Bitcoin Prices Rise, Ether Outperforms—and What Else Is Happening in Crypto

“From a technical outlook, bitcoin rejected the longer-dated 200-day moving average on March 28 — then around $48,250 — and this looks set to curb any move higher in the short term,” said Nicholas Cawley, a strategist at broker DailyFX.

“Two important areas of support now come into focus at $42,000 and $39,600,” Cawley added. “These need to hold to prevent further falls. If these levels remain intact, a trading range is likely to be set up with the 200-day moving average capping the upside.”

Bitcoin’s smaller peer, ether, was also slightly higher after a recent tumble, rising less than 2% to near $3,300. The token underpinning the Ethereum blockchain network was trading above $3,500 earlier in the week.

Bitcoin and ether remain well off all-time highs of $68,990 and $4,865, respectively, reached early last November.

Similar price action was seen in smaller cryptos, or “altcoins,” with solana 2% higher, cardano rising less than 1%, and uniswap up 2%. “Memecoins”— called that because they were initially intended as internet jokes rather than significant blockchain projects — also rose slightly, as dogecoin ticked up almost 2% and shiba inu was almost 1% in the green.

Recent weakness in the digital asset space has largely mirrored similar moves in the stock market. Bitcoin and other digital assets are supposed to trade independently of mainstream financial markets, but have shown themselves to be correlated to other risk-sensitive assets like tech stocks.

In focus is an aggressive shift toward tighter monetary policy from the Federal Reserve. The central bank is expected to raise interest rates many times this year nad reduce the size of its balance sheet as it fights historically high inflation. Higher borrowing costs would dent economic demand and could dampen the sentiment for risk assets like bitcoin and other cryptos.

Minutes from the March meeting of the Federal Open Market Committee (FOMC) — the Fed’s monetary policy group — confirmed recent rhetoric from officials at the central bank that a sizable, half-percentage point rate increase is a strong possibility in May. The Fed is also close to beginning its balance sheet reduction by $95 billion per month.

“The increased Fed rhetoric this week and Wednesday’s FOMC minutes are weighing on bitcoin as the market digests the increased hawkish stance set out by the Federal Reserve,” said Cawley.

But there remain reasons for optimism that recent declines could be limited. 

Analysts have recently pointed to on-chain data, which refers to the blockchain decentralized ledger that underpins bitcoin and records transactions, indicating that overall buying has remained positive. And some market-watchers said the most significant macro trends have mostly been digested by investors.

While, as Cawley said, “the outlook for risk markets is gloomier as monetary tightening in the U.S. gathers pace, a lot of this tightening has already been priced in so further falls in cryptos may be limited in the short-term.”

Write to Jack Denton at jack.dentondowjones.com