Bitcoin prices have been under pressure in 2022 after the collapse of algorithmic stablecoin terraUSD and subsequent bankruptcy filings from lender Celsius and hedge fund Three Arrows Capital.
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Bitcoin briefly topped $25,000 to hit its highest level in June before falling sharply as the cryptocurrency struggles to make any significant move higher.
The world’s largest digital coin popped above $25,000 late on Sunday for the first time since mid-June, according to CoinDesk data.
Bitcoin was trading at $24,178.52 at around 06:05 am ET on Monday, down more than 2% from 24 hours before.
Cryptocurrencies moved higher in the last month or so following a rise in US stocks. Digital currencies like bitcoin have been relatively correlated to the movement in stock markets, in particular the tech-heavy Nasdaq, which was itself up around 12% in the last month.
Investors have been getting more bullish after economic data showed inflation pressures could be easing a bit.
Bitcoin was up around 15% in the same period but it is still down around 48% year-to-date. It has been a rough few months for the crypto market, with trillions wiped off its value and bankruptcies and liquidity issues plaguing a number of players.
The cryptocurrency has been trading in a range since late June of around $20,000 to $24,000. While it has shown attempts to push higher, it has struggled to create a significant breakout. But there are now signs of a small rally.
“BTC continues to show signs of bullishness mainly due to higher highs and lows being formed,” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.
Bitcoin’s rise can also be attributed to a rally in alternative coins, or altcoins. Ether was up 56% in the last month, far outpacing the gains made by bitcoin.
That’s because investors are excited about a major long-awaited upgrade to the ethereum network that could improve the efficiency of transactions. Ether is the native cryptocurrency that runs on the ethereum blockchain.
The upgrade, known as the “merge,” ran its final dress rehearsal last week.
That rally in ether is also feeding through to bitcoin.
“We’re seeing BTC catch up with ETH, given the excitement over the merge, potentially scheduled for 15th September,” Ayyar said.