Bitcoin rallies and erases its losses for the year
28 March, 2022
Bitcoin’s stealthy rally over the past two weeks not only pushed it past a key level of $45,000, it also put the world’s biggest cryptocurrency back in positive territory for the year.
The token rose as high as $47,583 in early Hong Kong trading, well above the $35,000-to-$45,000 range where it has been since early January. With the latest gains, Bitcoin is now up about 1.2 per cent for the year, compared with a 4.7 per cent decline for the S&P 500.
If Bitcoin can keep breaking through “in a meaningful way”, it should gain a lot of upside momentum, said Matt Maley, chief market strategist at Miller Tabak + Co.
The coin has been stuck on a tight path as the Federal Reserve and other central banks remove some of the stimulus measures put in place in response to the coronavirus pandemic downturn. That means there is less cash to go towards riskier assets, including cryptocurrencies. In addition, digital currencies came under scrutiny with speculation swirling that they could be used to skirt sanctions against Russia for the invasion of Ukraine, although many analysts reject that claim.
Even so, Bitcoin, and other tokens like Ether, started a steady advance this month alongside broader increases in US stocks. But it took until the past day for Bitcoin to convincingly exceed $45,000, a level it had only briefly touched since early January.
“As we test the top of the 2022 trading range for the fifth time, this is another one of these Bitcoin moments when the narrative could swiftly change and investors pile in, propelling the Bitcoin price higher,” said Antoni Trenchev, co-founder and managing partner at Nexo.
“It might just be time to awaken from the Bitcoin-sideways slumber that’s been 2022.”
For all of Bitcoin’s recent strength, its performance has been bested over the past few days by alt-coins such as Cardano, Solana, Polkadot and Dogecoin.
Cardano in particular has found favour with traders, jumping 30 per cent over the past five days. Those tokens remain down for 2022, however.
Bitcoin was well above its 50-day moving average, which currently sits at about $41,085.
That puts it around the 80th to 90th percentile and in the “overbought” range, according to Bespoke Investment Group. But, although that signals potential for a downturn in price for many assets, with Bitcoin that has historically been the opposite, the company said.
“When it has been similarly overbought in its past [over the last five years], it has averaged significant gains going out one to 12 months,” according to the Bespoke report.
When Bitcoin has been in the ninth decile of its spread versus its 50-day average, it has historically risen 16 per cent in the next month, is up 100 per cent six months later, and has gained 274 per cent after a year, according to data compiled by Bespoke.
“This isn’t normally what you see for the typical stock or ETF, but because Bitcoin has mostly traded higher over the years and really has a lot of momentum trading behind it, overbought levels have yet to become a headwind for this particular space,” Bespoke wrote.
Bitcoin’s gains since mid-March – even as the war in Ukraine dragged on – also bolstered it versus gold, its traditional safe-haven rival, which traded sideways during the period.
Source: www.thenationalnews.com
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