Stocks got slapped (like Chris Rock) this morning as investors mulled over the ongoing war in Ukraine. Inversions on the yield curve further inverted, injecting additional uncertainty into an already volatile market. Short-term Treasury yields jumped while long-term yields slid, flattening the yield curve in the process as investors await additional rate hikes from the Fed.
“Geopolitical risks remain very elevated and the rally in equities over the past two weeks is impressive. The US economy is still in good shape, but buying every stock market dip probably won’t be the attitude for most traders going forward given how hawkish the Fed has turned,” said Oanda senior analyst Edward Moya.
But the biggest story today was undoubtedly the weekend Bitcoin rally, which saw crypto’s top coin surge over 5% higher on Sunday. The rally began last Tuesday when Russia announced that it would potentially accept Bitcoin as payment for oil exports.
Bitcoin traded abruptly higher after the news broke before retracing several hours later. Wednesday, the rally continued as Bitcoin slowly climbed, ultimately entering a major Sunday run-up past resistance.
Bitcoin closed above the 10-week moving average in mid-March. It then closed above resistance at $45,855.00 last week, sending a major bullish signal. The last time Bitcoin surpassed both the 10-week moving average and key resistance following a significant downturn, it soared from roughly $36,000 to a new all-time high at $69,000 over the course of the second half of last year.
Before that, it happened again during the post-Covid bull market that saw nearly every asset erupt higher. Bitcoin jumped above the 10-week moving average in late April 2020, rising from $7,700 to almost $65,000 in less than a year.
Simply put, the stage is set for another major run to new highs. But it won’t happen unless Bitcoin can remain above resistance in the coming days.
“Bitcoin is facing heavy resistance, but if it is able to hold above the $46,000 level (which roughly marks the yearly open) for several days, I expect a move to $52,000, which is the next key resistance,” wrote Marcus Sotiriou, an analyst at digital asset broker GlobalBlock.
“It is clear that $46,000 is a key pivot for the short-term direction for the market.”
Altcoins – cryptocurrencies that aren’t Bitcoin – gained, too.
“The growth of [Bitcoin] has impacted the crypto market in general as most altcoins are all on the run today, pushing the combined market cap to $2.1 trillion,” said Alexander Mamasidikov, co-founder of MinePlex, a digital bank.
And while most analysts noted that Bitcoin had potentially turned a corner, none (or at least no notable ones) connected the dots between Bitcoin’s prior rallies to new highs and last week’s major recovery. Resistance at $45,855.00 will be a key price level to watch for the current week, but the more important one will be $49,000.
If Bitcoin can close above $49,000 (significantly above last week’s high) Sunday evening, history suggests that the next crypto bull market will be upon us. And, within the span of one year, it also suggests that a new all-time high will be reached.
That’s not guaranteed to happen, of course. Nobody has a crystal ball, and every type of investing carries risk. Especially crypto.
But given the historical precedent, crypto bulls probably have a valid reason to be excited again, even though most analysts today tried to downplay the rally as less of a big deal than it really is.
