Bitcoin recovered to around $30 000 after spending most of the weekend below that level.
The largest cryptocurrency rose as much as 1.8% to US$30 450 on Monday morning in Asia. That’s after it fell for seven straight weeks, the longest losing streak since August 2011. That echoed the seven-week decline in the S&P 500.
“If the S&P falls some more, that should create one final flush and a great buying opportunity for bitcoin,” Fundstrat Global technical strategist Mark Newton said. “There’s a lot of bearishness, and we should be approaching a time when you really want to buy into that in the next couple of months.”
Bitcoin has struggled in recent weeks as the US Federal Reserve hikes interest rates and inflation remains high, boosting prospects for more monetary tightening. While the token has been touted in the past as a hedge against inflation, it’s proved in recent months to be highly correlated with risk assets like companies in the Nasdaq 100, which has tumbled amid the changing regime.
“Bitcoin is likely to hover around $29 000 to $31 000 for the next couple of weeks,” said Noelle Acheson and Konrad Laesser of Genesis Global Trading in a note on Friday. They added that some economic-data releases, like US GDP or inflation measures, “could change the narrative”.
Rick Bensignor, president of Bensignor Investment Strategies and a former Morgan Stanley strategist, uses DeMark technical indicators — which compare the most recent maximum and minimum prices to the previous period’s equivalent price to measure demand — to argue bitcoin likely won’t break higher anytime soon.
“I’d still expect another four weeks of heaviness,” he said in a note on Monday. The 12 May low around $25 425 and the bounce from that keeps support intact at $28 900, he said. — (c) 2022 Bloomberg LP