Bitcoin rallies amid risky market mood after falling below $ 40,000

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(Bloomberg) – Bitcoin briefly fell below $ 40,000 for the first time since August amid mounting criticism from regulators, before recovering as the mood in global markets improved.

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The largest cryptocurrency broke a three-day losing streak, rising 2.9% to $ 42,132 at 6:34 a.m. London time on Wednesday. It previously slipped as much as 3.2% to $ 39,625. Tokens including Ether, Solana and Litecoin were slightly lower over the past 24 hours.

Fears of contagion from the debt crisis within the China Evergrande group and expectations that the next Federal Reserve meeting will signal a reduction in asset purchases later this year are among the hurdles for investors. An Evergrande deposit on a bond interest payment, though loosely worded, and an injection of liquidity into the financial system by China’s central bank seemed to assuage some but by no means all of investor concerns.

The price action demonstrates that Bitcoin is not immune to selling risky assets in traditional markets, said Antoni Trenchev, co-founder of crypto lender Nexo. Bitcoin needs to resume the 200-day moving average at $ 46,000 and consolidate before a collective sigh can be released.

In a discussion on cryptocurrencies on Tuesday, the chairman of the United States Securities and Exchange Commission, Gary Gensler, said earlier cases of banks and other companies offering private forms of money had failed. .

Gensler reiterated that US securities rules give his agency great authority over digital tokens. He also said that there are some gaps in the oversight of digital tokens that Congress could help fill, such as the regulation of crypto exchanges.

Meanwhile, the US agency that was once the cryptocurrency world’s great hope is now issuing strong warnings to the industry that it risks echoing the toxic culture before the 2008 financial crisis.

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Michael Hsu, acting chief of the Office of the Comptroller of the Currency, argued on Tuesday that cryptocurrencies and decentralized finance could become threats to the financial system in the same way that some derivatives almost collapsed there. is over ten years old.

Separately, crypto-data network Pyth briefly reported the price of Bitcoin at $ 5,402 on Monday. Engineers are continuing to investigate the cause and a full report is in the works, he said in a tweet that day.

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