Jakub Porzycki | Nurfoto | Getty Images
The price of bitcoin bounced back on Tuesday, reversing the previous day’s losses caused by fears surrounding FTX liquidations.
Bitcoin was last up 4.5% at $26,185.72, according to Coin Metrics. On Monday, Bitcoin fell below the key support level of $25,000 for the first time since March. The recovery could be fueled in part by investors betting against the crypto assets rushing to cover short positions, in other words, by a short squeeze.
Investors have been selling their crypto ahead of a hearing Wednesday in which administrators could be allowed to sell the assets of FTX and its sister company Alameda Research. The tokens that come from the Solana And Polygon networks are among some of the company’s largest holdings. On Monday they fell by 3% and 5% respectively. They were last up about 2.5% each on Tuesday.
However, there is still room for disappointment. Katie Stockton of Fairlead Strategies said weakened medium-term momentum could make it difficult for bitcoin to see a sustainable recovery. With Tuesday’s rebound, the cryptocurrency’s next level to test on the upside is $27,600, the 50-day moving average.
Beyond the FTX liquidations, the crypto market has struggled for meaningful catalysts of late as investors await clearer regulation and attention has shifted back to inflation and economic inputs – after a string of stronger-than-expected data points last week, renewed concerns that the Federal Reserve increase the interest rate one more time before the end of the year.
This week, investors will receive the consumer price index and the producer price index for August on Wednesday and Thursday respectively.