s crash earlier this month, according to some experts. Stablecoins are intended to bring stability to the crypto markets and should hold as close to the U.S. dollar as possible, but UST sank below 12 cents as investors panicked and sold off their coins. Last week, Terra relaunched a new version of its failed luna cryptocurrency, but not UST.

 

Bitcoin’s price has been between $28,000 and $31,000 so far this week. Here’s how Bitcoin’s current price compares to its daily high point over the past few months:

Bitcoin’s high point of the year so far remains in the earliest days of January, when it nearly hit $48,000 on Jan. 2. So far, it has stayed above its late January low point below $34,000, which was the lowest it had been in the previous 6 months. Bitcoin has lost 40% of its value since it’s Nov. 10 all-time high above $68,000. While Bitcoin’s price has seen multiple big drops since November, its new highs in 2021 and current price are still an impressive feat considering its humble beginnings and a price below $10,000 as recently as July 2020. Ethereum — the next most popular crypto — notched another new all-time high of its own when it went above $4,800 in November.

The volatility highlights a durable truth for Bitcoin: it is still a highly volatile and speculative investment. In fact, the last time the original cryptocurrency set a record high in mid-April, it abruptly lost over half of its value and plunged to around $30,000 by mid-July. Similarly, Bitcoin dropped back below $35,000 this month not long after its most recent November high.bangladesh