Bitcoin price hovers below $22,000 as regulatory scrutiny weighs
Bitcoin
and other cryptocurrencies edged higher on Tuesday but remained below recent levels as regulatory uncertainty and looming economic data weighed on prices. Cryptos are likely to make their next move after the latest release on consumer grade inflation.
The price of Bitcoin has risen 1% over the past 24 hours to near $21,850, still below the zone around $23,000 that had marked the digital asset’s biggest trading range for weeks until a selloff last week. Bitcoin is now at its lowest level since mid-January after paring gains from a rally that had seen prices jump 40% since the start of the year.
New regulatory uncertainties have emerged as the latest threat to crypto, with the Securities and Exchange Commission targeting several crypto exchanges and companies across the industry. Products and services in the digital asset ecosystem — including stakes, which are essential to the Ethereum blockchain, and stablecoins tied to the dollar — have been scrutinized and appear vulnerable.
“Crypto is weakening as all traders worry about how devastating this SEC wave will be with the breakdown of staking products and stablecoins,” said Edward Moya, analyst at broker Oanda. “The news flow has been quite bearish for crypto and you can’t forget that [Tuesday’s] inflation report that can be hot and create problems for risky assets.”
Traders grapple with ongoing regulatory developments as a key macroeconomic catalyst looms, with the January CPI due at 8:30 a.m. ET. A tough macro backdrop of high inflation and rising interest rates has made crypto and stocks closely correlated, with Bitcoin poised to move alongside
Dow Jones Industrial Average
and
S&P 500
after the inflation statement.
Advertisement – Scroll to continue
Investors want to see inflation continue to trend downward, easing pressure from the Federal Reserve as the central bank battles the hottest rate hikes in decades. The Fed aggressively tightened financial conditions over the past year in an effort to curb inflation, which was the driving force behind the 2022 market sell-off.
“Bitcoin is still above the $20,000 level. It may be difficult for buyers to emerge until we see how Wall Street reacts with [Tuesday’s] inflation data,” said Oandas Moya. “If inflation comes hot, Bitcoin could break the key $20,000 level and target the $18,500 region.”
Beyond Bitcoin,
Ether
— the second largest crypto — gained 2% to over $1,500. Smaller cryptos or altcoins were also stronger, too
Cardano
and
Polygon
both up 3%. Memecoins were a bit more muted, too
Dogecoin
and
Shiba Inu
each up 1%. Binance Coin, the token issued by crypto exchange Binance – which has come under pressure from regulatory headwinds – was up less than 1% after falling as much as 9% on Monday.
Advertisement – Scroll to continue
Write to Jack Denton at [email protected]
