Bitcoin has made significant progress over the past week. The largest digital asset rose 20% in two days to heights not seen since November’s FTX meltdown.
Since the all-time high in November 2021, cryptocurrency prices have dropped rapidly, almost two-thirds of their value. Cryptocurrencies’ worst is over, according to some traders.
However, the foundation of the rally may be sand. It ended up being accurate following a string of victories.
Bitcoin’s price continued to fall after it stopped a rare winning streak of 14 consecutive days. Risk appetite that boosted asset prices at the start of the year gave way to caution.
On Thursday, the most valuable token dropped to 0.7%, trading at approximately $20,700 as of 9:20 a.m. in Tokyo. Ether, Solana, and Polkadot are three smaller coins that have also suffered moderate losses.
According to Matt Maley, the chief market strategist at Miller Tabak & Co., Bitcoin “has now become quite overbought on a near-term basis,” and the cryptocurrency is “getting ready for a short-term downturn.”
On Wednesday, US markets sank as Treasuries gained in response to concerns regarding the rate of economic development. This gloomy atmosphere poured into digital assets as well. This month’s FTX exchange breach has left the cryptocurrency sector reeling.
According to individuals who are familiar with the situation and have knowledge of the details, Genesis Global Capital, the lending division of Digital Currency Group, is preparing the groundwork for a bankruptcy petition that may take place as soon as this week. The digital asset industry is struggling, and DCG’s enterprises are crucial cogs in that market.
The relative strength index for Bitcoin over the past 14 days has fallen from around 90. However, it is still above 70, the threshold for conditions considered to be overbought. Some analysts believe this points to the likelihood of a temporary halt in the progression of Bitcoin’s price in 2023.
Bitcoin and the top 100 tokens have risen almost 20% this year, recovering some of last year’s losses. It has been largely driven by the idea that painful interest-rate hikes are ending due to a cooling in inflation.