Text size
Bitcoin prices are back in the familiar $20,000 to $25,000 range.
Ozan Kose/AFP via Getty Images
Bitcoin
and other cryptocurrencies were in for a bumpy ride on Monday as volatile trading, driven by a mix of factors, pulled digital assets in different directions.
The price of Bitcoin rose 2% in the past 24 hours to $22,200, after swinging several times in a range of nearly $1,000 during that period. The biggest digital asset staged an impressive rally on Friday, emerging from around $19,000 to return to the $20,000 to $25,000 range where the token has languished since a mid-June selloff knocked it down from $30,000.
“Our short-term gauges have improved, supporting a larger oversold return,” said Katie Stockton, managing partner at technical research group Fairlead Strategies. “We are not advocating countertrend positions in Bitcoin or other cryptocurrencies at this time, but we would not be surprised to see the upper limit of cloud-based resistance near $23,000 tested before the downtrend regains hold.”
Bitcoin has rallied along with stocks. The
Dow Jones Industrial Average
and
S&P 500
was on course for a fourth consecutive day of gains, after snapping a three-week losing streak following a pre-weekend rally. While cryptos should theoretically trade independently of mainstream finance, they have been shown to be highly correlated to other risk-sensitive assets, such as stocks.
Optimism that inflation is cooling, which could lead to central banks unwinding from aggressively tight financial conditions, has boosted sentiment. The Federal Reserve has delivered the biggest rate hikes in decades in 2022, hitting risk assets and raising the prospect of a recession. This narrative will be tested by inflation data when the US consumer price index (CPI) for August is released on Tuesday.
Helping the largest digital currency has also been a step in the world’s largest fiat currency, which has strengthened this year and put pressure on Bitcoin. The
US Dollar Index,
which measures the dollar against a basket of six peers, fell 1% on Monday and has fallen nearly 3% since hitting fresh 20-year highs last week.
“Bitcoin welcomes the return of risk appetite and a falling US dollar,” said Edward Moya, analyst at broker Oanda. “The broad market rally has rejuvenated cryptos, and it could continue if investors continue to look beyond hawkish central bank overtures and lingering recession risks.”
Adding turbulence to digital assets has been the long-awaited and anticipated upgrade to the Ethereum network known as The Merge, which is expected to be completed in the next few days. Touted as one of the biggest changes in crypto history, the merger has ushered in a wave of renewed interest in Ether – the second largest crypto – and fueled a wave of speculative bets.
Ether
prices fell 1% to $1,750.
Smaller cryptos, or altcoins, were more mixed.
Solana
increased 6% while
Cardano
was down less than 1%. Memecoins – originally intended as internet jokes – were more subdued, with
Dogecoin
and
Shiba Inu
both up about 1%.
Write to Jack Denton at [email protected]
