Bitcoin climbed higher on Tuesday after a slew of negative headlines pushed the cryptocurrency to a fresh 2022 low over the weekend.
Bitcoin price jumped more than 7% to $21,617.70 around 10:50 a.m. ET, according to Coin Metrics. Over the weekend, it fell to $17,958.05. This is the lowest since December 2020.
Meanwhile, Ether rose more than 7% to hit $1,185.17.
The moves come on the heels of bearish headlines for the cryptocurrency industry that began under pressure from macro forces. Wholesale prices rose at a near-record annual rate last week and the Federal Reserve raised its benchmark interest rate by three-quarters of a percentage point, the biggest increase since 1994.
Cryptocurrency companies including Coinbase and BlockFi are laying off employees. Crypto lenders, who promise users high returns for depositing their digital coins, have sparked insolvency fears.
As in the stock market, investors are moving slightly around bear market rallies, with some anticipating that cryptocurrencies could fall even further before seeing a meaningful rebound.
“Bitcoin’s weekend decline was, to put it simply, not deep enough,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. “The macro environment hasn’t really changed since last week’s FOMC meeting: there’s still no clear sign of lower inflation and the Fed could still drag the economy into recession by raising rates too aggressively or simply not controlling inflation.”
Marcus Sotiriou, an analyst at GlobalBlock, a UK-based digital asset broker, said bitcoin was facing resistance at the $21,300 level. If the cryptocurrency can overcome this, he said, it could reach the next target of $23,500 as its short sellers are squeezed. A “short squeeze” occurs when the price of a heavily shorted asset begins to rise and short sellers are forced to buy more of the asset to cover their positions.