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Crypto prices are far off recent lows, but remain dramatically down this year.
Ozan Kose/AFP via Getty Images
Bitcoin
Prices soared on Wednesday as investors flocked back to digital assets amid a return to risk sentiment in broader markets.
Analysts are watching closely for signs that this rally has momentum – and where it might take prices after a recent rout.
The price of Bitcoin jumped 7% in the past 24 hours to $23,500, outperforming most other major tokens and moving on to the highest levels since the biggest crypto fell to as low as $18,000 from $30,000 in a severe selloff in mid-June.
“A short-term outlook for Bitcoin is bullish and it could go as high as around $29,000 this week,” Yuya Hasegawa, an analyst at crypto exchange Bitbank, wrote in a note.
Now three weeks after the end of its worst quarter since 2011 – a year in which Bitcoin crossed the $1 threshold for the first time – analysts are looking to see if the crypto has formed a bottom after a period of dramatic price declines. The market value of digital assets has collapsed to $1 trillion from $3 trillion in November 2021, with some of the most severe declines in the past 12 weeks.
“Bitcoin prices have now traded below the realized price for over a month, with many signals that a deep and complete capitulation has occurred,” analysts at crypto-intelligence firm Glassnode wrote in a note. “Many signals indicate that real bottoming may be underway.”
Realized price refers to the average cost basis for Bitcoin – book value of purchased Bitcoins divided by the number of tokens in circulation. At pressured price levels, this number can reveal whether most holders are underwater.
Hasegawa’s bullish price target on Bitcoin suggests further gains in the 25% range could be reached in the coming days – but others are less convinced that this rally has legs and could take the crypto higher.
“The rally is strong, but with short-term overbought conditions already returning, we feel it is premature to call it the start of a lasting reversal,” Katie Stockton, managing partner at technical research group Fairlead Strategies, wrote in a note. .
From a technical perspective, Stockton sees three milestones as evidence that a sustained rally is in play.
Bitcoin needs to break out above the $25,000 resistance level and see a moving average convergence divergence (MACD) – which is a technical indicator – above zero every day as well as a positive weekly signal, Stockton said. In addition, the weekly stochastic, which is a momentum indicator, must be above 20% in an oversold rally.
“If these positive technical developments occur, secondary resistance near $28,800 will be targeted for the relief rally, at a minimum,” Stockton said. “We will still see the rally in the context of negative long-term momentum and will not be in favor of rebuilding long-term positions until monthly indicators improve.”
Ether,
the second largest token that has recently outperformed Bitcoin gained 2% to $1,550. Smaller cryptos, or altcoins, were more mixed, too
Solana
1% higher as
Cardano
shot up 10%. Memecoins – originally intended as internet jokes – were among the top performers as
Dogecoin
advanced 12% and
Shiba Inu
went up 11 percent.
Write to Jack Denton at [email protected]
