Bitcoin increased 7% to the top $20,000, its highest level over a week
September 28, 2022: -On Tuesday, Bitcoin topped $20,000, hitting its highest level in more than a week, but it struggles to break out of its trading range.
The world’s biggest cryptocurrency was more than 7% higher at $20,265.95 at nearly 3:30 a.m. ET, according to data from CoinDesk.
Bitcoin’s rally lifted the broader cryptocurrency market. Ether was up around 7% at $1,389.75.
Still, bitcoin is struggling for direction, trading between $18,000 and $25,000 since mid-June following a crash that nearly $2 trillion wiped off the entire crypto market since its peak in November.
That market refusal was driven by interest rate rises from central banks aimed at controlling rampant inflation and a wave of bankruptcies and insolvency issues filtered through the crypto industry.
Crypto investors watch monetary policy because digital currencies correlate to U.S. stock markets this year. Higher interest rates have put pressure on the S&P 500 and tech-heavy Nasdaq, filtering through other risky assets, which include cryptocurrencies.
The U.S. Federal Reserve’s 0.75 percentage point rate hike last week marked a “major event” for crypto markets, according to Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno.
“This was broadly in line with market expectations, and hence, we’ve seen a lot of that sentiment priced in,” Ayyar said.
Interestingly, bitcoin’s rally, which started on Monday, happened despite a fall in U.S. stocks, with the S&P 500 closes at its lowest level in 2022. Stock futures rose on Tuesday. So, there are signs that the correlation between crypto and stocks may weaken.
Meanwhile, investors watch the U.S. dollar closely. The dollar index tracks the greenback against a basket of currencies and is up more than 18%. Bitcoin moves to the dollar, so a strong greenback is negative for bitcoin. Although, Ayyar said that the dollar index could be nearing its top, marking a potential bottom for bitcoin. That could be a reason for bitcoin’s surge.
“Traders hence might be positioning themselves accordingly,” Ayyar said.
Since mid-June, when the crypto market set the latest lows, investors were focused on a huge network upgrade to the Ethereum blockchain called the merge, changing the method to validate transactions on Ethereum and significantly reducing energy consumption.
In the run-up to the upgrade, completed on September 15., the price of ether, the cryptocurrency of Ethereum, doubled, far outpacing bitcoin’s gains in the period. Although, ether has come down since the merge.
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