Bitcoin hits $25K key resistance

Crypto investors continue to ignore rising yields, dollar
Crypto trader eye direction from BTC’s next move
Week’s macro data highlights include PMIs and PCE Price Index

Bitcoin has been teasing the $25K level over past several days. Crypto assets have remained supported near their recent highs despite the Dollar Index finishing higher for the 3rd consecutive week and bond yields being on the ascendency. In theory, these moves should have impeded Bitcoin’s recovery since the latter doesn’t pay any interest or dividend. We have seen gold and silver struggle, while US stock markets have not been able to go much higher. Crypto investors have ignored these forces.

But if expectations of higher interest rates for longer continues, then we may well see renewed weakness creep back into the sector. For now, the bulls are continuing to exert pressure for an upside breakout.

After holding key support last week at around $21.5K, a level which was resistance back in November and preceded the BTC /USD’s last plunge, Bitcoin has rallied to $25K. Here, Bitcoin had formed its previous peak in August of last year. It is thus a significant level. A clean break above $25K would give the bulls a much-needed confidence boost that it has bottomed. If that happens, then we could see follow-up technical buying in the days to come towards the high $20Ks. In turn, other crypto prices might find support on the back of this potential breakout.

However, if the bulls show any signs of weakness, then the bears will be quick to pounce given the recent moves in the dollar and bond markets, and drive prices back down to the low $20Ks or even lower.

The US dollar’s ability to hold its recent recovery is a big factor in determining whether Bitcoin and other crypto prices will stay elevated. We have seen hotter-than-expected jobs and inflation data, and lots of hawkish comments from Fed officials as a result. Investors have boosted their expectations about the terminal interest rate in the US to well above 5%, than below it. Rising bond yields represents an opportunity cost for yield-seeking investors for holding zero-yielding assets like gold and Bitcoin.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.