Bitcoin shakes off sellers to hold steady after three-day rally
Bitcoin finished the work week on an even keel, recouping earlier steep losses to finish unchanged as bullish sentiment offset concern over a widening US crypto enforcement effort and the backdrop of rising interest rates.
The largest digital token rose as much as 2% on Friday afternoon in New York before ending little changed at about $24,490 as of 5 p.m. Bitcoin erased declines that had sent it slumping more than 4% earlier in the session and appeared ready to once again breach the $25,000 mark. It pierced that level for the first time since August on Thursday. Smaller tokens such as Ether, Avalanche and Binance Coin also bounced back, as did an index of the 100 biggest coins.
For Frank Cappelleri, founder of CappThesis, helping Bitcoin is the fact that it has formed a higher low on its weekly chart.
“Bitcoin’s ability to withstand the recent downdraft is a story in-and-of itself,” he said. “And, together with the action since last summer, a potentially large bottoming formation could be completed soon.”
Digital assets gained while US equities slid as traders fully priced in quarter-point interest rate increases at the Fed’s next meeting, with further hikes of 50 basis points also a possibility. Both the S&P 500 Index and Nasdaq 100 dropped more than 1% during Friday’s session, though they pared losses by the end of the trading day.
“The past week of macroeconomic data rained on the broad-based risk rally parade we’ve seen over the past weeks, including a recent hit to the stellar YTD growth in Bitcoin,” Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs said. “The good news is that inflation is coming down.”
It’s been quite a strong start to the year for Bitcoin, which in 2022 fell 64% in its second-worst annual performance on record. Despite the slew of negative news and spate of US regulatory actions, the price of the coin has remained resilient. Skeptics contend the bounce is vulnerable to the risk of higher-for-longer rates, though others see opportunity for buy-and-hold investors.
“Investors may consider looking through what the Fed will do this year, knowing that we are nearing the end, and buying on the dips of risk assets that may continue to shine later in the year,” Jablonski said.
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