Bitcoin and ether are on track to record their best month since last October, prompting some investors to question whether the crypto bear market is over.
No.1 cryptocurrency BTCUSD,
on Friday hit a high of $24,412, its highest level since June 13, according to CoinDesk data. Bitcoin is up more than 19% so far this month, while Ether ETHUSD,
rose over 50%.
Still, bitcoin and ether are trading 65% down from their peaks last year, respectively.
Despite the recent gains, “market data continues to show that traders are conservatively positioned,” analysts at NYDIG wrote in a Friday note.
Open interest in bitcoin futures and options, which measure the total outstanding derivatives contracts, is coming off recent lows but remains well below record highs, the NYDIG analysts noted. Perpetual swap funding rates also remain largely neutral, according to data from Coinglass. A positive funding rate is usually seen as bullish, as investors are willing to pay in the long position, while a negative funding rate is usually a bearish sign.
“The fact that funding rates remain low on an absolute basis indicates a lack of desire by traders to take directional bets, even though they appear to be trending higher,” the analysts wrote.
From a technical perspective, it is important to see if by the end of this week bitcoin can trade above its 200-week moving average, which currently sits at $22,800, noted Will Clemente, analyst at Blockware Solutions.
Hear from Mike Novogratz at the Best New Ideas in Money festival on September 21st and 22nd in New York. The Galaxy Digital boss has ideas for navigating the crypto winter.
Overall, the macroeconomic environment still plays the most important role, analysts noted. “Not surprisingly, this whole year is going to be dominated by the Fed and what they’re going to do,” said Ben McMillan, founder and chief investment officer at IDX Digital Assets.
The stock and crypto markets rose this week after the Fed Reserve raised its benchmark interest rate by 75 basis points, and Fed Chair Jerome Powell said that while another interest rate hike of the same scale in September was possible, the decision would depend on upcoming economic data. Some traders saw prospects that the Fed would slow the pace of rate hikes, while others believe that such expectations may be premature.
Read: The stock market’s post-Fed bounce is a “trap,” warns Morgan Stanley’s Mike Wilson
