Best of Bitcoin’s Recent Rally Is Over. See this key level for the next move.
Bitcoin
and other cryptocurrencies fell on Thursday, but had still consolidated gains from one of the best stretches for digital assets in more than two years amid hopes for more accommodative monetary policy from the Federal Reserve.
The price of Bitcoin has fallen 1.5% over the past 24 hours to below $24,500. Bitcoin is still up almost 50% so far this year – recovering from a bearish dip after falling below $20,000 last week – but it has fallen back from a peak above $26,000 on Tuesday, which marked the highest levels since the crypto crash accelerated last June. .
“We still see a tug of war near $25,000,” said Alex Kuptsikevich, an analyst at broker FxPro. “Prices are coming back below the 200-week moving average, and not immediately going higher. Technically, a key signal of a return to a long-term bullish trend would be a consolidation above $25,000 at the end of the week. Still, holding the price above $20,000 and The 200-day average looks like a sufficient condition that Bitcoin is not ready to fall sharply further and remains interesting to buy on the dip.”
Crypto prices have jumped higher amid a crisis of confidence in the US banking sector. While the failures of Silvergate Capital, Silicon Valley Bank and Signature Bank since last week have important implications for the digital asset industry and the functioning of crypto markets, traders have become bullish for another reason.
The meltdown of Silicon Valley Bank in particular — the biggest bank collapse since the 2008-2009 financial crisis — has spurred bets that the Fed will not raise interest rates as much in the coming months as expected. Higher prices have hammered Bitcoin prices over the past year as the Fed has tried to bring decades of high inflation under control with tighter economic conditions. But the recent stress on banks, an unintended consequence of the interest rate environment, has fueled speculation about a more cautious Fed.
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A cap on rates, and even the prospect of rate cuts this year, would be a major tailwind for Bitcoin, as higher prices dampen demand for riskier plays like crypto. While
Dow Jones Industrial Average
and
S&P 500
has slipped amid banking woes – with Bitcoin rejecting its correlation to the stock market – the tech stock-heavy
Nasdaq,
which is equally sensitive to interest rate expectations, has been more robust.
Nevertheless, markets largely sold off on Wednesday on fears that the US banking panic could go global, with shares in Swiss bank Credit Suisse (ticker: CS ) selling off dramatically. Bitcoin was unable to escape the short-term selling pressure, hence the decline through Wednesday and into Thursday.
“Bitcoin weakened as chaos across Wall Street saw another banking crisis trigger another wave of panic selling of risky assets. Credit Suisse is a bigger story than SVB, and this makes Wall Street extremely nervous,” said Edward Moya, analyst at broker Oanda. Bankuro may eventually turn out to be quite bullish for Bitcoin, but for now crypto-weakness is justified.”
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In focus ahead of the next Fed decision on interest rates due next week, after the central bank’s policy committee meets on 21-22. March, are signs of more stress in the banking system as well as economic data that add color to the inflation picture.
Beyond Bitcoin,
Ether
— the second-largest crypto lost 3.5% to hold at $1,650. Smaller cryptos, or altcoins, were even weaker, with
Cardano
crumbling 5% and
Polygon
plunges 8%. Memecoins was also firmly in the red, with
Dogecoin
down 7% and
Shiba Inu
reduction 8%.
Write to Jack Denton at [email protected]
