Bitcoin
and other cryptocurrencies climbed Monday, continuing to outperform stocks and extend gains from last week amid hopes that spot Bitcoin exchange-traded funds will soon be cleared by regulators. The technical backdrop is looking good.
The price of Bitcoin has risen 2% over the past 24 hours to above $30,450, having earlier traded closer to $31,000. The largest digital asset has broken out from a stagnant trading range around $26,000, which dominated for almost two months until a rally that started in earnest 10 days ago drove Bitcoin prices to their highest since mid-July.
“Bitcoin has gained over 10% in the last seven days, making the previous week the best in four months … this is a significant turning point,” said Alex Kuptsikevich, an analyst at broker FxPro. “A consolidation above $31,000 could force the bears to capitulate and quickly send the price into the $40,000 area.”
While the
Dow Jones Industrial Average
and
S&P 500
have been pressured in recent weeks amid a surge in government bond yields, cryptos have been resilient. Higher returns on risk-free U.S. Treasuries tend to dampen demand for riskier bets, but Bitcoin has bucked that trend to surge amid optimism that the Securities and Exchange Commission (SEC) will soon clear a Bitcoin exchange-traded fund (ETF).
The prospect of a spot Bitcoin ETF has loomed for months, especially since
BlackRock
and other financial giants filed for such funds in the summer and crypto asset manager Grayscale won a key legal ruling over the conversion of its Bitcoin trust to an ETF. A spot Bitcoin ETF would hold the token itself, a departure from existing funds that hold Bitcoin futures, and is expected to usher in a new wave of retail and institutional interest in digital assets, supporting prices.
Bitcoin ETF hopes have underpinned the latest rally—spurred by another positive sign for the Grayscale conversion—but while the technical backdrop for prices remains positive, it could still be months before this catalyst is borne out with an ETF trading. Moreover, continued weakness in stocks risks spilling over into crypto—and there’s the question of just how much higher Treasury yields can climb before investors start selling Bitcoin amid a wider risk-off rotation.
“A solid risk-off momentum will almost inevitably trigger institutional selling in crypto,” said Kuptsikevich.
Beyond Bitcoin,
Ether
—the second-largest crypto—gained 2% to $1,670. Smaller tokens or altcoins were also buoyant, with
Cardano
jumping 2% and
Polygon
popping 8%. Memecoins were also in the green, with
Dogecoin
surging 4% and
Shiba Inu
advancing 2%.
Write to Jack Denton at jack.denton@barrons.com
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