Bitcoin recently exceeded USD 20,000 but still struggles to move away from its trading range between USD 18,000 and USD 25,000. The close correlation between cryptocurrencies and the US stock market has led investors to watch monetary policy.
Investors remain nervous as Bitcoin (BTC) ranges between USD 18,000 and USD 25,000. The crypto market has encountered many problems, which include the collapse of project collapses and bankruptcies.
The value of Bitcoin recently exceeded USD 20,000, reaching its highest level in more than a week. However, it still struggles to move away from its tight trading range.
According to data from CoinDesk, the largest cryptocurrency by market capitalization appreciated by more than 7%.
The Bitcoin rally boosted the crypto market, where Ether (ETH) rose by 7% to around USD 1,389.
However, it has been difficult for Bitcoin to find its direction, trading between USD 18,000 and USD 25,000 since mid-June. Before that, a crash caused the overall crypto market to lose nearly USD 2 trillion since its peak in November.
This market decline was due, in part, to the interest rate hikes by the central bank to control rampant inflation. Many bankruptcies and insolvency issues seeping into the cryptocurrency industry also contributed to it.
Cryptocurrency Investors Should Watch the Correlation between Cryptocurrencies and US Stocks
This year, the close correlation between cryptocurrencies and the US stock market has led investors to watch monetary policy. The S&P 500 and high-tech Nasdaq indexes are under the pressure of rising interest rates, which has expanded to other risky assets like Bitcoin.
Vijay Ayyar is the vice president of international and business development on the Luno cryptocurrency exchange. He thinks the recent 0.75 percentage point rate hike by the US Federal Reserve (Fed) was a significant event for the overall crypto market.
Ayyar stated that this was in line with market expectations as the price reflects much of that sentiment.
The recent Bitcoin rally occurred despite a collapse in US stocks in which the S&P 500 Index closed at a low. Since the price of stock futures rose, the correlation between them and cryptocurrencies might be weaker.
Meanwhile, investors closely watch the dollar index, tracking the US dollar against a basket of currencies, as it has risen by over 18%. Bitcoin moves contrariwise to the American fiat currency dollar, implying that the strength of the US dollar would harm it.
However, Ayyar said that the dollar index might be about to reach its peak, indicating a potential bottom for Bitcoin. Therefore, traders might also position themselves as this could have contributed to the rise of Bitcoin.
Investors should research Bitcoin or any other crypto asset before buying it to know its all-time high, behavior, and possible future price. That will help them find the most convenient investment opportunity to minimize the risk of losing money.
Meanwhile, Bitcoin is trading at around USD 19,081 and has accumulated a 5.3% loss over the last 24 hours. While its daily trading volume is above USD 50 billion, its market capitalization is about USD 365.65 billion, according to CoinGecko.
By Alexander Salazar
