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Bitcoin may have just risen, but cryptocurrencies have almost collapsed in recent months.
Dreamstime
Bitcoin
and other cryptocurrencies rose on Wednesday, helped by the correlation between digital assets and technology stocks. But the crypto area is still under intense pressure, with the possibility of a new leg down in prices.
The price of Bitcoin rose 1% over the last 24 hours to 20,100 dollars, regaining the key mark of 20,000 dollars, as it fell through last week. The largest digital asset is trading at less than a third of its record high near $ 69,000, reached in November 2021, but has stayed above the $ 18,000 bottom hit below the bottom in a mid-June sale.
“I can only assume that the Nasdaq rally also lifted Bitcoin, so that’s the short-term correlation to see now,” said Jeffrey Halley, an analyst at broker Oanda. “My line in the sand for Bitcoin is still $ 17,500.00, anything over there will be noise, errors should trigger a new wave of margin stops.”
Although they should theoretically trade independently of the regular financial markets, Bitcoin and other cryptocurrencies over the past year have been shown to be correlated with other risk-sensitive assets, such as stocks – and especially technology stocks.
Tuesday was a good day for technology stocks, with the technology heavy
Nasdaq
rally 1.8% som
S&P 500
achieved a gain of 0.2% and
Dow Jones Industrial Average
fell 0.4 percent. This will have helped the cryptocurrency prices, at least in the short term.
Ether,
the second largest crypto, gained 1% to $ 1,150. The token underlying the Ethereum blockchain network remains well below its all-time high last November, close to $ 4,900. Smaller tokens, called altcoins, were also included
Solana
up 5% and
Cardano
1% higher. Memecoins – originally meant as internet jokes – also rose
Dogecoin
and
Shiba Inu
both about 3% into the green.
Despite the recent rise in prices above key levels, investors may want to put up with “buying dip” or prematurely calling a bottom for Bitcoin.
“The long-term downside is growing stronger [for Bitcoin]so it can take months before new, long-term oversold conditions take effect, says Katie Stockton, managing partner of the technical research group Fairlead Strategies.
Stockton has seen Bitcoin consolidate in the range of $ 18,300 to $ 19,500 – with the possibility of a price collapse leaving $ 13,900 as a major support level on the downside.
In the event of a huge rally – which seems unlikely in the short term, given the amount of pressure on crypto – Bitcoin is likely to meet resistance near the token’s 50-day moving average around $ 25,400, Stockton said.
Write to Jack Denton at [email protected]
