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Crypto market sentiment improves, with bitcoin reclaiming $31,000 level

June 6, 2022 Updated Mon., June 6, 2022 at 10:35 a.m.

An advertisement for Bitcoin cryptocurrency is displayed on a street in Hong Kong on Feb. 17, 2022. Bitcoin rose above the $31,000 mark on Monday.  (S-R wire file photo )
An advertisement for Bitcoin cryptocurrency is displayed on a street in Hong Kong on Feb. 17, 2022. Bitcoin rose above the $31,000 mark on Monday. (S-R wire file photo )
By Tanzeel Akhtar Bloomberg

Bitcoin was continuing to advance and stabilize Monday rising above the $31,000 mark, after languishing over the weekend.

Ether was advancing higher and up 5.6%, as a number of other altcoins went into the green – Solana, Avalanche, Cardano were all up 11% Monday as market sentiment improves.

“Bitcoin’s fundamentals and technicals have both been improving over the last few days. Though it may still be premature, some of the more optimistic traders are already calling for a floor on this extended drawdown,” Mati Greenspan, founder of Quantum Economics, told Bloomberg on Monday.

The crypto market could also get a boost from U.S. consumer-price data later this week.

If inflation is indeed coming down, there’s a good chance the Federal Reserve will ease up on market conditions, explains Greenspan.

Bitcoin has been trading around the $30,000 level for weeks now, defying predictions of a potential further decline but also struggling to gain upward momentum as the broader U.S. market has also taken a beating.

Speculative assets like technology stocks and cryptocurrencies are expected to be hit the hardest by the Fed’s plans to shrink its balance sheet, according to the latest MLIV Pulse survey.

“Bitcoin has stabilized over the past few weeks on improved short-term momentum,” Katie Stockton, co-founder of Fairlead Strategies, wrote in a note Friday.

She said a short-term countertrend buying signal was logged by Tom DeMark’s popular TD Sequential model for technical analysts, “increasing the probability of a more pronounced oversold bounce. We assume the 50-day moving average will provide resistance.”

Stablecoins are continuing to face scrutiny from global regulators following the collapse of the Terra/Luna ecosystem in May, which has further undermined confidence in the space; algorithmic stablecoin UST is trading at $0.016, according to data from CoinGecko, sinking even lower after losing its peg to the dollar.

On Friday, Japan became one of the first major economies to introduce a legal framework around stablecoins, following UST’s implosion.

Stablecoins must be linked to the yen or another legal tender and guarantee holders the right to redeem them at face value, according to the new law.

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