Bitcoin Tie. There are signs that the recent rally may be losing steam.
Bitcoin and other cryptocurrencies fell on Tuesday after recently pushing to their highest levels in months. While analysts remain bullish on Bitcoin, there are signs that the latest crypto rally may be losing momentum.
The price of
Bitcoin
has fallen less than 1% in the past 24 hours to $24,750, after trading above $25,000 – levels above which the biggest digital asset has not consistently changed hands since last June. A rally to start 2023 has sent Bitcoin around 50% higher this year, delivering the digital asset out of the depths of a brutal bear market and multi-year lows, although Bitcoin remains well short of its late 2021 peak near $69,000.
“Bitcoin continues its attempts to break through resistance at $25,000. Volatility was subdued on Monday as the primary driver for it – US stock markets – closed yesterday, said Alex Kuptsikevich, an analyst at brokerage FxPro. “Despite Bitcoin’s failed attempt on consolidating above $25,000, the intraday pullbacks from this resistance are diminishing, indicating a continued buy-the-dip pattern. A break above $25,000 is only a matter of time, potentially opening the door to $28,000.”
While Bitcoin will likely continue to take cues from the stock market, crypto has recently somewhat declined its correlation to
Dow Jones Industrial Average
and
S&P 500.
A tough macro backdrop of high inflation and rising interest rates linked digital assets and stocks over the past year, but the latest crypto wave has far surpassed anything seen in the stock market. Bitcoin’s rally has largely been based on factors endogenous to crypto, including positioning in derivatives markets and technical factors pushing prices higher – and there are signs that some of the momentum is waning.
The recent pop has been largely driven by the liquidation of bearish short positions in Bitcoin futures, analysts at crypto exchange Bitfinex wrote in a note, adding that the trend suggests the crypto is likely to fall into range-bound trading. Additionally, positioning in the crypto options market indicates that market sentiment has cooled somewhat and is more neutral. Both factors can limit prices in the short term.
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Beyond Bitcoin,
Ether
— the second-largest crypto — fell 1.5% to $1,675. Smaller cryptos, or altcoins, were even deeper in the red, with
Cardano
crumbling 3% and
Polygon
lose 5%. Memecoins were also muted, with
Dogecoin
down 2% and
Shiba Inu
drop 3%.
Write to Jack Denton at [email protected]
