‘Bitcoin Has Started a New Bull Market.’ The Next Key Price Level to Watch.

Bitcoin’s march higher has come in tandem with—though it has exceeded—a similar rise in the stock market, where the

Dow Jones Industrial Average
and

S&P 500
have gained as investors turned more optimistic on risk-sensitive assets. A macro backdrop of high inflation and rising interest rates solidified the link between cryptos and stocks over the past year, and recent signs that inflation is cooling and that the Federal Reserve will ease back on monetary policy has buoyed both asset classes.

“Bitcoin has a strong positive correlation with the risk-on factors, and it has been moving higher as the equity markets scored more gains,” said Naeem Aslam, an analyst at broker AvaTrade. “The big question is if it continues to trade higher as cracks have started to show in the risk-on rally. Traders may back away from supporting riskier assets this week … comments from the Fed officials have indicated that the Fed doesn’t seem to be in a rush to end its ultra-hawkish monetary policy.”

Nevertheless, after Bitcoin’s remarkable rally, some traders are calling for more gains. FTX’s failure and the ensuing bankruptcy proceedings looked like an existential crisis for cryptos—but much of that pessimism seems to have faded away. Prices above pre-FTX levels have fueled a wave of optimism amid bets that the worst of the brutal bear market that has gripped the space for a year may be over.

“Bitcoin has started a new bull market and is headed for $24,800, where the psychologically important 200-week moving average and the 161.8% Fibonacci level of the momentum from the December lows are concentrated,” said Alex Kuptsikevich, an analyst at broker FxPro, referring to technical market analysis levels that would indicate strength across cryptos. 

“From a technical perspective, Bitcoin’s trend indicators are generally signaling a strong upward trend, and it seems like the price is eyeing on its August high at $25,200,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank, echoing Kuptsikevich’s outlook for Bitcoin from a technical perspective. 

“However, Bitcoin’s relative strength index (RSI) is diverging from the price’s upward movement and starting to slide down, which is not a good sign for the current price trend,” Hasegawa added. “Bitcoin could test its August high and be supported at the $20,000 to $21,000 level, but with its RSI divergence and a couple of big tech earnings ahead this week, it could get quite unstable.”

Many traders are specifically watching for Bitcoin at $30,000, which would represent a price level not seen since the beginning of the crypto credit crisis last June, when multiple lenders headed towards bankruptcy amid turmoil in markets. While prices may be headed to near $25,000 in the near-term, according to Kuptsikevich and Hasegawa, the key $30,000 level may take a little longer to reach. 

“The market may need a long recharge and consolidation before a new upside wave begins,” Kuptsikevich said.

Beyond Bitcoin,

Ether
—the second-largest crypto—rose less than 1% to $1,630. Smaller cryptos or altcoins were more mixed, with

Cardano
1% lower and

Polygon
1% higher. Memecoins were also mixed, with

Dogecoin
gaining 4% and

Shiba Inu
just below flat.

Write to Jack Denton at jack.denton@barrons.com