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Bitcoin and other cryptocurrencies were little changed Thursday, having consolidated gains from one of the best stretches for digital assets in more than two years amid hopes of more accommodative monetary policy from the Federal Reserve.

The price of Bitcoin has risen less than 1% over the past 24 hours to above $24,800. Bitcoin is still up almost 50% so far this yearhaving soared from a bearish dip after falling below $20,000 last weekbut it has fallen back from a peak above $26,000 on Tuesday, which marked the highest levels since the crypto crash accelerated last June.

We still see a tug-of-war near $25,000, said Alex Kuptsikevich, an analyst at broker FxPro. Prices are returning under the 200-week average, failing to go immediately higher. Technically, an important signal of a return to a long-term bullish trend would be a consolidation above $25,000 at the end of the week. Nevertheless, keeping the price above $20,000 and the 200-day average looks like a sufficient condition that Bitcoin is not ready to decline sharply further and remains interesting for buying on declines.

Crypto prices have jumped higher amid a crisis of confidence across the U.S. banking sector. While the failures of Silvergate Capital, Silicon Valley Bank, and Signature Bank since last week have important implications for the digital asset industry and functioning of crypto markets, traders have turned bullish for a different reason.

The meltdown of Silicon Valley Bank in particularthe biggest banking collapse since the 2008-2009 financial crisishas spurred bets that the Fed will not raise interest rates in the coming months as much as once expected. Higher rates have hammered Bitcoin prices over the past year as the Fed has tried to get decades-high inflation under control with tighter financial conditions. But recent stresses on banks, an unintended consequence of the rate environment, has fueled speculation of a more careful Fed.

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A cap on rates, and even the prospect of rate cuts this year, would be a major tailwind for Bitcoin, because higher rates dampen demand for riskier bets like cryptos. While the Dow Jones Industrial Average and S&P 500 have slid amid banking woeswith Bitcoin bucking its correlation to the stock marketthe tech stock-heavy Nasdaq, which is similarly sensitive to rate expectation, has been more resilient.

Nevertheless, markets broadly sold off Wednesday amid fears that the U.S. banking panic could go global, with shares in Swiss bank Credit Suisse (ticker: CS) selling off dramatically. Bitcoin wasnt able to escape the short-term selling pressure, hence the move lower through Wednesday and into Thursday.

Bitcoin weakened as chaos across Wall Street saw another banking crisis trigger another wave of panic-selling of risky assets. Credit Suisse is a bigger story than SVB and this has Wall Street extremely nervous, said Edward Moya, an analyst at broker Oanda. Banking turmoil could ultimately prove to be rather bullish for Bitcoin, but for now crypto weakness is justified.

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In focus ahead of the next Fed decision on rates due next week, after the central banks policy-setting committee meets March 21-22, are any signs of more stress in the banking system as well as economic data that add color to the inflation picture.

Beyond Bitcoin, Ether the second-largest cryptolost 1% to above $1,650. Smaller cryptos, or altcoins, were weaker, with Cardano and Polygon losing 3%. Memecoins were also in the red, with Dogecoin down 3% and Shiba Inu shedding 5%.

Write to Jack Denton at jack.denton@barrons.com

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Best of Bitcoins Latest Rally Is Over. Watch This Key Level for the Next Move. - Barron's