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Bitcoin prices have recently traded in a range from $20,000 to $24,000.
Dreamstime
Bitcoin
and other cryptocurrencies rose Thursday along with stocks, with investors continuing to look to Federal Reserve Chairman Jerome Powell’s speech Friday at the Jackson Hole economic conference as a catalyst likely to swing digital assets.
The price of Bitcoin has risen 2% in the last 24 hours to $21,700. Bitcoin was well above the recent low of $20,800, which came after a fall late last week that saw the largest crypto fall from above $24,000 .It was Bitcoin’s highest level since a dramatic selloff in mid-June dragged the token down from $30,000, which is still less than half of the all-time high near $69,000 reached in November 2021.
In the short term, Thursday’s rise in the digital asset space matches a rise in share prices following a package of fiscal stimulus in China, which sent shares of Chinese stocks higher. While cryptos should in theory be uncorrelated assets, they have proven to be most tied to risk-sensitive plays like stocks.
“Bitcoin remains fairly stable after last Friday’s shock plunge. As is the case across financial markets, traders appear to have their eyes on Jackson Hole later this week to dictate the next moves,” wrote Craig Erlam, analyst at brokerage Oanda. in a note.
Jackson Hole is key because investors hope Powell will give the market more clarity on the Fed’s monetary policy path. Faced with the highest inflation in 40 years, the Fed has already moved aggressively to tighten financial conditions this year, including with the biggest rate hikes in decades.
A rally in July – which also boosted Bitcoin by around 25% – was largely based on optimism that the Fed had reached the peak of hawkishness, but that narrative unraveled in August amid a return of investor jitters over inflation and the economy.
The Fed and interest rates are so important to Bitcoin because higher interest rates reduce the attractiveness of risk-sensitive assets like stocks and cryptos, as well as increase the risk of recession, which will further hammer risky bets.
“[Bitcoin] continues to look vulnerable to a $20,000 break which could be a painful blow, but if Powell says something that excites the risk-on crowd, we could see it quickly eat away at last week’s losses,” Erlam said, referring to the slide in crypto.prices last week that pulled Bitcoin down from over $24,000.
Beyond Bitcoin,
Ether
— the second-largest token — rose 4% to over $1,700. Smaller tokens, or altcoins, were also stronger, with
Solana
3% higher and
Cardano
1% into the green. Memecoins, which were initially intended as internet jokes, also got involved
Dogecoin
up 2% and
Shiba Inu
increases by 1%.
Write to Jack Denton at [email protected]
