“Crypto markets have found a floor” according to several major Wall Street analysts
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(Kitco News) – There has been an interesting narrative shift around Bitcoin (BTC) and the cryptocurrency market from some of the biggest players in the financial markets this past week amid rising token prices.
In a note to clients on Monday, JPMorgan analyst Kenneth Worthington indicated that “cryptomarkets appear to have found a floor” with prices recovering in July thanks to “a reprieve in the correction in token prices that has persisted since cryptocurrency market prices peaked in November 2021.”
And it’s not just analysts at JPMorgan who see the tide turning for the crypto market, as Mike McGlone, senior commodity strategist at Bloomberg, also sees a more positive future for the crypto market in the months ahead.
During a recent interview with McGlone, the analyst suggested that Bitcoin will likely transition “to being more of a risk-on asset like bonds and gold and less of a risk-on asset like the stock market” in the second half of 2022.
According to McGlone, the speculative excesses of the 2021 bull market have now washed out and the market is ripe for a fresh rally.
Bitcoin’s price surge above $24,000 on Monday excited market participants and prompted them to call for the start of a new bull cycle. The move may have been a reaction to the triggering of short stop-loss orders and forced short covering, according to David Lifchitz, chief investment officer at ExoAlpha.
Lifchitz suggested that the other likely source of this latest rally is “stealth dip buyers” who have occasionally triggered “mini short-squeeze melt-ups since the June 18 low of $17,593.” There have been four such waves since June 18, with each wave “making a low that was higher than the low of the previous wave, which is constructive.”
BTC/USD 1-Day Chart. Source: TradingView
Looking ahead, Lifchitz pointed to the key overhead resistance levels of $24,700 and $26,000 as the important zones to watch, but admitted that “what happens from there is anybody’s guess.”
A wildcard to keep an eye on, according to Lifchitz, is Wednesday’s CPI report in the US, focusing more on the details and not on the headline “as food prices are expected to continue to soar while energy prices may pull back a bit. , possibly leading to a ‘moderate’ headline level.”
“If people can’t afford food, that’s a problem … that could push the FED to keep raising interest rates longer than the market expects, which could put some cold water on price action sooner rather than later,” Lifchitz said.
As for the worst-case scenario, Lifchitz suggested that “any pullback should not break the bottom of $18k-ish for BTC.”
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