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Bitcoin was heading for its biggest monthly decline since losing in May

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Still, it has forecast a 65% increase since the start of the year, well ahead of stocks and commodities

Author of the article:

Bloomberg news

Sunil Jagtiani

Bitcoin's wobble this month has reduced its year-to-date increase to about 65 percent, still ahead of traditional assets like global stocks and commodities. Bitcoin’s wobble this month has reduced its year-to-date increase to about 65 percent, still ahead of traditional assets like global stocks and commodities. Photo by Andrey Rudakov / Bloomberg

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Bitcoin climbed after a steep drop in troubled year-end trading, but it’s still on track for the biggest monthly drop since the May cryptocurrency rout.

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The volatile token traded 0.6 percent at 47,835.46 at 10:21 a.m. in London on Wednesday, after falling nearly 7 percent on Tuesday. It’s down about 16 percent this month, while the broader crypto universe lost about $ 260 billion in market value over the reporting period, according to tracker CoinGecko.

Demand for the most speculative assets subsided towards the end of 2021, in part because the Federal Reserve is withdrawing the extraordinary incentives that helped raise a multitude of assets this year. Some analysts say the pullback will be brief.

“I suspect that year-end book squareing into thin market conditions exaggerated the margin,” said Jeffrey Halley, a senior market analyst at OANDA. “There is nothing to suggest that the latest $ 45,000 to $ 52,000 Bitcoin is under threat.”

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Strategists are keeping an eye on key technical levels for clues about Bitcoin’s outlook.

Katie Stockton, founder and managing partner of Fairlead Strategies, an independent research firm focused on technical analysis, said Bitcoin’s next level of support is around $ 44,200 based on a Fibonacci retracement.

The token wobble this month has reduced its year-to-date increase to about 65 percent, still ahead of traditional assets like global stocks and commodities.

Crypto converts expect the Bitcoin bull market to return in time, bringing the digital asset back to the record high of nearly $ 69,000 last month. Their arguments include the controversial idea that the token offers protection against inflation.

“The arc of history is long,” said Graham Jenkin, chief executive officer of the CoinList crypto exchange, on Bloomberg Television. “Over time, Bitcoin will be a pretty superior asset to invest in.”

It could be that a decline in trading volumes during the Christmas holiday will worsen price action.

“I’m going to upset something though and classify this as low-volume Christmas funk,” said Mati Greenspan, founder of market research, advisory and wealth management company Quantum Economics, referring to recent performance.

Bloomberg.com

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