Bitcoin
and other cryptocurrencies slipped Friday, paring gains after the largest digital asset hit its highest level since May 2022 this week, though crypto traders remain optimistic that the rally is only beginning.
The price of Bitcoin has shed 3% over the past 24 hours to below $34,400, retreating after nearing $36,000 on Thursday, which marks its highest level since a brutal bear market accelerated last spring. The biggest crypto has rallied some 30% in a matter of weeks, snapping out of a multi-month period through the summer during which Bitcoin volatility and trading volume had fallen to historical lows.
“Overall, the jubilant mood and the bull party continue in the crypto space. It’s been a long time since we have had such positive sentiment, and many are hopeful about a coming bull market,” said Rachel Lin, CEO of trading platform SynFutures. “For the short-term, there are some negative signs, like the relative reaching overbought levels both at daily and weekly time frames.”
Bitcoin has been propelled largely by optimism that U.S. regulators will soon approve the launch of spot Bitcoin exchange-traded funds (ETFs), which is expected to usher in a fresh wave of retail and institutional investor interest in digital assets. Geopolitical risk from conflict in the Middle East has also renewed the “digital gold” narrative for Bitcoin, with bulls pitching the token as a haven asset.
Like the
Dow Jones Industrial Average
and
S&P 500,
Bitcoin most recently advanced on the back of the latest decision from the Federal Reserve to hold steady on interest rates. Markets now expect that the Fed is finished with its campaign of aggressive rate-hikes, which weigh on risk-sensitive assets like tokens and cryptos particularly hard.
There are also signs from within crypto markets that the trading environment is growing more robust. After Bitcoin’s summer slump, larger traders are coming back into the market—signaling renewed institutional interest—and trading volumes are recovering. “Not only is the price increasing, but we are also witnessing an increase in the number of users and transactions. This is a good sign for the entire ecosystem,” said Lin.
Crypto bulls expect the recent momentum to continue, according to Lin, who pointed to significant concentrations of December Bitcoin call options at the $40,000, $45,000, and $50,000 levels. Call options give traders the right to purchase an asset at a certain price at a certain time—and open interest accruing at these levels is bullish. “This suggests a large number of people are willing to bet that Bitcoin will be significantly higher in two months than what it is today,” said Lin.
Beyond Bitcoin,
Ether
—the second-largest crypto—fell 2% to below $1,800. Smaller tokens or altcoins were more mixed, with
Cardano
climbing 4% but
Polygon
down 2%. Memecoins were in the red, with
Dogecoin
and
Shiba Inu
shedding 3% each.
Write to Jack Denton at jack.denton@barrons.com
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