Bitcoin rebounds above $20,000 despite intensifying systemic woes – Cryptocurrency News
- Stefanos Oikonomidis
European stock markets are in the green today, building on solid momentum as they also closed higher on Monday, capitalizing on mild risk-on sentiment triggered by Wall Street’s rebound on Friday. Moreover, US stock futures are in the positive region today, with markets eyeing the release of the Fed’s latest meeting minutes on Wednesday for clues as to whether the Bank will proceed with a softer monetary tightening on signs that inflation in the US is peaking. This latest relief rally in equity space has spilled over to crypto markets, dragging most cryptocurrencies higher despite the plethora of bearish crypto headlines.
Another potential reason why Bitcoin recouped some losses could be the tweet from the CEO of Binance regarding news that the Bank for International Statements (BIS) would allow commercial and investment banks to keep 1% of their reserves in Bitcoin. Thus, should banks start accumulating Bitcoin that would account for 1% of their total reserves, this would amount to trillions of dollars being invested in Bitcoin, propelling its price a lot higher than the current levels.Systemic risks mount adding to an already bearish macro environment
Bitcoin’s year-to-date decline is largely attributed to the ongoing monetary tightening alongside global fears over inflation and growth slowdown. However, the downfall has been exacerbated by regulatory woes, idiosyncratic risks of the digital asset universe and operational crackdowns among crypto financial service providers. On Monday, a Singaporean crypto lender called Vauld paused withdrawals, trading and deposits on its platform, citing extremely volatile market conditions.
Furthermore, the cryptocurrency hedge fund Three Arrows Capital fell into liquidation after defaulting on a more than $660 million loan from Voyager Digital. On a similar note, Meta, the parent company of Facebook, announced that it will shut down its digital wallet Novi in September 2022, terminating the project in its pilot stage due to the recent mayhem in cryptocurrency markets. The ongoing market crash has been continuously exposing flaws and failures in several cryptocurrency projects and business models, delivering significant blows to the trustworthiness of the broader crypto space.Technical picture remains intact
Although Bitcoin's price managed to recover from its fresh 18-month low of $17,588 and jump above the $20,000 mark, it remains below the 200-week simple moving average (SMA), which is essentially the bottom of all its previous bear market cycles.
If negative momentum strengthens, the 2022 low of $17,588 may act as the first line of defense. Sliding beneath this crucial support, the price would descend to form fresh multi-year lows, where the next significant barrier could be found at the August 2020 resistance of $12,500.On the flipside, bullish actions might encounter initial resistance at the 200-week SMA, currently at $22,459. An upside violation of the latter may pave the way for the $28,737 level, which is the 61.8% Fibonacci retracement of the 3,850-68,999 upleg.
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