Text size
Bitcoin prices recovered firmly this week after a spectacular sale last week.
Dream time
Bitcoin
and other cryptocurrencies rebounded on Friday as digital assets continued a recent bullish outlook, although there are signs in the derivatives market that cryptocurrency traders are preparing for a downward move.
The price of Bitcoin has risen 4% in the last 24 hours to about $ 30,500. The largest cryptocurrency was still trading around the lowest point of the year, but comfortably above recent levels below $ 30,000 and well above the $ 26,000 hit in last week’s fall in cryptocurrency.
“Bitcoin is around $ 30,000 as investors continue to shy away from stocks,” wrote Edward Moya, an analyst at the Oanda broker. “A weaker dollar and bearish market fears are making Bitcoin attractive again.”
Bitcoin and its peers should theoretically trade independently of major financial markets, but have largely been shown to be correlated with other risk-sensitive assets, such as stocks and especially technology stocks over the past year. Part of that correlation has recently disappeared, with Bitcoin actually surpassing stock market indices like the
S&P 500
and heavy on technology
Nasdaq
this week.
The main digital asset has gained nearly 10% since Monday, when it changed hands at around $ 29,500. In comparison, based on the stock market futures that indicate the opening of the US market on Friday, the S&P 500 lost 2% this week while the Nasdaq-100 fell 3%.
Shares are in a difficult situation, with the Nasdaq remaining in bearish territory territory (28% lower this year) and the S&P 500 flirting with a bearish market.
“Bitcoin seems to be about to consolidate [around $30,000]but the bulls should be happy to see that prices do not mimic what happens with the stock market, “Moya wrote.
Bitcoin has been trading at its lowest levels since July 2021 and remains at less than half of its all-time high, near $ 69,000 in November. In comparison, the S&P 500 closed on Thursday at its lowest level since March 2021.
The main digital asset is recovering very slowly from its recent collapse, which has been largely related to the overflow of a stock market liquidation and driven by the collapse of a stable systemically important currency destined to be pegged to the US dollar.
“It seems that the consequences of the whole drama of stable currencies that sent much lower cryptocurrencies are finally disappearing,” Moya wrote.
That stable currency,
TerraUSD,
continued to trade with a severe discount to the dollar: 7 cents. Luna, a related show that through an arbitrage market mechanism seeks to keep the Earth in place, was changing hands at one-hundredth of a penny. It was at $ 80 two weeks ago, when it was one of the biggest digital assets.
But there are still indications in the derivatives market that crypto traders are ready for, or even betting on, another major downward movement in Bitcoin prices.
“The put / call ratio for Bitcoin’s open interest reached a 12-month high of 0.72 yesterday, indicating a bearish sentiment among investors,” wrote a team at cryptocurrency market intelligence firm Delphi Digital.
A put / call relationship describes the betting environment in the options market; Bets are bets for prices to go down, while calls are bets for prices to go up.
“A high put / call ratio indicates that investors are speculating whether bitcoin will continue to sell, or it could mean that investors are hedging their portfolios against a downward movement,” Delphi analysts said. “Last April, the put / call ratio was trading at 0.96 before the price of Bitcoin fell more than 50% in May 2021.”
Beyond Bitcoin, the crypto
Ether
it was even more buoyant. The token that supports Ethereum’s blockchain network has risen 5% above $ 2,050, well above last week’s low below $ 1,800, but is still down nearly a third from two weeks ago.
Smaller cryptocurrencies or altcoins have also been gained.
Solana
increased by 4%,
Cardano
increased by 2% and
Avalanche
jumped 7%. Memecoins, which were initially thought of as internet jokes rather than serious cryptocurrency prospects, were equally green;
Dogecoin
e
Shiba Inu
both increased by 2%.
Write to Jack Denton at jack.denton@dowjones.com