Bitcoin Set to Record First Weekly Increase Since August
Analysts are skeptical about the duration of the rally as Bitcoin prepares to break its four-week losing streak.
The largest cryptocurrency by market value has risen about 2% since last Sunday to about $26,358.
“Crypto bulls badly needed a bounce this week,” said Matt Maley, chief market strategist at Miller Tabak Co. “Things looked bleak at the start of the week, so the bounce has provided some very important relief.”
The chance for a weekly rally comes as Bitcoin rebuilds its correlation with tech stocks, mirroring price movements in the Nasdaq 100 index as it rose earlier this week. However, the tech-heavy index is on track to be flat or modestly negative for the week after declines in Amazon.com Inc. and Nvidia Corp. sent it lower on Friday. As investors prepare to digest a slew of economic data and the Federal Reserve’s interest rate decision next week, it’s unclear how stocks will fare going forward.
Will Tamplin, senior analyst at Fairlead Strategies, says it makes sense to be overly optimistic about Bitcoin’s recent gains.
“Our short-term momentum indicators show improvement, but we are cautious about the durability of the rally as medium-term developments have weakened in recent weeks,” he said. “If Bitcoin is able to clear the 50-day moving average, which is currently near $27,400, it would increase our confidence in a near-term recovery.”
Read more: Bitcoin is returning to trading along with tech stocks
The level that investors are now looking at in Bitcoin is $28,800.
Anything below that level — Bitcoin’s lows in both June and September — could cause many investors to abandon the digital asset, according to Maley.
“That $28,800 level is now a ‘line in the sand’ for Bitcoin bulls,” he said.
