Bitcoin Price Rally. A key ‘correlation’ is now in crypto’s favor.

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Bitcoin
Prices have consolidated above a key level as most cryptocurrencies rose on Thursday, helped by slow but steady gains in the stock market.

The price of Bitcoin rose 2% over the last 24 hours to over $ 20,500, after regaining the $ 20,000 mark on Wednesday after falling through it a week ago. The largest digital asset is trading at less than a third of its record high near $ 69,000, reached in November 2021, but is now well above the bottom of $ 18,000 that was hit below the bottom of a mid-June sale.

“Bitcoin has clung to the $ 20,500 region, although it can probably thank the Nasdaq correlation for that,” wrote Jeffrey Halley, an analyst at broker Oanda. “Despite several credit implosions in the crypto area, the reality of concentration risk in a loan portfolio hits home.”

In fact, crypto holders can thank optimistic action in the stock market for the recent gains in digital assets. While they should theoretically trade independently of ordinary finance, Bitcoin and its peers have been shown to be correlated with stocks, and especially technology stocks over the past year.

For the most part, this connection has been painful. The

S&P 500
and tech stock heavy

Nasdaq
are both in a bear market as investors worry about the risk of recession amid a dramatic rise in interest rates from the Federal Reserve – an environment that does not support risky games like Bitcoin.

But equities have reversed, rising slowly but steadily in the face of continuing recession concerns since investors returned from the long weekend of 4 July. And that should help crypto.

Crypto certainly does not help itself. Worsening the digital assets route – which just made Bitcoin the worst quarter since 2011, a year in which it broke the $ 1 barrier for the first time – has been a series of high-profile errors in the crypto area. Cracks in the industry include meltdown of stablecoin Terra, breakdowns at lenders including Celsius, Vauld and

Voyager Digital
,

and the bust of a large hedge fund that threatens further infection.

In addition to Bitcoin, much of the digital asset area was lifted.

Ether,
the second largest crypto, got 3.5% to $ 1200. Smaller tokens, or altcoins, also increased

Solana
and

Cardano
both up 2%. Memecoins – originally meant as internet jokes – were similarly higher as

Dogecoin
and

Shiba Inu
rose 2%.

However, “negative sentiment among market participants remains,” wrote Marcus Sotiriou, an analyst at digital asset broker GlobalBlock in a Wednesday note.

Sotiriou said that digital asset manager

Coin shares

reported inflows of $ 51 million to a new short Bitcoin strategy – just one week after institutional investors withdrew $ 423 million from cryptocurrency funds.

“This is a result of the current uncertainty with the macro environment, as the risk of a recession worsens,” the analyst wrote. “Institutions are bearish on the asset.”

Write to Jack Denton at [email protected]