Bitcoin BTC price rises then pulls back. What’s behind this week’s roller coaster? What’s coming up?

It’s been a wild week for Bitcoin, with the largest cryptocurrency by market cap hitting multiple six-month highs before abruptly pulling back late Thursday, but then bouncing back.

Bitcoin (BTC) recently traded above $24,557, up nearly 3.1% over the past 24 hours and a weekly high early Thursday, when BTC surpassed $25,000 for the first time since August.

Despite Thursday’s drop, bitcoin was still trading 13% higher than it was seven days ago. The reasons behind the bounce from the previous support around $22,000, subsequent drop and subsequent rally were different. They underscore crypto’s continued sensitivity to macroeconomic conditions and industry-specific events, even as BTC has at times acted counterintuitively.

Late Tuesday, investor optimism trumped concerns about a crackdown on stablecoins and the tepid Consumer Price Index (CPI) to boost bitcoin, ether and most other cryptos. In an interview with CoinDesk, Riyad Carey, a research analyst at crypto data firm Kaiko, said Bitcoin’s upswing was “a sort of euphoric rally that regulatory issues have temporarily cooled.”

Earlier in the week, Darius Tabatabai, co-founder of Vertex Protocol, a London-based decentralized exchange, said that “we may have what it takes for another bull market.”

A day later, markets turned cautious and Bitcoin fell more than $1,000 in a matter of hours amid dovish statements from Federal Reserve officials, the announcement of a lawsuit by the US Securities and Exchange Commission (SEC) against the disgraced co-founder of Terraform Labs, Do Kwon, and a disappointing wholesale prices report suggesting inflation has remained stubbornly resilient.

BTC’s “mid-term overbought conditions” are creating headwinds with key resistance near $25,200 raising the likelihood of a near-term pullback. Support is near the 200-day MA of $20,000,” wrote Katie Stockton, founder of technical analysis-based research firm Fairlead Strategies, in an email to CoinDesk.

Edward Moya, senior market analyst at forex market maker Oanda, noted in an email on Friday that “after Bitcoin tested the $25,000 level and failed to expand higher, many active traders held onto gains. The appetite for risky assets could be stunted in the near-term, which could support Bitcoin consolidation as long as regulatory crackdown doesn’t bring down a major stablecoin or crypto company.”

On Friday afternoon, investors appeared to have shrugged off the latest disheartening news to push Bitcoin back just a few dollars below $25,000. And cryptos continued to outperform the stock markets, which they correlated with for much of 2022. Ether (ETH), the second largest crypto by market value, is up more than 12% over the past week.

Oanda’s Moya believes that the larger outcome of the new US crypto regulation push will not be apparent for a while, allowing the markets to sort themselves, and that the industry itself will continue to be inundated with interesting projects. “There’s always a time when regulators and lawmakers want to hear from the market that they’re going to make an impact,” Moya said in an interview with CoinDesk. “But I haven’t seen anything stopping this market from continuing to grow, seeing investments and doing projects that could hopefully drive the application case for it,” he added, although he added that a lot of money could leave stablecoins behind for other types of crypto investments.

Certainly, some observers believe that regulatory abuse could drive away investment and unsettle markets. “Due to their unwillingness to come to the table, it’s clear that the SEC’s motivation of late has been driven by a desire to protect established financial institutions — that is, Wall Street,” said Al Morris, founder of the decentralized publication protocol Koii Network, CoinDesk told in an email, adding that overly strict US regulations could benefit other crypto hubs in Europe and Dubai.

But investors remained largely bullish on the crypto markets. You see the Fed authorizing a second straight 25 basis point rate hike at its next Federal Open Market Committee (FOMC) meeting in March, rather than returning to the more aggressive hikes of 2022. And they hope any economic contraction will be mild – and so-called safe landings that central bankers seek.

“While projections of higher interest rates are weighing on the value of future cash flows, increasing global liquidity is helping to push up asset prices,” wrote Lucas Outumuro, head of research at blockchain analytics firm IntoTheBlock, in a Friday newsletter.

Meanwhile, Moya noted on Thursday that Bitcoin’s “resilience” has been “impressive” given bond market volatility and the steady barrage of regulatory headlines.

However, in a follow-up interview with CoinDesk, he cautiously added: “I think we have to live week by week and right now it seems like the main goal is to introduce consumer protection. That will ultimately be the point at which things will become fixated on these potential investigations. I think part of the market is getting used to that kind of expectation as well.”

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