Bitcoin Prices Bounce Back After Falling To 6-Month Low

Bitcoin prices have recovered over the last several hours, climbing more than 13% since declining to their lowest since July.

The world’s most valuable digital currency by market value rose to $37,500 this afternoon, CoinDesk figures show.

It appreciated to this point after dropping to as little as $32,983.59 this morning, additional CoinDesk data reveals.

The digital currency has been having a rough several months, losing more than 50% of its value since approaching $69,000 last year.

Bitcoin declined over the weekend, and then the digital currency extended those losses today, causing it to reach its lowest since July 23.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Key Role Of Policy

When explaining these latest price movements, more than one analyst pointed to the anticipation of tighter Federal Reserve policy and increasingly stringent crypto regulations.

In December, the Federal Open Market Committee announced that it would reduce its monthly asset purchases, starting in January.

That same month, the policy makers of the central bank projected that they would increase benchmark rates a total of three times this year.

Late last week, Bloomberg reported, citing unnamed sources, that the Biden administration is working on an executive order that would create a comprehensive strategy for U.S. federal government agencies.

In the past, these government entities have taken a disorganized approach to regulating the crypto and blockchain space, failing to provide industry participants with a clear set of rules.

Charlie Silver, CEO & Chairman of Permission.io, spoke to this situation, stating that “The anticipation of Fed and White House moves, unfortunately, weigh heavily on the market.”

Mark Elenowitz, president of FinTech firm Horizon, also weighed in.

He stated that today’s sell-off was the “result of expected rate increases by the Federal Reserve and uncertainty of regulation around the space in certain countries.”

Elenowitz described it as “having a major impact not just on crypto but equities in general.”

“A lot of the selling appears to have already happened, which suggests that the markets are already pricing in expected tightening by central bankers.”

Key Technical Levels

After outlining these major drivers of bitcoin’s latest price movements, several market observers shed some light on crucial levels of support and resistance.

Multiple technical analysts identified support close to $30,000.

Julius de Kempenaer, senior technical analyst at StockCharts.com, spoke to “the major support level near 30k,” describing it as “a very important support level as it represents the cluster of lows that was set in the summer of 2021.”

Elenowitz also chimed in, stating that “It looks as though the price for support for Bitcoin is around $31,000 or so.”

John Iadeluca, founder & CEO of multi-strategy fund Banz Capital, offered his point of view on the matter.

“There’s a substantial support level that has newly formed at $33,000 alongside a large amount of buying pressure that has culminated throughout the course of today’s market,” he stated.

The analyst next outlined the digital currency’s key resistance.

“The next level of resistance seems to have formed, from a high-level perspective, at $40,000, with a smaller, but more precise sell-wall having established new resistance at the $37,500 price level.”

De Kempenaer also weighed in.

“There is a bit of resistance around 37.5k and more importantly around 40k, the old support level,” he stated.

“Watching 30k like a hawk, it will have major implications either as a trigger for even more acceleration lower in case it breaks or as the floor for the market to stabilize if it holds,” said de Kempenaer.

“Either way it will take time before BTC will enter a clear uptrend again.”

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.