On Friday, bitcoin (BTC) rallied and returned above the USD 40,000 level for the first time in two weeks, while ethereum (ETH) neared the USD 3,000 level.
At 17:00 UTC, BTC trades at USD 40,426 and is up almost 10% in a day and 9% in a week. ETH jumped 12%, surpassing USD 2,950. It’s also up 22% in a week.
Other coins from the top 10 club are up 5%-13% in a day.
As reported today, some analysts argue that BTC and ETH may be bottoming or are soon to bottom – but with cautionary words attached against premature bullishness.
“The current rise came after considerable rangebound price action that saw volumes drying and shorts increasing. Typically when the market is heavily leaning on one side of a trade (too long or too short), the price can move to counter that weight and squeeze positions,” Joe DiPasquale, CEO of crypto hedge fund BitBull Capital, wrote in an emailed comment.
According to him, in the last two years, risk-on equities and bitcoin have been positively correlated, but this was not the case overall previously.
“This week, the Nasdaq and S&P 500 have recovered where they were before Jan 21, the day BTC sold off from USD 43k to USD 35k. With equities’ partial recovery, all things being equal, we expected to see BTC back to USD 40-41k,” DiPasquale added.
Meanwhile, this jump today is also attributed to recent positive developments in the stock market.
“The fact that AMZN’s earnings went the way of AAPL, MSFT and GOOGL — and not the way of FB — has given investors more confidence to reengage with the risk-on trade,” Matt Maley, Chief Market Strategist at Miller Tabak + Co., told Bloomberg. Also, today was announced that the US economy created far more jobs than expected in January. Nonfarm payrolls increased by 467,000 jobs last month while economists polled by Reuters had forecast 150,000 jobs would be added in January.
Also, according to Hayden Hughes, CEO at Alpha Impact, a trading social media platform, although there were concerns about accelerating monetary policy, there is now a sense among many capital markets that a 50 basis point rate hike is priced in given recent movements in equity markets.
However, Will Hamilton, Head of Trading and Research at Trovio Capital Management, said that throughout this period of consolidation changes in the derivatives market indicate traders continuing to bet on further downside.
“Futures funding has remained in a sustained period of negativity indicating a modest short bias in the perpetuals market, whilst the bitcoin put/call ratio has hit 58%, a level last seen in the FY21 May-July bear market, indicating a strong desire for downside protection,” he said in an emailed comment.
According to him, from an on-chain perspective, further accumulation is evident as new and existing investors continue to increase holdings.
“The number of new bitcoin wallets with a >0 zero balance has hit all-time high of 40.12m during this recent pullback whilst total exchange reserves have declined to multi-year lows, reaching 13.27% of the total circulating supply,” Hamilton noted.
– Bitcoin to Hit USD 93K This Year, According to Less Optimistic Survey
– USD 100K per Bitcoin ‘Hopium’ Now Moved to Mid-2022
– Bitcoin and Ethereum Price Predictions for 2022
– How Global Economy Might Affect Bitcoin, Ethereum, and Crypto in 2022
– Fiat Fears Intensify as Turkey’s Inflation Runs Wild; Citizens Turn to Bitcoin, Tether
– Another Case for Bitcoin as Lebanon Reportedly Targets Depositors’ Fiat
(Updated at 17:17 UTC with the US jobs data. Updated at 18:45 UTC with comments from Joe DiPasquale.)