While Bitcoin climbed above $43,000 in early Thursday trading, it fell back later in the day, hitting $42,766 in the mid-afternoon. The move put the digital currency up 2.3 percent over the prior 24 hours, according to CoinMarketCap. Bitcoin was among many digital currencies that surged early in the day only to come off their highs later, amid potential challenges to cryptocurrencies.
Russia’s central bank proposed banning cryptocurrencies in the country on Thursday, naming the risks of financial stability, money laundering and monetary sovereignty as reasons. Meanwhile, the U.S. House of Representatives Energy and Commerce Committee discussed the energy impacts of blockchain, the technology that powers cryptocurrency.
Many other cryptocurrencies surged early Thursday before settling down in the mid-afternoon.
Ethereum was up about 5 percent before it managed to hold on to only a 2.7 percent gain by mid-afternoon, at a price of $3,200. The digital currency set an all-time high above $4,800 in November, but its price has fallen steadily through December and into January.
Cryptocurrency Cosmos, its native token known as ATOM, had soared 13.2 percent at midday, but was trading up just 9.3 percent later, at $40.62. At a price of $139.09, Solana was up 2.4 percent in the mid-afternoon, below its 4.5 percent gain at midday.
Bitcoin’s recent trend has been downward
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 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,” essentially a cryptocurrency version of the U.S. dollar backed by the central bank. While the Fed has not taken a position on the creation of a currency yet, the paper explores the pros and cons of doing so. Now the Fed is seeking public comment on the topic.
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.