Some crypto traders turning against each other
Bitcoin is gaining for the third straight day amid a broader rally in risk assets, with the digital currency briefly rising above US$24,000 for the first time in more than a month.
The world’s largest digital token rose as much as 3.3 per cent Wednesday to trade around US$24,066, the highest level since mid-June. It’s on pace to advance for the seventh session out of eight, adding more than 20 per cent over the past week. And other cryptocurrencies are also rallying, with Ether catching attention with a greater-than 50 per cent surge since July 12.
“The forced digital asset selling associated with various crypto lenders and entities appears to have abated for the time being,” said Josh Olszewicz, head of research at crypto fund-manager Valkyrie Investments. He’s watching the US$25,000 level for Bitcoin next.
The crypto rally is happening as US stocks have come off recent lows. Crypto and stocks -- and tech firms in particular -- have been trading in tandem all year.
The development is heartening for many crypto fans who had been watching prices sink all year. Billionaire crypto investor Mike Novogratz said the “worst is over” in the crypto industry and that while the current issues may have increased distrust among retail investors, the argument for Bitcoin is still strong, particularly as central banks around the world fight inflation. While the price action has calmed some crypto-trader nerves, the fall from November’s high still looms large. Bitcoin is back up to levels last seen mid-June, well below the near-US$69,000 peak.
“The rally is strong,” wrote Katie Stockton, co-founder of Fairlead Strategies, pointing out that Bitcoin crossed above its 50-day moving average this week for the first time since April. Still, she said it might be premature to call this latest leg higher the start of a meaningful reversal. Among other things, Stockton said she’s watching for a break above US$25,000 for signs it’s sustainable, as well as a weekly “buy” signal from an indicator called MACD, a momentum gauge.
And there are still plenty of worrying headlines. The recent gains in Bitcoin appear as cryptocurrency exchange ZipMex halted withdrawals due to volatile market conditions and financial difficulties of counterparties. Other crypto firms, including Vauld and CoinFlex, have already suspended withdrawals as the contagion continues to travel throughout the industry. Market changes have allowed for players including FTX’s Sam Bankman-Fried to perform a substantial industry consolidation, including with BlockFi and Voyager.