Bitcoin
and other cryptocurrencies were slipping Friday after running up gains on Thursday. Crypto traders remain bullish after a rally over the past month, with Friday’s release of the U.S. jobs report a likely catalyst for another big swing one way or another.
The price of Bitcoin has shed 2% over the past 24 hours to $23,400, having briefly spiked to about $24,000 in early trading to change hands near its highest level in six months. Bitcoin has risen 40% so far this year as traders pile back into risk-sensitive assets like cryptos and stocks, though it remains at about one-third of its late-2021 all-time high.
“Bitcoin is riding this risk-on mood from Wall Street, but it might struggle to break above massive resistance from the $25,000 level,” said Edward Moya, an analyst at broker Oanda.
Upbeat sentiment about the macro picture has boosted both Bitcoin and stocks in recent weeks, with the
Dow Jones Industrial Average
and
S&P 500
also running higher. A tough environment of high inflation and rising interest rates over the past year made digital assets and equities highly correlated, and optimism that the worst of the rate hikes from the Federal Reserve—a key headwind—has benefited both asset classes.
Investors took the latest macro catalyst in stride, rallying after the Fed’s decision this week to hike rates—albeit with a much smaller increase than the rate boosts across much of last year—and will look to do the same Friday. The all-important U.S. jobs report is due in the day ahead and will be the next catalyst for risk, with investors wanting to see more signs that the Fed’s work in cooling the economy is working.
Crypto traders, for their part, are positioned firmly bullishly heading into the jobs report—and are likely looking for a good reason to test Bitcoin’s recent resistance around $24,000, or even a jump to near $25,000.
“On the derivatives front, data shows that traders are still largely optimistic about future Bitcoin prices,” said Rachel Lin, the CEO of crypto derivatives platform SynFutures. “The long-short ratio and lending rates reveal that bulls are firmly in control.”
But this positioning may also signal that traders are getting a bit too jubilant—especially amid multiple signs that the latest crypto rally is largely built on sand, with a new bubble forming against a weak technical and fundamental backdrop.
“While this week’s market momentum is welcome, data shows that bulls may be becoming overly confident in the current market condition,” Lin said.
Beyond Bitcoin,
Ether
—the second-largest crypto—shed 2% to below $1,650. Smaller cryptos or altcoins were also in the red, with
Cardano
losing 1% and
Polygon
slipping 4%. Memecoins were more mixed, with
Dogecoin
down 3% and
Shiba Inu
4% higher.
Write to Jack Denton at jack.denton@barrons.com
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