The price of Bitcoin has been experiencing various challenges lately, including low liquidity and increased volatility. In addition to these issues, regulators in the United States are intensively examining the cryptocurrency industry.
On Monday, cryptocurrency prices saw a broad increase, with Bitcoin climbing above $27,000 for the first time this month. According to Coin Metrics, Bitcoin was up by 3% at $27,307, reaching a high of $27,403.17 earlier in the day. Ether, another popular cryptocurrency, gained 2% and was trading at $1,658.89.
Other cryptocurrencies also saw gains, with smart contracts platforms Solana and Cardano rising by 5% and 2% respectively, and Binance Coin adding 1.5%. XRP, a payments token, increased by around 1.5%. DeFi tokens associated with the Polkadot and Polygon networks also experienced gains of about 2% each.
The reason behind the price increase is not entirely clear, although there was a significant surge in trading volume during opening hours in the Asian market. According to Dessislava Aubert, a senior research analyst at crypto data provider Kaiko, the current low liquidity environment can amplify spot price movements and lead to liquidations in derivatives markets.
Bitcoin has seen a 4% increase in value in September. The recent surge in trading volume followed a report by Japan’s Nikkei over the weekend, stating that the Japanese government plans to allow startups to sell digital tokens to venture capital funds, expanding beyond conventional assets like shares and stock options.
Aubert noted that volatility is expected this week due to several major central bank meetings. The rise in cryptocurrency prices coincides with a rising stock market ahead of the Federal Reserve’s two-day policy meeting, scheduled to conclude on Wednesday. Market participants are predicting a 99% chance that the Fed will maintain interest rates as they are, with only a 31% probability of an increase in November, according to the CME Group’s FedWatch tool.
Despite the bearish sentiment among investors, Bitcoin has seen its first back-to-back weekly gains since May. However, some concerns have arisen as its 50-day moving average started declining in August and recently crossed below its 200-day moving average. While short-term volatility usually does not faze cryptocurrency traders, this trend has raised worries about potential long-term momentum loss.
With the Monday price increase, Bitcoin has achieved a 4% gain for the month.