Bitcoin
and other cryptocurrencies were little changed Monday, with digital assets trading in a historically narrow price range that suggests volatility is looming. Traders will be eyeing multiple catalysts as possible triggers for the next big move.
The price of Bitcoin has fallen less than 1% over the past 24 hours to $26,850, continuing to languish below $30,000, a psychologically important zone that the largest crypto breached last month for the first time since June 2022 but failed to consolidate.
“While Bitcoin has been relatively well supported by the 100-day moving average (DMA) over the last week, it has been trending sideways and price action was rather lackluster,” said David Duong, the head of institutional research at crypto exchange
Coinbase Global
(ticker: COIN). “If Bitcoin does get rejected [around $27,200], it should bring the lower Bitcoin range back into play with the … target around $24,000.”
Cryptos have been trading in a remarkably tight range over the past week, with the seven-day price range of Bitcoin—at 3.4%—sitting at one of its narrowest over the last three years, according to analysts at crypto market intelligence firm Glassnode. “It is comparable to January 2023, and July 2020, both of which preceded large market moves,” Glassnode analysts said via Twitter on Monday. “High volatility is likely on the horizon.”
It will take a catalyst to trigger a big move, and traders are eyeing at least four forces.
Duong, of Coinbase, cited three—two that could introduce selling pressure and one that could buoy Bitcoin.
The first is the disbursement of Bitcoin owed to creditors of Mt. Gox, a crypto exchange that went bust in 2014, and is finally seeing Bitcoin distributed to creditors over the coming months in a process that could see mass selling.
The second is a ruling from the Argentine central bank against payments providers carrying out crypto operations, which may force some 250,000 to 300,000 customers of one fintech group to sell their Bitcoin and Ether over the coming month.
The third is the recent move from stablecoin issuer Tether to regularly allocate up to 15% of its net realized operating profit toward purchasing Bitcoin, on top of the $1.5 billion in Bitcoin it holds in its reserves.
Broader macroeconomic catalysts also loom, with Bitcoin continuing to swing with the
Dow Jones Industrial Average
and
S&P 500
in reaction to U.S. economic data that could govern the future of interest rates. Talks over the U.S. debt ceiling also have been adding another level of uncertainty to the backdrop for digital assets.
But the outlook for interest rates remains key, since the Federal Reserve’s aggressive campaign of inflation-fighting rate hikes over the past year has been a driving force behind Bitcoin’s tumble from the late-2021 high near $69,000. Traders are regularly shifting their expectations over the Fed’s next decision in June, with markets continuing to price in a significant chance of another rate hike, after that possibility had previously been all but ruled out.
“Recent economic data and pessimistic outlooks from Fed speakers … supports the idea of a rate hike in June,” said Mike Crosbie, the acting CEO of stablecoin issuer poundtoken.io. “While Bitcoin and Ether have been consolidating in a tight range over the past few weeks indicating uncertainty about the broader markets, the likely rate hikes in June should give the crypto markets more clarity.”
Beyond Bitcoin,
Ether
—the second-largest crypto—was down less than 1% to $1,810. Smaller cryptos or altcoins were mixed, with
Cardano
up 1% and
Polygon
slipping 2%. Memecoins fell, with
Dogecoin
down 2% and
Shiba Inu
shedding 1%.
Write to Jack Denton at jack.denton@barrons.com
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