Bitcoin price stalls. Where Crypto is heading next.

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Bitcoin prices continue to hover around $23,000, having started the year below $17,000. The time of dreams

Bitcoin and other cryptocurrencies were on pause on Tuesday, hovering at consolidated levels after surging in price since the start of 2023. The momentum behind the big crypto rally may have waned and assets numbers may decline.

Bitcoin price rose less than 1% in the past 24 hours to $23,000. The biggest digital asset has soared 40% year-to-date, leaving behind two-year lows and trading at the highest levels since last summer – a trend that many crypto traders are betting means the beginning of the end of a brutal bear market. But the momentum largely faded in February, with Bitcoin failing to hold above the $24,000 level and steadily returning to around $23,000.

“Bitcoin saw its countertrend rally stall in response to short-term overbought conditions,” said Katie Stockton, managing partner at technical research group Fairlead Strategies. “We expect Bitcoin to pull back further to support our near-term bearish bias, noting that it has seen a noticeable loss of near-term bullish momentum. Initial support is at the 200-day moving average, near of $19,700.

Alongside the recent rally in cryptos comes similar action in the stock market, where the Dow Jones Industrial Average and S&P 500 have soared this year as investor sentiment for risk-sensitive assets, like digital assets and stocks, has improved. A correlation between asset classes means that Bitcoin and its peers will react similarly to macroeconomic catalysts related to inflation, interest rates and recession risks, with a series of remarks from Federal Reserve officials coming this week.

But there are other technical factors that are supporting Bitcoin and bolstering the case for a market looking past “crypto winter,” as Matthew Sigel, head of digital asset research at Bitcoin, pointed out. fund manager VanEck, in a recent note.

These include the fact that Bitcoin has never fallen for two consecutive calendar years – and the asset had one of its worst years on record in 2022 – and that the current bear market has lasted over 380 days, which is longer than average. November also saw a “significant capitulation” from long-term holders — people who had held Bitcoin for at least six months — noted Sigel, which is another sign that the bear market bottom may have passed. At the same time, Bitcoin’s leverage ratio fell sharply, Sigel said, suggesting caution among market participants.

Additionally, some global money supply trends are also a tailwind for Bitcoin, which is highly correlated with M2 money supply growth, Sigel said. M2 growth recently hit 0% on an annual basis for the first time, but the three-month rate of change in global money supply now exceeds the 12-month change, which is “historically a very positive indicator.” for a bitcoin fund,” Sigel said. . “Investors who focus solely on the Fed could miss the improvement in global liquidity.”

Beyond Bitcoin, Ether – the second largest crypto – gained less than 1% to $1,650. Smaller cryptos or altcoins were mostly unchanged, with Cardano lower by less than 1%, although Polygon gained 3%. Memecoins were slightly weaker, with Dogecoin down 1% and Shiba Inu losing almost 4%.

Write to Jack Denton at [email protected]

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