Bitcoin experienced a bounce on Tuesday, offsetting the previous day’s losses that were primarily driven by concerns surrounding FTX liquidations. According to Coin Metrics, Bitcoin’s price rose by 4.5% to reach $26,185.72. Interestingly, on Monday, Bitcoin dipped below the crucial support level of $25,000 for the first time since March. The subsequent rebound may have been fueled, in part, by investors rushing to cover their short positions, resulting in a short squeeze.
Investors have been selling their cryptocurrencies in anticipation of an upcoming hearing scheduled on Wednesday. This hearing may grant liquidators the authority to initiate the sale of FTX and its sister company Alameda Research’s assets. FTX’s largest holdings include tokens native to the Solana and Polygon networks, which experienced respective falls of 3% and 5% on Monday. However, on Tuesday, both tokens showed signs of recovery, with a 2.5% increase each.
Despite the recent bounce, there is still room for disappointment in Bitcoin’s price movements. Katie Stockton from Fairlead Strategies highlights the weakened momentum in the intermediate term, which could pose challenges for Bitcoin’s durable recovery. As the cryptocurrency aims to regain its footing, its next significant resistance level to overcome is the 50-day moving average at $27,600.
Apart from the FTX liquidations, the overall cryptocurrency market has struggled to find meaningful catalysts in recent times. Investors are eagerly awaiting clearer regulations and have redirected their attention to concerns about inflation and economic factors. Last week, several stronger-than-expected data points renewed worries that the Federal Reserve may raise interest rates before the year ends. This shift in focus has somewhat overshadowed the crypto market.
This week, investors are particularly interested in the release of the August consumer price index (CPI) and producer price index (PPI) readings. The CPI will be unveiled on Wednesday, followed by the PPI on Thursday. These economic indicators play a crucial role in shaping market sentiment and may have an impact on Bitcoin’s future movements.
Bitcoin’s price experienced a rebound amidst concerns over FTX liquidations. However, there are potential obstacles to the cryptocurrency’s sustained recovery. The overall crypto market has faced challenges in finding catalysts, as attention has shifted to regulatory uncertainties and traditional economic factors. Investors eagerly await key economic data releases this week, which may provide further clarity on market conditions and influence Bitcoin’s future performance.