Bitcoin Reclaims $31,000 Level After Weeks of Languishing

Bitcoin is continuing to advance and stabilize, rising above the $31,000 mark, after languishing over the weekend with the largest cryptocurrency gaining as much as 5.4% on Monday to $31,553.

Ether is advancing higher and up 5.6% with a number of altcoins also in the green: Solana, Avalanche, Cardano are all up 11% as market sentiment improves.

“Bitcoin’s fundamentals and technicals have both been improving over the last few days. Though it may still be premature, some of the more optimistic traders are already calling for a floor on this extended drawdown,” Mati Greenspan, founder of Quantum Economics, told Bloomberg on Monday.

The crypto market could also get a boost from U.S. consumer-price data later this week. If inflation is indeed coming down, there’s a good chance the Federal Reserve will ease up on market conditions, explains Greenspan.

Bitcoin has been trading around the $30,000 level for weeks now, defying predictions of a potential further decline but also struggling to gain upward momentum as the broader U.S. market has also taken a beating. Speculative assets such as technology stocks and cryptocurrencies are expected to be hit the hardest by the Fed’s plans to shrink its balance sheet, according to the latest MLIV Pulse survey.

“Bitcoin has stabilized over the past few weeks on improved short-term momentum,” Katie Stockton, co-founder of Fairlead Strategies, wrote in a note Friday. She said a short-term counter-trend buying signal was logged by Tom DeMark’s popular TD Sequential model for technical analysts, “increasing the probability of a more pronounced oversold bounce. We assume the 50-day moving average will provide resistance.”

Stablecoins are continuing to face scrutiny from global regulators following the collapse of the Terra/Luna ecosystem in May, which has further undermined confidence in the space; algorithmic stablecoin UST is trading at $0.016, according to data from CoinGecko, sinking even lower after losing its peg to the dollar.

On Friday, Japan became one of the first major economies to introduce a legal framework around stablecoins, following UST’s implosion. Stablecoins must be linked to the yen or another legal tender and guarantee holders the right to redeem them at face value, according to the new law.

Tanzeel Akhtar report for Bloomberg News.

Copyright 2022 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.