The stealth rally in the last two weeks by Bitcoin has made them go over the critical $45000 level and put the world’s largest cryptocurrency into positive territory once again.
As per Bloomberg News, the cryptocurrency rose to a high of $47,583 in early trades in Hong Kong, well above the range of $35,000- $45,000, where it was stuck since January. The token is now 1.2% up for the year after its new gains compared to the decline in the S&P 500 by 4.7 %.
According to Matt Maley, the chief Strategist with Miller Tabak & Co, Bitcoin will gain plenty of positive momentum if it keeps breaking through meaningfully.
The token has been stuck in a narrow range after the Federal Reserve and other central banks removed some of the stimulus provided during the pandemic. This meant less cash to be diverted towards risky assets, including cryptocurrencies.
There are also speculations that digital currencies could come under the lens as they might be used to evade Russian sanctions though many analysts have rebuffed the suggestion.
Bitcoin and other cryptos such as Ether have made steady advances and the overall increase in U.S. Stocks this month. But it was only a day earlier that Bitcoin could cross the $45000 levels after briefly touching it only once in January.
Overbought Range
Despite the recent strong performance by Bitcoin, it was surpassed by other altcoins in the last few days, such as Solona, Dogecoin, Cardano, and Polkadot. Cardano was, in particular, was favorite among traders as it jumped 30% over the past five days, and these tokens were down throughout 2022.
Bitcoin price was well above its 50-day moving average, which is at $41,085 at present, which means that it is around 80% -90% in the overbought range as per Bespoke Investment group. This also signals a potential downside for many other assets as historically, Bitcoin has prices have been opposite. As per the Bespoke report, Bitcoin’s overbought position averaged significant gains in the last five years.
Bitcoin has historically risen by 16% in the month after it was in the ninth decile spread compared to the 50 days moving average. It was up 100% in the next six months and 274% in a year, as compiled by Bespoke Investment Group.
According to Bespoke, it is not typically seen in a typical ETF or stock, but for Bitcoin, there was a lot of momentum behind the higher trading levels over the years. Thus, the overbought level is yet to face a headwind in this particular space.
Against the backdrop of the Russia Ukraine war, since mid-March, Bitcoin gains have bolstered it against gold, the traditional safe asset traded sideways.
