Bitcoin prices have held up well lately – what’s next for the cryptocurrency?

Bitcoin prices have shown relative stability of late, fluctuating within a relatively modest range after declining in early November.

Just before midnight last night EST, the digital currency saw some gains, rising to $17,412.97, CoinDesk data shows.

At the time, it was trading at its highest since early November, additional CoinDesk data shows.

Since then, the cryptocurrency pulled back, trading near $17,050 at the time of writing.

[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.]

Over the past few weeks, the broader digital currency markets, as well as the companies in this sector, have felt the impact of the collapse of troubled FTX exchanges.

On November 11, FTX Group, which consists of FTX Trading Ltd., declared (FTX.com) and over 100 affiliates, that they had filed for Chapter 11 bankruptcy protection, according to a company announcement which was posted on Twitter.

Earlier this year, the company had been valued at a whopping $32 billion when it raised $400 million in a funding round.

While bitcoin prices fell particularly early in November, they have since experienced greater stability.

“A critical period” for Bitcoin

“This is a critical period for BTC.” said Tim Enneking, CEO of Digital Capital Management.

“On the one hand, the drop after FTX to $15.5k may have signaled a bottom. This morning’s (in the US) move to almost $17.5k, the highest level in almost a month, supports that,” he said, referring to the recent upward movement.

However, he emphasized how economic strength could give Federal Reserve policymakers greater incentive to reign in red-hot inflation numbers.

Enneking pointed to the latest numbers from the Institute for Supply Management, which revealed that the US Services Purchasing Managers Index, a measure of how fast the nation’s sector is expanding or contracting, stood at 56.7 in November.

That number pointed to expansion, beating the 53.3 figure predicted by economists polled by Reuters.

Should Fed officials take a more aggressive approach to raising benchmark interest rates, that could create further headwinds for risk assets, including stocks and cryptocurrencies like bitcoin.

Technical analysis

In addition to highlighting important macroeconomic considerations, Enneking pointed out some key levels of support and resistance for the world’s most prominent digital currency.

“Going forward, we see BTC struggling to move up against the downward pressure, facing major resistance at each $1,000 level (as we’ve seen this past week at $17k), and even stronger resistance at $20k,” he said.

“Should BTC lose the battle, $15.5k will be a decisive level. If it breaks, $14k will kick in.”

Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management, also provided perspective on this particular topic.

“We are looking at the $18,000 and $21,300 levels on the upside to provide encouragement to the bulls,” he said.

“On the downside, we see recent YTD declines around $15,500. Holding this support level is important to let investors know that the vicious downtrend may be coming to an end.”

Proceeding

While the collapse of FTX has certainly created headwinds for the digital currency industry, some market observers believe that the exchange’s fall will serve as a positive driving force, motivating key stakeholders to create a more effective regulatory regime so that such incidents can be prevented.

After the FTX saga generated countless headlines, a wave of inquiries followed, with both lawmakers and regulatory agencies taking action.

In November, key members of the House Financial Services Committee announced that the group would hold a hearing on the exchange’s fall and the consequences it will have on the digital currency and blockchain industries.

US Senator Sherrod Brown, who chairs the Senate Banking, Housing and Urban Affairs Committee, revealed that his committee will also investigate the matter.

Furthermore, the new CEO of FTX has had to respond to several inquiries launched by the US Securities and Exchange Commission and the Commodity Futures Trading Commission, according to a lawsuit reported by NPR.

Andrew Rossow, an internet lawyer, spoke about this development and gave an optimistic view of the matter.

“While the collapse of FTX has certainly been the thorn in the side of the room, it is generally positive for the future of Bitcoin and digital assets, as this will undoubtedly start the long awaited process of investors, regulators and financial institutions working together to start setting the parameters like this the currency must be regulated in,” he stated.

Furthermore, he urged market observers to focus on progress in the space.

“Right now, investors should look at the underlying technology where Bitcoin is exploited and used, while of course staying informed of any upcoming updates coming from the ongoing FTX bankruptcy and ongoing investigations.”

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