Bitcoin is heading for the best week since October as the cryptocurrency collapses

The price of bitcoin received a slight relief this week when investors hoped that the worst crypto-liquidity crisis is over.

On Friday, bitcoin had risen around 11% for the week and is starting its best week since October, according to Coin Metrics. The price rose as high as $ 22,478.37 at one point, climbing back from a low of around $ 17,000 in June.

It was last traded more than 1% higher on the day at $ 21,903.00, around 11:30 ET, according to CoinMetrics.

“Many of the insolvencies and foreclosures from a volume perspective are behind us,” said Felix Hartmann, managing partner of Hartmann Capital. “Three Arrows’ bankruptcy petition was, in a way, the last resort.”

Three Arrows, a cryptocurrency-focused hedge fund, filed for bankruptcy last week after a sharp drop in digital currency prices revealed a liquidity crisis in the company.

The market infection can spread to smaller crypto exchanges or funds, Hartmann added, but there are no larger, more powerful dominoes left to fall. If the crypto industry can go a month without bad news or insolvency, he said, it is “very likely” that the market could double.

Still, this would only lift the price of bitcoin back to April levels. It is currently about 70% below the record in November of $ 68,982.20.

Gritt Trakulhoon, a leading cryptanalyst at Titan, called bitcoin’s weekly rise a “much-needed” short-term relief rally that came after a major capitulation that went back to May when Terra’s stackecoin project crumbled. In fact, as digital currency prices plummeted and liquidity strained, so have cryptocurrencies and other firms.

Having an unofficial lender in the last resort like Sam Bankman-Fried to rescue some of the quarrelsome lenders also gives investors relief, Trakulhoon added. This week, the FTX chief said he and his company still have “a few billion” on hand to support companies that are struggling and could further destabilize the digital asset industry.

Trakulhoon said that $ 22,500 to $ 23,000 is the resistance level for looking for bitcoin. If it breaks that threshold, it should rise “fairly quickly” to the next stop: $ 28,000, he added.

Ryan Shea, an economist at Trakx, pointed to this week’s news that Federal Reserve officials said a new 50 or 75 basis point rate hike is likely at their July meeting. That, combined with growing signs that the U.S. economy is declining more markedly than politicians’ estimates, is causing investors to look at the Fed’s aggressive stance “with more caution,” he said.

“In reality, they are reviewing the gains and are instead focused on the expectation of a possible Fed capitulation, which is a positive scenario for cryptocurrencies and risk assets more generally,” Shea said.