Digital asset prices jumped to life Monday as bellwether crypto bitcoin found reprieve above $17,000, an area of contention that saw mild volatility oscillating around a key support line.
Bitcoin jumped to its highest point in more than 20 days above $17,400 dragging most crypto higher on intra-day trading before conceding all of its gains and finishing down 0.8% on the day.
The initial charge in crypto, egged on by Federal Reserve chair Jerome Powell’s hint last week of slowing interest rate hikes this month, also did little to quiet concerns over traditional equities, which slid further on the day.
An initial rally that began to pick up steam towards the end of last month has been short-lived where major stock indices posted a peak around Nov. 30 and Dec. 1 before giving up most gains on the back of the Fed’s interest rate flag.
The Dow Jones Industrial Average shed 1.4%, to 33947 while the Nasdaq Composite also dropped 1.9%, closing at 11239, Tradingview data shows. The S&P500 also fell 1.8% to 3998.
Most digital assets over a 24-hour period traded in the red Monday down between 1% and 3%, a mild showing by comparison. Axie Inifinity’s native crypto, AXS, saw the largest gains among projects with a market capitalization above $1 billion — climbing 29% on the day.
It would appear, at least in the short term, the decoupling of crypto assets’ correlation to tech stocks is waning as volatility in the market begins to slow following FTX’s collapse.
Bitcoin’s 30-day correlation coefficient to the tech-heavy ETF known as the Qs fell to its lowest level in more than three years — hinting at a further divergence in the relationship between traditional equities and crypto.
Still, Zhong Yang Chan, CoinGecko’s Head of Research told Blockworks via Telegram the challenging macroeconomic environment of high inflation, lower consumer spending and a risk-off attitude generally meant future volatility couldn’t be ruled out.
“Bitcoin seems to have found a support level post-FTX collapse at around $16,000,” Chan said. “The Fed’s latest announcement on potentially moderating interest rate hikes has provided some respite, but may also be a precursor to holding interest rates high for a longer period of time.”
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Source: https://blockworks.co/news/bitcoin-price-holds-17k-as-tech-stock-index-slips