Bitcoin extended gains from the past two sessions, jumping nearly 5% on Wednesday to as high as $24,210, its highest level since June 13, raising investors’ hopes for a sustained rally after months of volatility in crypto markets.
The largest cryptocurrency BTCUSD,
is still trading 65% lower than the record in November.
Minor cryptocurrencies also rose on Wednesday, with ether ETHUSD,
up 5.8% in the past 24 hours to around $1,594, according to CoinDesk data. Binance Coin BTCUSD,
rose 3.3% to about $270.3, and XRP XRPUSD,
rose 3.9% to $0.38. Dogecoin DOGEUSD,
rose nearly 10% to $0.07, and Shiba Inu SHIBUSD,
advanced 8% to around 0.00001.
“Like many risk assets, the crypto market is benefiting from investors lowering expectations for the Fed’s top rate this cycle to around 3.75% around the end of the year,” Matt Weller, global head of market research at Forex.com wrote in a Wednesday note. US stocks rose on Wednesday, building on Tuesday’s rally.
See: How high does the Fed need to raise interest rates to cool inflation? Nobody knows
“As long as the Fed sticks to a 75bps rate hike at the July meeting, the crypto rally could extend further,” Weller wrote. “However, it’s worth noting that both Bitcoin and Ethereum saw major countertrend rallies in the 2018 bear market before eventually falling to new cycle lows, so long-term investors shouldn’t wave the ‘clear’ flag just yet.”
Katie Stockton, founder and managing partner of Fairlead Strategies, echoed the point. “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,” Stockton wrote.
From a technical perspective, a sustained relief rally would be indicated by “a breakout above cloud-based resistance near $25,000, a weekly MACD buy signal and weekly stochastics above 20% in an oversold rally,” according to Stockton.
On the derivatives front, trading volume and open interest in bitcoin futures, which measure the total number of outstanding contracts, have picked up in recent weeks, noted Corey Miller at decentralized exchange dYdX.
“It seems like more traders are coming back to the market,” according to Miller. “The more traders continue to return to the market, the greater the potential for this rally.”
Nevertheless, the market continues to digest contagion from the bankruptcy of hedge fund Three Arrows, lender Celsius and broker Voyager Digital. One of the latest casualties could be Singapore-based crypto exchange ZIPMEX, which said on Wednesday it would pause user withdrawals.
