Other cryptocurrencies are on the rise on Friday as digital assets continued to outperform recently in stocks, despite signs in the derivatives market that crypto traders are preparing to move lower.
Bitcoin price has increased by 4% in the past 24 hours to around $30,500. The biggest cryptocurrency was still trading around the lowest point all year, but comfortably above recent levels below $30,000 and well above the $26,000 reached in last week’s crypto crash.
“Bitcoin is hovering around the $30,000 level as investors continue to stay away from stocks,” wrote Edward Moya, an analyst at broker Oanda. “Dollar weakness and bear market fears are making bitcoin attractive again.”
Bitcoin and its peers should in theory trade independently of mainstream financial markets, but they have largely shown to be tied to other risk-sensitive assets – such as stocks, especially tech stocks – over the past year. Some of that correlation has fizzled out recently, as Bitcoin has actually outperformed stock indices like
Standard & Poor’s 500
and heavy technology
The leading digital asset has gained nearly 10% since Monday, when it traded around $29,500. By comparison, based on stock index futures indicating the US market opened on Friday, the S&P 500 has lost 2% this week while the Nasdaq-100 is down 3%.
Stocks are in a rough patch, with the Nasdaq remaining deep in bear market territory — down 28% this year — and the S&P 500 flirting with a bear market.
Bitcoin looks ready to consolidate [around $30,000]But bulls should be happy to see prices don’t mimic what is happening in the stock market, Moya wrote.
Bitcoin is trading at its lowest level since July 2021, still less than half of its all-time high near the $69,000 reached in November. By comparison, the S&P 500 closed Thursday at its lowest level since March 2021.
The leading digital asset is recovering very slowly from the recent crash, which was largely linked to the spread from the stock market selling and fueled by the collapse of a systemically important stablecoin that is supposed to be pegged to the US dollar.
“It seems that the fallout from all the stablecoin drama that led to a sharp drop in cryptocurrency is finally fading away,” Moya wrote.
They continue to trade at a steep discount on the dollar – 7 cents. Luna, a pegged token which, through an arbitrage market mechanism to keep Terra pegged, was trading at one-hundredth of a penny. It was priced at $80 two weeks ago, when it was one of the biggest digital assets.
But there are still indications in the derivatives market that cryptocurrency traders are preparing – or even betting – for another big downward move in bitcoin prices.
“Bitcoin’s open buy/sell ratio reached a 12-month high of 0.72 yesterday, indicating a downtrend among investors,” wrote a team at crypto market intelligence firm Delphi Digital.
The buy/sell ratio describes the betting environment in the options market; Sell bets are bets on lower prices, while calls are bets on higher prices.
“A higher buy/sell 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 buy/sell ratio traded at 0.96 before the bitcoin price dropped more than 50% in May 2021.”
Beyond Bitcoin, the Cryptocurrency
It was more prosperous. The token underlying the Ethereum blockchain rose 5% to above $2,050, well above last week’s low of under $1,800, but still down about a third two weeks ago.
Smaller cryptocurrencies have also gained in size.
increased by 2% and
jumped 7%. Memecoins, which were initially intended for online pranks rather than serious crypto prospects, were similarly in the green;
Both are up 2%.
Write to Jack Denton at email@example.com