Bitcoin
and other cryptocurrencies advanced Thursday to fresh 18-month highs, carrying forward the momentum from a recent rally and supported by a number of factors that suggested gains can continue.
The price of Bitcoin has risen 7% over the past 24 hours to above $37,900, its highest point since early May 2022, before cryptos plunged into a brutal bear market when the stablecoin network Terra collapsed and set off a string of industry bankruptcies. The largest token has climbed by more than one-third in just weeks, spurring calls of a new bull market and ending a multi-month period of historically low volatility and trading volumes.
“Looking ahead, the breakthrough above the $37,000 mark will be a significant milestone and our outlook is optimistic concerning Bitcoin’s price action,” said Douglas Comin, a senior crypto options trader at the investment group XBTO. “The momentum appears poised to persist as the cryptocurrency market continues to garner attention from institutional investors.”
Bitcoin continues to vastly outperform the
Dow Jones Industrial Average
and
S&P 500,
gaining on the back of mostly crypto-native catalysts, though the backdrop for risk-sensitive assets more broadly has also improved. The key force behind this token rally has been hopes that U.S. regulators will soon approve the first spot Bitcoin exchange-traded fund (ETF), which would be expected to usher in a fresh wave of retail and institutional investor interest in cryptos.
There are reasons to believe gains can continue.
For one, traders are extremely bullish, piling into big bets in the crypto derivatives market that should put upside pressure on prices. There is a significant quantity of Bitcoin call options expiring next month around both the $40,000 and $50,000 mark, Rachel Lin, CEO of trading platform SynFutures, noted this week. Call options are contracts that give traders the right to buy an asset at a determined price. Another sign of bullishness is the Crypto Fear and Greed Index, which hit the highest level this week since November 2021, when Bitcoin was near all-time highs around $69,000.
Two, the technical market backdrop is supportive of a rally. “Should Bitcoin see another breakout, it would put next resistance near $42,200,” Katie Stockton, managing partner at technical research firm Fairlead Strategies, wrote in a note this week, when Bitcoin was trading below $35,000. Alex Kuptsikevich, an analyst at broker FxPro, has also said Bitcoin’s current levels are “low-density territory”—a range between roughly $35,000 and the low $40,000s in which Bitcoin hasn’t spent much time during bull runs in 2021 and the 2022 selloff.
Three, the supply of tokens is historically tight, with the amount of Bitcoin in the hands of long-term holders who are reluctant to sell near an all-time high, according to analysts at crypto market research group Glassnode. Tight supply in a market where bullish traders are clamoring for crypto has the potential to supercharge gains. “The coming months are shaping up to be exciting ones for Bitcoin investors,” the Glassnode analysts said.
Beyond Bitcoin,
Ether
—the second-largest crypto—gained 6% to above $2,000. Smaller tokens or altcoins posted solid gains, with
Cardano
and
Polygon
popping 9% each. Memecoins also advanced, with
Dogecoin
5% in the green and
Shiba Inu
6% higher.
Write to Jack Denton at jack.denton@barrons.com
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