Altcoins Lead Post-Fed Crypto Rally as Risk Appetite Grows
(Bloomberg) – Small coins drove gains among cryptocurrencies on Thursday amid investor optimism that central banks in the United States and Europe will finally ease their aggressive interest rate hikes.
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Altcoins, including Ether and Cardano, climbed north of 2% as of 12:47 a.m. in New York on Thursday, as Bitcoin pared its strong lead. Still, the largest token by market value rose 2.4% on Thursday before moderating its gains to trade at $23,786. A top 100 coin gauge is up 37% so far in 2023.
Investors are “moving from the risk spectrum into more speculative plays right now,” Matt Maley, chief market strategist at Miller Tabak + Co., said. “Just as they are in stock.”
Crypto-related stocks are also benefiting from the widespread enthusiasm. Coinbase Global Inc. is up 19%, while Silvergate Capital Corp. is up 36%. Meanwhile, an index of crypto-mining stocks is also trading up 10.7% on Thursday, after posting an unprecedented month where it recorded 77% gains.
Bitcoin has been trading in a tight range for the past two weeks, although it hit a five-month high on Wednesday. This follows Federal Reserve Chairman Jerome Powell’s comments on inflation that signaled less tight monetary policy to come. Still, the price of the token is far from its all-time high of nearly $69,000 in November 2021.
“The side action after such a big move is constructive,” said Frank Cappelleri, founder of CappThesis. “BTC’s January spike was much more pronounced than anything we’ve seen from stocks, and simply continuing to consolidate those gains would be bullish.”
It was a promising start to the year for Bitcoin, which in 2022 fell 64% in its second-worst annual performance on record. The rally rekindled previously muted enthusiasm, even as the industry still grapples with one of its darkest periods yet amid the fallout from the FTX empire and other crypto companies.
However, the coin’s rally is more subdued than other speculative assets. Cathie Wood’s flagship fund, ARK Innovation ETF (ticker ARKK), for example, closed above its 200-day moving average on Wednesday for the first time since November 2021. Shares rose 7.7% on Thursday.
“Given ARKK’s moves, disruptive stocks, and heavily shorted stocks, I’m surprised Bitcoin isn’t up more,” said Peter Tchir, head of macro strategy at Academy Securities. “I’m even less sure than usual what’s holding him back.”
Chart analysts pointed out that Bitcoin could crash to $25,000. In particular, Mark Newton, Head of Technical Strategy at Fundstrat, flagged $25,200 as a potential resistance zone.
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–With help from Sunil Jagtiani, Akshay Chinchalkar and Joanna Ossinger.
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