Bitcoin price surges, potentially ending 9 weeks of straight losses
Bitcoin (BTC) failed to rally with tech stocks last week, but today's surge may give investors hope.
- BTC rose 8% before correcting, leaving it up 6% on the week at the time of writing.
- While the 2 markets have been correlated recently, NASDAQ gained approximately 7% last week while Bitcoin lost 5.5%.
- Despite declining 54% since its all-time high, BTC is only down 15% compared to 1 year ago.
Bitcoin has been ascending since 30 May, rising from AUD$41,100 to a relative high of AUD$45,000 before recording a minor correction. At press time, BTC is trading at AUD$44,323.
Before its ongoing upward movement, Bitcoin had been on the receiving end of 9 consecutive weeks of price losses, its highest since late 2014. Analysts believe that if stock prices continue to remain in the red – with the S&P 500 and NASDAQ Composite both losing over a percent over the past day – the digital asset could float above AUD$45k (US$32k), even hitting AUD$51.5k (US$37k).
For a full bull market to resume, experts believe Bitcoin will soon have to hit a price point of AUD$61.5k (US$44k). If that happens, BTC can trigger a breakout and potentially retest its all-time highs.
BTC decoupling from stocks, but not as hoped
Last week, the tech-heavy index NASDAQ closed at a profit of 6.7% as the Federal Reserve noted that it might not have to increase interest rates as aggressively as many investors had previously feared. Higher interest rates have a direct impact on the purchasing power of an individual. If rates are high, people tend to invest less across various markets.
This positive news was not mirrored by the crypto market, with the price of BTC slipping by 5.5% between 23 and 29 May. The drop was likely compounded by news of the recent Terra Luna debacle, which independent analyst Matt Maley believes "took a lot of confidence out of the asset class". He noted:
"Investors don't want to get burned again in the cryptos. Confidence is such an important part of new assets like cryptocurrencies. Until investors regain more confidence, they will no longer be a good risk-on/risk-off indicator."
Analyst Fiona Cincotta believes that the ongoing decoupling is not one that crypto enthusiasts were expecting, adding: "I doubt this will be the end of the [inverse] Bitcoin-NASDAQ correlation."
Disclosure: The author owns a range of cryptocurrencies at the time of writing.