Bitcoin. Source: Adobe
A growing narrative among crypto and traditional asset class investors that Bitcoin may indeed be a viable safe haven against possible turmoil in the traditional fiat-based fractional reserve banking system has helped propel BTC to new multi-month highs against its key altcoin peers this week became .
According to TradingView, Bitcoin’s dominance (meaning the percentage of the total cryptocurrency market capitalization that is taken up by Bitcoin) hit its highest level in nine months at over 45.5% on Wednesday. This comes after the BTC/ETH exchange rate hit its highest level since November earlier this week around November 15.
BTC/BNB, meanwhile, is near its highest since last August at around 80, BTC/XRP is at its best since last September at over 62,200, while BTC/ADA is at its lowest since early 2021. Blockchaincenter.net’s Altcoin Season Index has slipped firmly back into “bitcoin season” (defined as scores below 25, with the current score being 22), down from late February highs in the 47 region.
Can Bitcoin Reach $30,000?
Bitcoin’s leap in dominance comes after the cryptocurrency hit its highest level since last June at mid-$26,000 earlier this week, a stunning rebound from last week’s plunge to fresh two-month lows below the $20,000 mark. Last week’s plunge was prompted by broader risk-off flows after a tide of crypto/tech-friendly US banks slumped.
This week’s rebound was fueled by a combination of bullish factors, analysts say, including 1) a proactive response by US authorities to backstop deposits and 2) the introduction of a new bank liquidity program (which will support the USDC, a key part of the installation of the crypto market, helped rally back to its $1 peg) and 3) expectations that the risk of a banking crisis would prevent the Fed from making any more significant rate hikes.
The aforementioned narrative of Bitcoin being a safe haven against troubles in the traditional financial system is said to have helped as well, as is being touted to strengthen Bitcoin against its main crypto rivals. What is causing the rebound is that analysts’ price predictions have turned significantly more bullish.
Technical signals look good; Bitcoin rallied strongly from its recent retest of the 200DMA and realized price (both just below $20,000), a sign that the bull market is resilient, and the recent breakout of the resistance in the $25,200-400 range is seen as a door opener next resistance area in the $28,000 area for an uptrend towards the bitcoin.
On-chain indicators that can signal when a bear market is over continue to send good signals, as discussed in this recent article. Metrics related to Bitcoin’s on-chain activity (such as daily transactions, new address creation, daily active users, number of addresses with non-zero balance) also continue to trend in a generally positive direction.
Traders will continue to monitor the health of the US and global financial system, with signs of further cracks potentially fueling the Bitcoin rally further. Next week’s Fed meeting will be another important event to watch as this week’s US CPI and PPI (fortunately for the Fed) give them some room to take a slightly less aggressive view on a to indicate tightening. That could be another tailwind for Bitcoin.
If bitcoin can make it to the $28,000 resistance and break above it, the door would open to more upside potential beyond $30,000 to the next major resistance in the $32,500-$33,000 range.
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