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Cryptos recover after weeks of losses.
Dreamstime
Bitcoin
led a rally in digital assets on Friday when cryptocurrency traders seemed to strike up sharply after weeks of prices under pressure.
The price of Bitcoin rose 5% over the last 24 hours to $ 21,500. The largest digital asset moved as high as $ 22,400 in early Friday to trade at the highest levels since mid-June, when painful cryptocurrency sales accelerated.
“Bitcoin now has a small upside potential,” wrote Yuya Hasegawa, an analyst at the Bitbank cryptocurrency exchange, in a note.
While Bitcoin is at less than a third of its all-time high near $ 69,000 reached in November 2021, it is comfortably above the $ 20,000 key level and has put its last bottom below $ 18,000 far behind.
“An inherent resilience that cryptocurrency has shown in recent weeks in the face of a wave of liquidations and solvency problems has come to the fore today,” a team of analysts at the Bitfinex cryptocurrency exchange wrote in a note. “It will be interesting to see if a lively cryptocurrency market in the last 24 hours leads to more purchases this month.”
There were gains all over the crypto universe, too
Ether
gets 3% to over $ 1,200 – the highest level in several weeks, although the token underlying the Ethereum blockchain network remains well below the highest level in November 2021, close to $ 4,900.
The rally was more subdued among smaller cryptocurrencies, or altcoins, with
Solana
and
Cardano
hovering around flat. Memecoins – originally meant as internet jokes – were better, too
Dogecoin
inches 1% higher and
Shiba Inu
3% into the green.
This rally will be welcome news for traders who have experienced volatile market conditions amid expectations that the digital assets area will enter a new “crypto winter.”
Bitcoin has just ended its worst quarter since 2011 – a year in which the price crossed the $ 1 threshold for the first time – with the total market value of cryptocurrencies collapsing from nearly $ 3 trillion eight months ago to $ 950 billion.
In addition to broad market sales, cracks in the cryptocurrency market itself have damaged digital asset prices – whether it’s the meltdown of stablecoin Terra, failures of cryptocurrencies such as Celsius and Voyager Digital, or the pain felt from the bust of the large hedge fund Three Piler Kapital.
Shares have managed to turn around this week, and have climbed steadily upwards over the last four days.
But investors have not yet put their worries about the recession behind them. Shares were in danger of snapping up the winning streak as the end of the week approached.
“This is unlikely to be a turning point from a macro perspective,” Hasegawa wrote. “The market is now all the more sensitive to economic data.”
Reports on Friday, including non-farm wages and unemployment, could provide a catalyst. While labor data is generally a lagging indicator, signs of a decline may raise hopes that the Federal Reserve will become less aggressive.
Traders with Bitcoin derivatives appear to be bullish.
Overall open interest in Bitcoin futures is at its highest level since before the sale in mid-June. This signals how much money is unlocked in derivative bets – usually with influence or borrowed money – while traders hunt for position before a big move.
In addition, the financing rate for Bitcoin futures positions has been consistently positive for the first time since mid-June, indicating that traders have overwhelmingly bet that the price of the largest crypto will rise.
These signs are important for two reasons.
First, they are proof that sentiment among traders with digital assets is brighter after weeks of a downright depressing mood.
Secondly, they show that there is momentum behind a further rally, partly because more price gains will push short positions – or bet that Bitcoin will fall. Should cryptocurrencies continue to climb, traders who have bet on a downturn may be forced to “cover” their positions by buying back Bitcoin, leading to higher prices again.
“Hedge funds that focus on broader contagion and market capitulation can lick their wounds as Bitcoin and Ethereum both provide impressive gains,” Bitfinex analysts wrote.
Write to Jack Denton at [email protected]
