Bitcoin faces a number of headwinds, including low liquidity which contributes to volatility. US regulators are also closely scrutinizing the crypto sector.
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Cryptocurrency prices rose broadly on Monday, with bitcoin surpassing $27,000 for the first time this month.
Bitcoin was last up less than 1% at $26,685.97, according to Coin Metrics. Previously, it rose almost 4% to $27,403.17. Ether was also slightly higher and was trading at $1,635.90.
The reason for the move was unclear, although there was an increase in trading volume during business hours in the Asian market, said Dessislava Aubert, senior research analyst at the crypto data provider Kaiko.
“In the current low liquidity environment, relatively weak buying and selling pressures could amplify spot price movements and cause liquidations in derivatives markets,” she said.
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Bitcoin is up around 4% for September.
The surge in volumes follows a report from Japan’s Nikkei over the weekend that the Japanese government is considering allowing startups to sell digital tokens to venture capital funds in addition to conventional assets such as stocks and bonds. stock options.
“Overall, we expect volatility this week ahead of several major central bank meetings,” Aubert added.
The moves coincide with a rise in the stock market ahead of the Federal Reserve’s two-day policy meeting, which is scheduled to end on Wednesday. Traders estimate a 99% chance that the Fed will keep interest rates where they are and only a 31% chance that it will raise them in November, according to the CME Group’s FedWatch tool, which assesses prices in the federal funds futures market.
Bitcoin just made its first consecutive weekly gains since May despite bearish investor sentiment. Its 50-day moving average started declining in August and recently fell below its 200-day moving average. Although crypto traders are generally unfazed by short-term volatility, this trend has caused some to worry that long-term momentum could be broken.
Monday’s moves bring bitcoin’s monthly gain to 4%.
