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Bitcoin Trades at $40K as Rebound Rally Stalls

·2 min read
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Bitcoin (BTC) was hovering around $40,000 after losing some of the gains from a forceful rebound earlier Thursday. 

The largest cryptocurrency by market capitalization at one point surged as high as $43,000, regaining almost all of the ground lost during Wednesday’s 14% price plunge, which was the biggest single-day decline in 14 months.       

Shortly after 16:00 coordinated universal time (12 p.m. ET), bitcoin dropped about 5%. That move roughly coincided with the publication of a U.S. Treasury report calling for businesses that receive transfers of more than $10,000 in cryptocurrencies to report them to the Internal Revenue Service. 

Related: Bitcoin Stabilizes at Support; Faces Resistance at $45K

“There are definitely still some downside risks left short term, and markets rarely rebound in one single move up,” said Jean-Marc Bonnefous, managing partner of investment firm Tellurian Capital. “Political noise, with news of tax rules tightening, is still weighing on a prompt recovery.”

Matt Blom, head of sales and trading for the digital-asset firm Equos, wrote in his daily newsletter that a move back above $42,800 “will FOMO those on the sidelines back into BTC.”
“Resistance at $44,000 will be the first blocker on thoughts of bitcoin returning to trade with a $50,000 handle,” according to Blom. “Should we reach $38,800, and should bulls fail to protect it, then $33,800 awaits. Any move down will likely see more drama as fear once again returns to the market.”
“Short-term price movements are difficult to predict, but thus far we are encouraged by the resiliency in price,” Greg Cipolaro, head of research for the bitcoin-focused asset manager NYDIG, wrote Thursday in an email. “Only in hindsight will we know for certain whether the recent events were a mid-cycle correction or part of a larger cyclical risk-off move.”

Bitcoin’s rebound came as U.S. stocks rallied on positive economic news, while the yield on 10-year U.S. Treasury bonds declined by four basis points, or 0.04 percentage point, to 1.63%. 

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