Categories: Tech News

Bitcoin’s Hold Above $20,000 Gives Bulls Hope for Lasting Rally

Bitcoin’s four-day streak above $20,000 has reinvigorated cryptocurrency traders as they bet the token is due for a resurgence after a brutal year.

Bitcoin’s four-day streak above $20,000 has reinvigorated cryptocurrency traders as they bet the token is due for a resurgence after a brutal year.

The largest cryptocurrency by market value advanced above $20,000 on Tuesday, and had yet to fall below that threshold as of Friday morning in New York. The breakout marked the end of a nearly three-week slide that saw Bitcoin trade below the key level for the longest stretch since late 2020.

Other cryptocurrencies made their own comebacks. Over the past few days, Ether has traded at or slightly above $1,500 after spending much of the month near $1,300. Meanwhile, Dogecoin is up around 40% since late Sunday. Elon Musk, an ardent altcoin fan, completed his acquisition of Twitter Inc. for $44 billion this week.

Still, it’s not what “Uptober” crypto traders wanted. Crypto enthusiasts had seen Bitcoin make huge gains last October. This time last year, for example, the token advanced 40% during the month. But advances in digital assets this week were encouraging for crypto bulls on hopes that the worst of this year’s sell-off is behind them.

“Crypto has made solid fundamental progress in recent months,” wrote Matt Hougan, chief investment officer at Bitwise Asset Management, noting the successful upgrade of the Ethereum network as well as developments on the regulatory front. “But those fundamentals have not been reflected in prices.”

Hougan said a couple of events lifted cryptocurrency prices this week. On the one hand, data on Tuesday showed that US consumer confidence fell to a three-month low. According to Hougan, market participants took the data to mean that the Federal Reserve’s aggressive rate hikes are having the desired effect.

Bitcoin is already down 70% from its highs, a larger magnitude of loss than seen with many other assets, says Steven McClurg, co-founder and chief investment officer at digital asset fund manager Valkyrie Investments.

“The flat markets just before breaking back above $20,000 are likely due to support from corporate and institutional owners who bought heavily around these prices and show that there is support for the asset, rather than ‘a capitulation that would have caused heavy casualties,’ he said. said “Here’s some hope that things could start to improve sooner rather than later.”

While some Bitcoin advocates are now ready to proclaim the end of this latest bear market “crypto winter,” at least one analyst is taking a more reserved tone.

“We hedge against countertrend exposure because bear market rallies tend to be fast and furious, making them difficult to time,” said Katie Stockton, co-founder of Fairlead Strategies.

Several measures show that interest in digital assets has waned during this year’s downturn. Retail investors, in particular, have been disenchanted with the asset class and have not been involved in the market in the same way they were during the first two years of the pandemic. Google searches for the word “crypto” have fallen to their lowest levels in the last year.

It’s not just retail: Institutional digital asset products this month saw their lowest data trading volume since June 2020, with average daily volume down 34% to 61 million of dollars, according to CryptoCompare.

Still, these are the exact types of trends you could see toward the end of a prolonged downtrend, says Alec Young, chief investment strategist at MAPsignals.

“People giving up on something is what happens late in a bear market — Google searches and so on — that’s what you want to see, that capitulation, throwing in the towel,” Young said in an interview. “It’s bullish for Bitcoin that people are giving up; that’s what you see at the turn.”


Published by

Recent Posts

More on the Interest-Income Channel

Last weekend, I wrote about Warren Mosler's argument that the Fed's rate hikes could be…

4 weeks ago

More information in the Interests Channel

Last weekend, I he wrote on Warren Mosler's argument that the Fed's rate hikes could…

4 weeks ago

Biden wants to reduce the deficit. Powell wants to reduce inflation. Do rate hikes undermine both goals?

Last week, the chairman of the Fed, Jerome Powell said, "the disinflationary process has begun".…

1 month ago

Quick thoughts on the CBO budget and economic outlook

Earlier this week, I joined Romaine Bostick and Scarlet Fu Bloomberg TV. The Congressional Budget…

1 month ago

Eight states have joined forces to raise taxes on America’s wealthiest

Tomorrow morning, I'll be joining CNBC's Squawk Box to talk about a new effort tax…

1 month ago

Mike Pence would pick up where Paul Ryan left off

Former Vice President Mike Pence talks about privatizing Social Security. The remarks came Thursday before…

2 months ago