and other cryptocurrencies rallied for a third day, giving back gains from the final phase of a month-long rally as investor sentiment started August on the wrong foot after a great July.
The price of Bitcoin fell 3% in the past 24 hours to below $22,700. The biggest digital asset has moved higher from around $19,000 a month ago to a peak of more than $24,000 last week, but has since fallen back. Bitcoin continues to trade at about a third of its all-time high near $69,000 reached in November 2021.
“Bitcoin registers losses for third straight day in what could be a sign that recovery momentum is slowing,” Craig Erlam, analyst at broker Oanda, wrote in a note. “There were certainly signs of this during the recent rally that topped $25,000, and the corrective pattern that has formed over the past month and a half can easily be seen as a bearish setup following the selloff that preceded it.”
From a technical perspective, analysts said the outlook for Bitcoin is mixed. With the June bottom below $18,000 behind it, digital assets appear to be on the upswing, but the all-time highs and $3 trillion crypto market cap of nine months ago remain a long way off as the macro outlook continues to be volatile. .
“A larger loss of near-term momentum would support a retest of support around $18,300 to $19,500,” Katie Stockton, managing partner at technical research group Fairlead Strategies, wrote in a note. “A decisive break above $25.00, despite indications to the contrary, would support an extended relief rally and test of previous support near $30,000.”
Bitcoin and its ilk should in theory trade independently of traditional finance – and are indeed often influenced by factors within crypto, such as the meltdown of stablecoin Terra – but have shown a correlation with other risk-sensitive assets, such as stocks. As such, cryptos have followed suit
into a deep sell-off this year amid soaring inflation and the risk of recession from much tighter monetary policy.
After a stellar July for both stocks and crypto — with the S&P 500 seeing its best month since November 2020 and Bitcoin climbing nearly 25% — investor sentiment has been volatile in August. The latest macro concern, along with recession risks, has been geopolitical tensions over Taiwan. A dampened appetite for risk could add pressure to crypto, which could be poised for another leg lower in the coming weeks or months, according to Stockton at Fairlead.
“Intermediate and long-term momentum indicators continue to point lower, raising the risk of another significant decline in the months ahead,” Stockton said.
— the second-largest crypto, which has recently outperformed its larger peer — fell 7% to just above $1,550. Altcoins, or smaller cryptos, were similarly weak, with
loses 7% and
6% lower. Memecoins showed more of the same, which
each shed 5%.
Write to Jack Denton at [email protected]