Bitcoin builds resistance
Bitcoin approached the highest levels of the week as investors continue to debate the implications of rising borrowing rates for riskier assets.
The largest token by market value rose as much as 1.5 per cent to US$20,376, while Ether and Polkadot each rose more than 3 per cent. Other cryptocurrencies also advanced, with an index of 100 of the largest digital tokens adding more than 3 per cent.
Bitcoin’s been glued to a tight trading range of around US$19,500 to US$20,700 over the past week, with the coin unable to break out above US$20,000 in any meaningful way.
“The coin is stuck in a range and momentum is weak,” said Wilfred Daye, chief executive officer of Securitize Capital, a digital asset management firm. Summer seasonality doesn’t help, he added, meaning that there’s low liquidity in the marketplace.
Investors are still grappling with how aggressive the Federal Reserve will continue to be as data shows the US economy continues to be on strong footing while inflation remains high. The US labor market stayed robust in August as employers added jobs and more people entered the workforce, data out Friday showed.
“Into the long US weekend, the market could see some profit taking of short positions today. Hence, a squeeze higher across the crypto space.” said Teong Hng, chief executive at crypto investment firm Satori Research. “Today’s NFP number does not change the current macro picture.”
Bitcoin has largely been trading in tandem with US stocks, which also rose on Friday. Despite the slight bump higher, the largest cryptocurrency remains down more than 50 per cent this year.
“Bitcoin’s response is more or less fully in tune with how risk assets elsewhere reacted to today’s NFP numbers.” said Vetle Lunde, analyst at Arcane Crypto. “It’s promising that BTC holds for now, but investors should pay close attention to the potential implications of the US$19k area breaking. Nevertheless, by now, a vast majority of traders seems to focusing on protection and hedging.