Other cryptocurrencies, such as ether, also saw price increases, with ether climbing approximately 4%. The total value of all cryptocurrencies on the market rose above $1 trillion for the first time in a while.
The most recent leg higher for Bitcoin has been sparked by a slight weakening of the U.S. dollar, which has seen a stunning rally so far this year. Specifically, this year’s stunning rally has been caused by the U.S. dollar. On Friday morning, the U.S. dollar index, which compares the value of the greenback against a selection of other currencies, was trading about one percent lower.
Thursday’s trading session came to a positive end for U.S. stock indexes, and Friday’s futures indicated further gains. Bitcoin’s price has been highly correlated with that of U.S. markets, typically increasing in tandem with stock indexes. Bitcoin prices also tend to go up when there is a decline in the value of the dollar.
Since June, the price of bitcoin has been trading in a range that roughly stretches from $18,000 to $24,000, and it has not been able to break out of that pattern.
Vijay Ayyar, vice president of corporate development and international at cryptocurrency exchange Luno, stated that Friday’s rally could be a “bearish retest” of the price range of $22,500 to $23,000. This range was mentioned in reference to the fact that Ayyar predicted that the price range would hold.
Therefore, unless it breaks that level convincingly and closes above it, I would still think this is a bearish rally that could see more ranging and downside, as Ayyar explained it.
The Federal Reserve has been aggressively hiking interest rates this year, which has taken the shine off of risk assets such as cryptocurrencies. As a result, Bitcoin has been pummeled this year and is currently more than 60 percent off of its record high seen in November.
The cryptocurrency market has been negatively impacted not only by unsuccessful projects but also by high-profile bankruptcies that have spread throughout the industry.
Ethereum ‘Merge,’ Inflation in Focus
Crypto markets have been anticipating the merge, a major network upgrade to Ethereum that supporters claim will make the blockchain more efficient.
The merger should be completed by mid-September.
The price of ether, Ethereum’s native token, has far outpaced bitcoin in the run-up to the event.
Financial markets are also looking for signs of a slowing in inflation when the United States. The report on the Consumer Price Index is scheduled to come out the following week. Investors are also watching for clues about the Fed’s rate hike path.
On Thursday, Fed Chair Jerome Powell stated that the Fed is “strongly committed” to fighting inflation, implying that additional rate hikes are possible.
Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank, said bitcoin could test the $22,000 level if inflation cools and there is excitement about the Ethereum merger, but he also issued a warning.
Hasegawa wrote in a note that was released on Friday that “given what some Fed members, including Chair Powell, have said this week, too much optimism could be dangerous.”
Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of EGG Finance. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.