Bitcoin and Other Cryptocurrencies Advance Amid Risk-On Sentiment
Bitcoin and other cryptocurrencies advanced Friday as risk-sensitive assets at large enjoyed gains. Traders, however, were still bracing for declines after a key technical indicator—the so-called death cross—flashed red this week.
Bitcoin Price Update
The price of Bitcoin has risen 1.5% over the past 24 hours to $26,650, with the largest digital asset continuing to trade around the $26,000 mark that has dominated for much of the past month. Bitcoin saw a brief selloff to mid-June lows near $25,000 earlier this week but has since rebounded in action that marked a departure from months of historically low volatility.
“After an initial scare at the start of the week, the crypto market quickly recovered and stabilized around the same levels it has been in for the past month,” said Rachel Lin, the CEO of trading platform SynFutures. “Bitcoin is currently in the process of converting the $26,000 level from resistance to support … if Bitcoin stays above $26,000 by the end of the week, it could be a positive sign.”
Digital assets have advanced in step with the stock market in recent days, with the Dow Jones Industrial Average seeing its best day since early August on Thursday and the S&P 500 on track for a three-day winning streak. But the technical backdrop bodes ill for Bitcoin despite these gains.
The Death Cross
In focus was the fact that Bitcoin prices have formed a death cross, a closely watched technical indicator that often suggests a prevailing downtrend in prices, or at least a slide in sentiment towards bearishness. It marks when the 50-day moving average for prices falls below the 200-day moving average.
On average, Bitcoin falls 2.3% in the week following a death cross, according to Dow Jones Market Data. The death cross formed this week for the first time since January 2022, when prices began the month above $47,000 before plunging more than 65% to their trough in the following November.
Analysts also were downbeat beyond the technicals, with the macroeconomic backdrop—interest rates likely to stay higher for longer than once thought to tame inflation, weighing on demand for riskier assets—looking far from supportive.
“There’s just too much uncertainty overhanging the market to expect any sustained rally for Bitcoin and other digital assets at the moment,” said Conor Ryder, head of research and data at crypto infrastructure group Ethena Labs. “Too many factors are dragging down the market. The macro situation in particular is still not conducive for a rally in long-duration assets, especially crypto.”
Beyond Bitcoin, Ether—the second-largest crypto—rose 1% to $1,630. Smaller tokens also were higher, with Cardano and Polygon each popping 1%. Memecoins rose, with Dogecoin advancing 1% and Shiba Inu 2% higher.
Write to Jack Denton at [email protected]