Bitcoin traded higher on Tuesday, rising about 6% over the past 24 hours. Cryptocurrencies are in relief mode as selling pressure from May stabilizes in a tight range between $30,000 and $40,000. Traders are watching for signs of capitulation as bitcoin appears to be oversold and shorts unwind positions.
Crypto markets have been resilient despite regulatory crackdowns in China and the U.K. On Monday, Reuters reported that several companies have abandoned their efforts to register with the U.K.’s Financial Conduct Authority amid mounting regulatory scrutiny on the industry.
“Prices rising in the face of bad news may be a sign of the seller exhaustion we need to go higher,” David Grider, a strategist at FundStrat, wrote in a newsletter on Monday.
- S&P 500: 4291.67, +0.025%
- Gold: $1761.22, -0.97%
- 10-year Treasury yield closed at 1.475%, compared with 1.472% on Monday
Where to from here
“We do think this could continue to be a choppy market for a bit as prices reestablish their trend, and we could even retest the $31K level, but overall, we remain in the bullish camp over the balance of the year,” Grider wrote.
From a technical perspective, bitcoin’s long-term trend remains intact despite the loss of intermediate-term momentum. The $34,000 price level has prevented secondary support near $27,000 from becoming relevant, according to Katie Stockton, managing partner at Fairlead Strategies.
“We would view a breakout above the 50-day moving average [around $38,000] as a positive catalyst supporting a test of secondary resistance near $44K,” Stockton wrote in a report published Monday.
The big economic data point analysts are awaiting this week is Friday’s U.S. jobs report, which could affect assets that are deemed to be risky, including cryptocurrencies.
“If Friday’s employment numbers come in stronger than expected, market participants could anticipate the Fed raising rates sooner than expected,” Alexander Blum, managing partner at digital asset manager Two Prime, wrote in an email to CoinDesk.
A strong jobs report could be bearish for digital assets in the near-term, according to Blum, while a weaker-than-expected number would be bullish.
Bitcoin’s year-to-date return of about 20% is beating the S&P 500 Index, but trailing the Thomson Reuters Core Commodity Index.
Over the past year, bitcoin and ether had a similar risk-adjusted performance to popular U.S. stocks such as Alphabet (NASDAQ: GOOG) and Tesla (NASDAQ: TSLA).
Bitcoin cycle decoupling
The current bitcoin bull cycle has decoupled from the 2013 and 2017 cycles. This is due to a combination of factors including regulatory crackdowns, environmental concerns and an occasional tweet from Tesla CEO Elon Musk, which interrupted the 2021 bull cycle.