Bitcoin jumps back over $40K — where next?
The $40,000 mark may provide support as investors try to build enough momentum to push Bitcoin to the next resistance point at $45,000.
After months of descent, Bitcoin (BTC) is seemingly back on the rise.
The leading cryptocurrency pushed back above $40K a coin Friday, its highest in two weeks, lifting several other cryptos along with it.
Bitcoin hit a 24-hour high of $40,901.18 Friday, according to data from CoinDesk. Is this the turnaround crypto investors have been waiting for? And can they keep it going?
Bitcoin’s reversal Friday may be tied to Amazon’s (AMZN) recent earnings report. Shares of the tech behemoth soared in after-hours trading Thursday after the company posted a big earnings beat in what many are hoping will be the beginning of a tech comeback. The tech-heavy Nasdaq Composite Index rose 1.6% on Friday.
The move for the crypto also comes amid the stronger-than-expected jobs report Friday, which sent the 10-year Treasury yield higher. Rising Treasury yields have been pressuring the tech sector and crypto lately, as the Fed inches closer to implementing rate hikes.
“One of the most difficult environments for Bitcoin to face is surging Treasury yields,” said OANDA senior market analyst Ed Moya in a note Friday. But, according to Moya, “Bitcoin shrugged off the payroll slump and is rallying on momentum buying.”
After hitting an all-time high of $68,990.90 in early November, the price of Bitcoin has tumbled.
Several factors have likely contributed to Bitcoin’s recent pullback. Namely, the Federal Reserve’s push to combat inflation, profit taking and ongoing talk of crypto regulations.
Bitcoin fell below the $40K mark last month, a key support level, which got some crypto investors talking about the possibility of a “crypto winter,” a phrase referring to a major bear market. The recent pullback is reminiscent of the late-2017 and early-2018 crypto winter, when Bitcoin crashed by over 80% from its then all-time high. On January 24, Bitcoin briefly dropped below $33,000 to its lowest level since July 2021.
Looking at Bitcoin’s chart, the $40K mark has been a previous level of resistance and support. Those points mark where sellers outnumber buyers, and vice versa.
Bitcoin last dropped below it on January 20, and now it may provide support as investors try to build enough momentum to stay above it and shift the downtrend.
Crypto investors are continuing to battle a hawkish Fed, which could keep downward pressure on the market. And, while often seen as a hedge on the stock market, it has followed tech stocks recently.
“Bitcoin may have difficulty breaking above the $40,000 level if Wall Street grows confident that the Fed will raise rates by a half point in March,” Moya noted.
If Bitcoin can push beyond $40K, $45K will be the next level of resistance.
What does this mean for investors?
In the short term, impending rate hikes may keep investors from buying into higher-risk assets like crypto, which means Bitcoin may not have enough momentum to shift the downtrend.
But if you’re buying because you believe in Bitcoin long term, this price is still well below its top and might be attractive. Advocates say Bitcoin can climb to $100,000 a coin within a few years. Goldman Sachs said in a report last month that it agrees.
Finder’s panel of crypto experts is forecasting a price over $72,000 by the end of 2022, and $192,800 by the end of 2025. Read their findings on our Bitcoin price prediction page.
At the time of publication, Matt Miczulski owned BTC and shares of AMZN.
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