While bitcoin jumped above $43,000 early Thursday, it slipped again later in the day, hitting $42,766 in the middle of the afternoon. The move lifted the digital currency by 2.3 percent in the previous 24 hours, according to CoinMarketCap. Bitcoin was among several digital currencies that rose early in the day to retreat from their highs later, amid potential challenges for cryptocurrencies.
The Russian Central Bank proposed banning cryptocurrencies in the country on Thursday, citing risks to financial stability, money laundering and monetary sovereignty as reasons. Meanwhile, the US House of Representatives Energy and Commerce Committee discussed the energy impact of blockchain, the technology that powers cryptocurrency.
Several other cryptocurrencies rose early Thursday before settling in the middle of the afternoon.
Ethereum gained about 5 percent before it was able to sustain a gain of just 2.7 percent by mid-afternoon, at $3,200. The digital currency hit an all-time high above $4,800 in November, but its price dropped steadily through December and into January.
Cryptocurrency Cosmos, its original token known as ATOM, was up 13.2 percent in the middle of the day, but rose only 9.3 percent later, at $40.62. At $139.09, Solana was up 2.4 percent in the mid-afternoon, short of its 4.5 percent midday gain.
Bitcoin’s recent trend has been bearish
The price of bitcoin has been under pressure since the Federal Reserve meeting in early November, when the central bank announced that it would begin to scale back its bond purchases, reducing stimulus in the financial system.
This downward trend continued through most of December and into January. After peaking above $51,000 in late December, the cryptocurrency dropped to around $41,000 in early January and has spent the past two weeks hovering in the low-$40,000 range around $42,000 as the market looks for direction.
On Thursday, the Federal Reserve released its 40-page paper exploring the creation of a “digital dollar,” which is essentially a crypto-version of the US dollar backed by a central bank. While the Fed has not taken a position on creating a currency yet, the paper explores the pros and cons of doing so. The Fed is now seeking public comment on the matter.
At its December meeting, the Fed announced that it was increasing its tapering pace, buying fewer bonds than expected in November. The new pace means the Fed will stop buying bonds by March 2022.
From there, the Fed said it would eventually raise interest rates, as circumstances warranted.
“With inflation exceeding 2 percent for some time, the Committee expects that it will be appropriate to maintain this target range until labor market conditions reach levels consistent with the Committee’s assessments of maximum employment,” the FOMC said in a prepared statement. .
Bitcoin peaked at $68,990.90 in early November, but the price has been steadily weakening since then. However, Bitcoin remains at the top of the list of the most valuable cryptocurrencies by total value.