Will Bitcoin go back up? Gains come during backdrop of ‘fear’ as IMF closes on El Salvador

Bitcoin fraud: Victim discusses ‘warning bells’

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The trend has seen Bitcoin forfeit significant value since November 2021, the last time it was above the $60,000 mark. In the early afternoon on November 18, the coin settled around $60,586.89 (£44,828.54), but by the following morning, it had dropped to $56,015.73 (£41,446.32). So far in 2022, it has seen even more dramatic losses, bottoming out at $33,495.91 (£24,783.79) on January 24.

Will Bitcoin go back up?

BTC is showing very early signs of recovery, as, over the last two days, it has slowly recuperated some value.

Since its Monday lows, analysts have seen the token surge 15 percent in a modest rally.

As of January 26, it is still growing, as investors can buy one coin for $38,106.51 (£28,195.20), a 2.26 price increase since January 25.

Marcus Sotiriou, an analyst at UK-based digital asset broker GlobalBlock, said the coin is developing under a harsh backdrop.

He said the rally has happened “whilst funding rates have turned very negative”.

The changing rates signal increased attention from “short-positioned traders”, he added, who are now “dominating the derivative market”.

Mr Sotiriou concluded the bounce shows widespread shorting, indicating continued fear.

He said: “This indicates that Bitcoin’s bounce was driven by spot rather than derivatives, which is confluent with the significant bidding seen on Coinbase.

“The fact that funding is negative suggests there is still fear in the market, as participants are generally shorting this rally.”

BTC has come under increased pressure recently from global regulators.

Over the last week, the International Monetary Fund (IMF) has moved on El Salvador, the first country to permit Bitcoin transactions.

The Central American nation adopted the currency in September 2021, making it legal tender alongside the US dollar.

But the IMF has asked the country’s leaders to reverse the decision in a statement.

Board members of the Washington-based organisation stressed to President Nayib Bukele that further embracing the currency could make it harder to secure a loan from them.

In a statement, they said BTC presents risks to “financial stability, financial integrity, and consumer protection”.

They called on El Salvador’s authorities to “narrow the scope of the Bitcoin law” by “removing Bitcoin’s legal tender status”.

Mr Bukele fought back, however, and publicly doubled down on his support for the token.

He revealed El Salvador’s treasury had purchased 410 Bitcoins on Tuesday, costing a total of $15 million (£11,098,575).

In a Twitter post, he claimed “some guys are selling really cheap”, and has mocked the organisation in following tweets.

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