The Price of Bitcoin Reverses Losses on Tuesday
The price of bitcoin bounced back on Tuesday, recovering from the previous day’s losses. The decline was driven by concerns surrounding FTX liquidations.
According to Coin Metrics, bitcoin is currently up 4.5% at $26,185.72. This follows a dip below the critical support level of $25,000 on Monday, which hadn’t been seen since March. The rebound may be due to investors who were betting against bitcoin rushing to cover their short positions, resulting in a short squeeze.
Investors have been selling their cryptocurrency ahead of a hearing scheduled for Wednesday. This hearing could allow liquidators to start selling the assets of FTX and its sister company, Alameda Research. Tokens native to the Solana and Polygon networks are among the company’s significant holdings. On Monday, these tokens experienced a 3% and 5% decrease, respectively. However, on Tuesday, they both showed a 2.5% increase.
Despite the recovery, there is still potential for disappointment. Katie Stockton from Fairlead Strategies suggests that weakened momentum in the medium term could hinder a sustainable bitcoin recovery. The next level to test on the upside is $27,600, which represents its 50-day moving average.
Aside from FTX liquidations, the cryptocurrency market has been lacking significant catalysts. Investors are eagerly awaiting clearer regulation, and attention has shifted back to concerns about inflation and economic factors. Stronger-than-expected data points last week renewed fears of a potential rate hike by the Federal Reserve before the end of the year.
This week, investors will be closely watching the August consumer price index and producer price index readings, which are scheduled for release on Wednesday and Thursday, respectively.
