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After finding its way above $42,500 earlier in the day, Bitcoin’s price dipped and continued to flirt with the $42,000 level, hitting $41,842 in late Wednesday trading as the market sought direction for the largest cryptocurrency after a rough month of declines. Bitcoin is up about 0.5 percent over the past 24 hours, according to data from CoinMarketCap.
Chipmaker Intel may soon unveil a more efficient Bitcoin miner at an upcoming conference, which is expected to use about 15 percent less power and makes it cheaper to participate in the crypto world. Bitcoin bulls are also finding support from Block and Twitter founder Jack Dorsey, who announced recently that he was proceeding with a previously announced plan to build an open bitcoin mining system.
Bitcoin’s price has been under pressure since the Federal Reserve’s early November meeting, when the central bank announced that it would begin tapering its purchases of bonds, reducing stimulus in the financial system.
That downtrend continued through much of December and into January. After peaking above $51,000 in late December, the digital currency fell to about $41,000 in early January and has spent the past couple weeks hovering around $42,000, as the market looks for direction.
Meanwhile, Ethereum was trading at $3,121 late Wednesday afternoon, nearly flat from the prior day. The second-largest cryptocurrency set an all-time high above $4,800 in November, but its price has fallen steadily through December and into January.
Rival cryptocurrency Cardano fell significantly over the past 24 hours, down 4.6 percent in Wednesday afternoon trading. It traded at $1.36 and is down more than 50 percent from its 52-week high of nearly $3.10.
A number of other cryptocurrencies also traded sharply lower late Wednesday. Internet Computer declined 5.7 percent to $26.85, while Tezos was off 4.8 percent to $3.94.
The near-term prospects for cryptocurrency may not be so rosy if the Federal Reserve follows through on its plan to tighten financial conditions. At its December meeting, the Fed announced that it was increasing the pace of its taper, purchasing even fewer bonds than it had projected in November. The new pace means the Fed will stop buying bonds by March 2022.
From there, the Fed has said that it will eventually raise interest rates, as conditions warrant.
“With inflation having exceeded 2 percent for some time, the committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment,” said the Federal Open Market Committee in a prepared statement.
Bitcoin peaked at $68,990.90 in early November, but the price has steadily weakened since then. Nevertheless, Bitcoin remains atop the list of most valuable cryptocurrencies by total value.