- The token heads to the fourth trading day above the key level
- Crypto profits are still far from the Uptober traders they wanted
Bitcoin’s four-day streak above $20,000 has strengthened cryptocurrency traders. They have bet the token should resurface after a brutal year.
On Tuesday, the largest cryptocurrency by market value advanced above $20,000. And as of Friday morning in New York, it had yet to fall below that threshold. The breakout marked the end of a nearly three-week slump that saw Bitcoin trade below the key level for the longest stretch since late 2020.
Other cryptocurrencies staged their comebacks. For the past few days, Ether has traded at $1,500 or slightly above after spending much of the month near $1,300. Meanwhile, Dogecoin is up around 40% since the end of Sunday. Elon Musk, an ardent fan of the altcoin, completed his $44 billion acquisition of Twitter Inc. this week.
Still, it’s not the “Uptober” cryptocurrency traders wanted. Cryptocurrency fans had seen Bitcoin post huge gains last October. Now last year, for example, the token advanced 40% during the month. But the gains in digital assets this week were encouraging for cryptocurrency bulls who expect the worst of this year’s selling to be behind us.
“Crypto has been making solid fundamental progress in recent months,” wrote Matt Hougan. Matt Hougan is a chief investment officer at Bitwise Asset Management. He points to the successful upgrade of the Ethereum network, as well as advancements on the regulatory front. “But those fundamentals haven’t been reflected in prices.”
Hougan said a couple of events pushed cryptocurrency prices higher this week. On the one hand, Tuesday’s data showed U.S. consumer confidence fell to a three-month low. According to Hougan, market participants took the data to signify that the Federal Reserve’s aggressive interest rate hikes are having the desired effect.
Bitcoin has already fallen 70% from its highs. It is a greater magnitude of loss than has been seen with many other assets. It has been said by Steven McClurg, co-founder, and chief investment officer of digital asset fund manager Valkyrie Investments.
“The flat markets before surpassing $20,000 again are likely due to support from corporate and institutional owners who largely bought around those prices and show that there is support for the asset, rather than a capitulation that would have caused an intense drawdown,” he said. “There’s a little glimmer of hope here that things could start to improve sooner rather than later.”
While some Bitcoin proponents are now ready to proclaim the end of this latest “crypto-winter” bear market, at least one analyst is taking a more reserved tone.
“We caution against countertrend exposure because bear market rallies are often fast and furious, making them difficult to time,” said Katie Stockton, co-founder of Fairlead Strategies.
Several measures show that interest in digital assets has waned during this year’s recession. Retail investors, in particular, have become disenchanted with the asset class and have not been involved in the market in the same way they did during the first two years of the pandemic. Google searches for the word “crypto” have fallen to the lowest levels in the past year.
It’s not just retail: Institutional digital asset products experienced their lowest trading volume this month in data dating back to June 2020, with average daily volume dropping 34% to $61 million, according to CryptoCompare.
Still, these are the exact kinds of trends one might see toward the end of a prolonged drawdown, says Alec Young, chief investment strategist at MAPsignals.
“People giving up something is what happens late in a bear market: Google searches, etc., that’s what you want to see, that capitulation, throw in the towel,” Young said in an interview. “It’s bullish for Bitcoin that people are giving up, that’s what you see in turn.”
Source: BLOOMBERG
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