Cryptocurrencies, including Bitcoin, paused trading on Monday after reaching their highest levels since August over the weekend. Some traders call it a new bull market since cryptocurrency values have recovered to where they were before the terrible FTX crash.
When it comes to major cryptocurrency, Bitcoin has recovered from two-year lows but dropped less than 1% in the last 24 hours to $22,750 after surpassing $23,000 for the first time in five months over the weekend.
And if we look closer, Bitcoin’s rise has paralleled – if not surpassed – a comparable rise in the stock market. The Dow Jones Industrial Average and S&P 500 have risen as investors are bullish on risky assets. Over the last year, a macro background of high inflation and increasing interest rates have strengthened the relationship between cryptos and equities, and recent hints that inflation is dropping and the Federal Reserve would relax back on monetary policy have strengthened both asset classes.
According to Naim Aslam, an analyst at brokerage AvaTrade, Bitcoin has a strong positive correlation with risk-on factors, and it has been rising as stock markets have made new gains. The big question is whether it will continue to trade higher, as cracks have begun to appear in the risk-on rally. Traders may be withdrawing their support for risky assets this week. Because of Fed officials’ comments, the Fed seems in no hurry to end its ultra-aggressive monetary policy.
However, some traders predict even bigger gains following Bitcoin’s incredible run. The loss of FTX and the subsequent bankruptcy procedures appeared to be an existential catastrophe for cryptos — but much of that pessimism appears to be gone. Prices above pre-FTX levels have sparked a wave of confidence amid predictions that the harsh bear market that has gripped the area for a year may be coming to an end.
“Bitcoin has started a new bull market and is headed for $24,800, where the psychologically important 200-week moving average and the 161.8% Fibonacci level of the momentum from the December lows are concentrated,” said Alex Kuptsikevich, an analyst at broker FxPro, referring to technical market analysis levels that would indicate strength across cryptos.
Yuya Hasegawa, an analyst at crypto exchange Bitbank, echoed Kuptsikevich’s technical view for Bitcoin, saying that from a technical standpoint, Bitcoin’s trend indicators are generally shows a strong rising trend, and the price appears to be heading for its August high of $25,200.
However, Hasegawa also stated that Bitcoin’s Relative Strength Index (RSI) is diverging from the price’s uptrend and starting to fall, which is not a favorable indicator of the current price trend. Bitcoin could test its August high and find support between $20,000 and $21,000, but with RSI divergence and several big tech earnings due out this week, the price could become very volatile.
Many traders are still looking for Bitcoin to reach $30,000, which would represent a price level not seen since the start of the crypto credit crisis last June, when many lenders declared bankruptcy amid market volatility. While prices may be heading toward $25,000 in the short future, Kuptsikevich and Hasegawa believe the important $30,000 milestone will take a bit longer to achieve. As Kuptsikevich commented, the market may need a prolonged recharge and consolidation period before a fresh rising wave can start.
Beyond Bitcoin, Ether, the second-largest cryptocurrency, increased by less than 1% to $1,630. Cardano was 1% lower, and Polygon was 1% higher among smaller cryptos or altcoins. Memecoins performed similarly, with Dogecoin rising 4% and Shiba Inu falling slightly.