Bitcoin falls below $30,000. Why the crypto rally has stalled.
Bitcoin
and other cryptocurrencies fell on Monday, with digital assets stumbling after the final leg of the year’s big rally saw the crypto above key price levels. While catalysts lie ahead, it may be some time before the next big move.
The price of Bitcoin has fallen 1.5% in the past 24 hours to below $29,950, falling through the critical $30,000 level, which it surpassed last week for the first time since June 2022 as the sale of the digital asset accelerated to a brutal bear market. Bitcoin recently traded as high as $31,000 in a rally that has taken it more than 80% higher so far this year, but has struggled to consolidate its recent gains.
“The overall technical outlook still looks strong, so the potential downside should not be severe. All in all, a small correction should be expected and it will ultimately be healthy for Bitcoin’s upward trend to continue,” said Yuya Hasegawa, an analyst at the crypto exchange Bitbank.
Digital assets are likely to continue to take cues from the macroeconomic backdrop and fluctuations in
Dow Jones Industrial Average
and
S&P 500.
The 2023 crypto rally has come amid expectations that the Federal Reserve will soon become more accommodative on monetary policy, which has also boosted the stock market.
A series of dramatic interest rate hikes by the Fed over the past year, in an effort to curb decades of high inflation, knocked both crypto and stocks back as higher interest rates dampen demand for risk-sensitive assets. But signs that inflation is cooling and that higher interest rates are stressing parts of the economy, including the banking sector, have pushed traders to reconsider how much more the Fed will tighten financial conditions.
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Catalysts in the coming days include economic indicators, such as the Empire State Manufacturing Index on Monday, weekly jobless claims on Thursday, and Friday’s Services and Manufacturing Purchasing Managers’ Index (PMI). A handful of Fed officials will also deliver public comments, which will be scrutinized ahead of the meeting on 2-3. May in the central bank’s policy-setting committee. Anyone could move Bitcoin.
But it may take a lot to see prices move much higher from $30,000. Regaining the psychologically important mark was a long time coming for Bitcoin, and there have been signs that some traders are taking profits around this price level.
“Traders should be prepared that the $30,000 mark for the first cryptocurrency could act as solid resistance after it was stiff support in 2021,” said Alex Kuptsikevich, an analyst at broker FxPro. “That said, technically Bitcoin has already proven the end of the bear market by hedging above key moving averages and steadily pulling back from the bottom.”
Beyond Bitcoin,
Ether
— the second-largest crypto, which has recently surged after the success of a key upgrade called “Shanghai” — was just below flat near $2,100. Smaller cryptos or altcoins were more mixed, too
Cardano
down 2% but
Polygon
bounced 1% higher. Memecoins were up, with
Dogecoin
up 4% and
Shiba Inu
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less than 1% in the green.
Write to Jack Denton at [email protected]
