Bitcoin gained on the day on Monday as buyers stepped in to buy the cryptocurrency, after earlier tumbling to its lowest level in six months on fears of a Russian attack on Ukraine and before this week’s Federal Reserve meeting.
The largest cryptocurrency was last up 2.5% at $37,250 after earlier dropping to $32,951, its lowest price since July 23. That took losses from its all-time high of $69,000 hit in November past 50%.
Bitcoin is now at a critical juncture where analysts say that further selling could reverse its long-term bull trend.
The currency fell earlier on Monday on rising tensions between Russia and Ukraine. NATO said it was putting forces on standby and reinforcing Eastern Europe with more ships and fighter jets, in what Russia denounced as an escalation of tensions over Ukraine.
Nerves over the Federal Reserve’s two-day policy meeting, starting on Tuesday, added to the mix, with the U.S. central bank expected to confirm it will soon start draining the pool of liquidity that has supercharged growth stocks.
“The story is really how aggressive is the tightening,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, noting that a Fed move to reduce the size of its balance sheet will tighten conditions along with higher interest rates.
Cryptocurrencies fell along with other risk assets as “people are pulling back on risk broadly,” he added. Stocks also bounced off their lows in afternoon trading.
Katie Stockton, founder of technical analysis firm Fairlead Strategies, said that closing this week above the $37,400 level, where there is support from the Ichimoku cloud bottom, may be key to whether the selloff is a correction in an uptrend, or the start of a bear trend.
If Bitcoin fails to rise back above this level, then “the long-term uptrend is essentially reversed by that breakdown,” she said.
Around $465 million in crypto assets have been liquidated in the past 24 hours, according to data from Coinglass, with Bitcoin trades accounting for $167 million of that total.
Smaller cryptocurrencies, which tend to move in tandem with bitcoin, also slumped but ended off their lows. Ether , the second-largest digital coin, was last down 3.5% at $2,451, after earlier reaching $2,160, its lowest level since July 27.
U.S.-listed cryptocurrency miners Riot Blockchain (RIOT.O) and Bit Digital (BTBT.O) and Marathon Digital (MARA.O) also rebounded from earlier lows while crypto exchange Coinbase Global (COIN.O) pared most of the day’s losses.