Bitcoin advances above $20,000 to break out of trading range

The largest cryptocurrency by market value, rose as much as 5.3% to $20,412 Tuesday, posting its biggest one-day gain since Sept. 27. The token has traded below $20,000 for nearly three weeks, breaking from the coin’s trademark volatility.

 

Bitcoin broke above $20,000, ending its longest run below that  price index  since the token first breached the threshold in late 2020.


The largest cryptocurrency by market value, rose  the maximum amount  as 5.3% to $20,412 Tuesday, posting its biggest one-day gain since Sept. 27. The token has traded below $20,000 for nearly three weeks, breaking from the coin’s trademark volatility. Other digital assets followed with Ether gaining  the maximum amount  as 12.8% to trade at $1,525, its highest price  in additional  than a month. And so-called alt-coins like Solana and Dogeoin also advanced.


“You’ve  need to  be encouraged by this,” said Stephane Ouellette, chief executive of FRNT Financial Inc, adding that the token “is rallying with risk assets.”


Despite the gains, Bitcoin still remains in its multi-month price slump as central banks hike interest rates to curb rising inflation. The token has lost  near  60% of its value since the start of the year.


US stocks also rose on Tuesday as investors assess mixed corporate earnings and weighed risks to  economic process . New economic data revealed slumping US consumer confidence,  an indication  that buyers may slow spending amid recessionary fears and aggressive interest-rate hikes.


Bitcoin’s strong correlation to risk assets like tech stocks has dashed hopes that Bitcoin would  function  a hedge against inflation. The coin has traded in line with US stocks for much of the year. The S&P 500 Index rose 1.6% on Tuesday. And a 60-day  coefficient of correlation  for Bitcoin and contracts on the S&P 500 hovered around 0.63. (A coefficient of 1 means the assets are  occupation  lockstep, while minus-1 would show they’re  occupation  opposite directions.)


Bitcoin’s 30-day volatility is near a six-year low,  consistent with  a note by Arcane Crypto’s Vetle Lunde and Bendik Norheim Schei,  which  could mean a breakout is due. The last time it reached those levels was  within the  summer of 2020. Bitcoin maintained levels below its current price at the time for four days before “the price exploded up,” said the note.


But whether the token can maintain trading above $20,000 remains to be seen.


“Some people are watching $20,000 for the psychological significance of it,” said Katie Stockton, co-founder of Fairlead Strategies. She said that  supported  her firm’s models, she  would wish  to see “consecutive daily closes” above roughly $19,600 to “confirm a minor breakout.”

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