Bitcoin Is Holding Firm. Have Cryptos Really Hit Their Bottom?
BitcoinBTCUSD +8.49% and other cryptocurrencies were trading mixed Tuesday, with prices wavering amid fragile investor sentiment following a selloff in the stock market on Monday.
The price of Bitcoin rose slightly over the past 24 hours to $22,171, having moved as high as $22,700 on Monday. Bitcoin continues to hold around the highest levels since a selloff in mid-June drove the largest crypto as low as $18,000 from $30,000, and is changing hands at less than one-third its all-time high near $69,000 from eight months ago.
“While Bitcoin saw positive momentum this week, it remains range-bound when you take a broader view, and is still struggling to cross the $22,000 resistance,” said Joe Diasquale, the CEO of crypto asset manager BitBull Capital.
After a recent crypto rally, market participants are mulling over whether digital assets have hit their bottom following a brutal period.
Bitcoin just capped its worst quarter since 2011, a year in which it crossed $1 for the first time, and the total market capitalization of the crypto space has collapsed to $1 trillion from nearly $3 trillion in November 2021.
“For now, we remain interested in the bottom of this range when it comes to Bitcoin’s price, and are monitoring for accumulation during this range-bound movement,” DiPasquale said. “If Bitcoin does not break down from this range by the end of the month, especially post the [Federal Reserve’s monetary policy meeting ending July 27], we could see it as a strong sign of a potential long-term bottom.”
Cracks in the crypto ecosystem, such as the failure of stablecoin Terra and collapse of high-flying hedge fund and institutional borrower Three Arrows Capital, have heaped pressure on digital assets. But so too have macro pressures, and Bitcoin’s clear correlation to other risk-sensitive assets like stocks.
Bitcoin has followed the S&P 500 and Nasdaq lower in recent months as investors have fretted over the risk of recession. Facing the highest inflation in decades, the Federal Reserve has already moved aggressively to tighten monetary policy and raise interest rates—risking causing a recession, which would be an unkind environment for risky bets like Bitcoin.
Stocks staged a rally late last week, and initially looked to continue that on Monday before it all came apart and the indexes ended lower. But risk sentiment seems to have made at least somewhat of a permanent improvement.
“Wall Street is enjoying a positive risk-on mood that is good news for cryptos,” said Edward Moya, an analyst at broker Oanda. “If Bitcoin continues to stabilize here over the next two weeks, the crypto winter could be over. Market positioning became extreme and that could allow for the bottom to have been made if the institutional money buys in.”
Beyond Bitcoin, EtherETHUSD +7.09% , the second-largest crypto, gained 5.1% to $1,552. The token underpinning the Ethereum blockchain network has rebounded more than 40% over the past week, outperforming Bitcoin. Altcoins, or smaller cryptos, were also upbeat, with Solana SOLUSD +17.34% up 7% and CardanoADAUSD +7.65% 2% higher. Memecoins were more mixed, with DogecoinDOGEUSD +5.04% around flat and Shiba Inu rising 3%.
By Jack Denton