“This rally may, in part, be driven by the expectation that rate hikes are almost over, but some investor groups are attracted to crypto because it is an asset outside of traditional banking and finance. "said Bradley Duke, Co-General Manager. from crypto exchange-traded products provider ETC Group.
Bollinger Band Compression
Digital assets over the past two sessions have broken out after weeks of limited trading. Analysts cited technical factors as another reason to give the token a boost.
But above the recovery, liquidity is consistently low, which, it must be said, is distorting prices and could cause a quick reversal if central banks remain firm in the fight against inflation.
"30K is very important for both technical and fundamental reasons," said Mati Greenspan, managing director of Quantum Economics. "The resistance built up for three straight weeks and finally broke."
Bitcoin's break above strong resistance at US$30,000 comes after a so-called Bollinger Band squeeze, when all-time volatility fell to the lowest since January. The compression then led to a sharp rise that resembles Tuesday's upside breakout. Traders following technical patterns can now consider the US$30,800 area as their first potential target, followed by US$31,200.
Exceeding these levels would bring bitcoin close to another psychologically important threshold: erasing all losses since the tumultuous unwinding of the terraUSD stablecoin in early May. This event set the stage for a deep market slump and the demise of some of the best-known names in crypto, from 3AC to lender Celsius Network and exchange FTX.
"The yield is there, so it's still attractive if you're trying to generate 20%, 30% or even something more if you're willing to hold the coins longer," said Brandon Mulvihill, CEO of Crossover, a cryptocurrency trading venue for institutional investors.
Obstacles overcome
Certainly, the crypto industry as a whole is under intense scrutiny.
Crypto exchange Coinbase Global said it received a notice from the Securities and Exchange Commission stating its intention to file a lawsuit. The SEC has sued crypto tycoon Justin Sun for allegedly violating securities rules in a case that Mr Sun has declared to be without merit.
Elsewhere, the US Commodity Futures Trading Commission has sued Binance founder Changpeng Zhao and his crypto exchange for alleged violations of derivatives regulations, although Binance said it was not agreement with many of the agency's characterizations.
But even with the setbacks, bitcoin's rally has gained strength over the past month following the collapse of three US banks, reigniting the narrative among bitcoin bulls that the token offers a more attractive alternative to traditional finance.
Additionally, analysts say a drop in liquidity to a 10-month low – after market makers lost access to US banking rails provided by Silvergate Capital and Signature Bank – could also explain the rebound. , at least in part. With lower trading volume, price fluctuations can seem more dramatic.
"Order books are thin and business activity is depressed," said Strahinja Savic, head of data and analytics at FRNT Financial. “Under these circumstances, it is possible that we will see some price action that is difficult to attribute to a single reason.”
Bloomberg