Bitcoin Holds Above $28,000 Crypto Bulls Perhaps a “A Little Too Confident.”
Bitcoin
and other cryptocurrencies were little changed on Tuesday, with momentum from a recent rally in digital assets fading amid renewed fears over Federal Reserve monetary policy. Crypto bulls may have gotten ahead of the curve.
The price of Bitcoin has fallen less than 1% in the past 24 hours to $28,175. The biggest digital asset pushed above the $28,000 level in late March, representing the latest increase in a remarkable rally that has taken it around 70% higher so far in 2023 – a move that has spurred another bull market. But Bitcoin has since stalled somewhat, surging above $29,000 in recent days but falling back consistently as analysts have seen traders take profits until prices return to around $28,000.
“Those who have been predicting a sustained rally for Bitcoin may have been a bit overconfident, especially if the Fed has to keep prices higher for longer due to even more persistent inflation,” said Jake Boyle, director of crypto brokerage Caleb & Brun. “Sentiment has nevertheless been quite positive. After all, Bitcoin hasn’t changed much from $28,000, and this suggests to me that there is still a lot of demand despite all the setbacks this industry has experienced.”
The correlation between crypto and stocks has returned, and Bitcoin is moving in step with it
Dow Jones Industrial Average
and
S&P 500
amid macroeconomic forces. Expectations that banks were pushing, and signs that inflation is cooling, will allow the Fed to become more accommodative in monetary policy, ease rate hikes and possibly even cut interest rates soon, driving the 2023 rally in digital assets.
Looser economic conditions are a tailwind for Bitcoin and its peers, and the dramatic rise in interest rates last year was a major headwind for the digital asset sector. While expectations of an easier Fed have spurred gains for crypto, a surprise move by the OPEC+ group of oil-producing nations this week to cut crude output has reignited fears about inflation and the prospect of even more Fed rate hikes.
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Cryptos are likely to continue following a broader risk-on sentiment against the macro backdrop, with a flurry of economic data coming in the days ahead, ahead of Friday’s release of the US jobs report for March, a key economic indicator for the Fed.
Beyond Bitcoin,
Ether
— the second-largest crypto — advanced 1% to $1,830. Minor cryptos, or altcoins, were lower, with
Cardano
crumbling 2% and
Polygon
loses 1%. Memecoins were much stronger, med
Dogecoin
soaring 25% after Elon Musk made the joke crypt symbol the logo for Twitter’s homepage, and peer
Shiba Inu
— itself a play on Dogecoin — jumped 6%.
Write to Jack Denton at [email protected]
