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Bitcoin and other cryptocurrencies were higher Wednesday, paring their biggest gains from a Tuesday spike but still in the midst of the best winning streak for digital assets since the last bull market.

The price of Bitcoin has risen 2% over the past 24 hours to $24,800. The largest digital asset has faded from a $26,500 peak notched in recent tradingits highest level since the crypto crash accelerated last Junebut on Tuesday still capped its best four-day stretch since February 2021, according to Dow Jones Market Data. Ripping higher from below $20,000 as recently as last weekend, a return to the $25,000 zone should reassure traders that Bitcoin is looking bullish again. But it needs to consolidate gains.

The price seems to be developing a bearish pattern, indicating that a top may be in the works for the time being, said Naeem Aslam, chief investment officer at Zaye Capital Markets. Bulls, on the other hand, should rejoice since the price has broken above the $25,000 level, which was an important resistance zone, and a breach of this level has opened the way for the price to re-test its next resistance zone of $30,000.

Bitcoin has revealed just how closely tied crypto sentiment is to the macro picture, rallying in recent days in the face of what could be interpreted as dire headwinds for digital asset markets.

The two leading U.S. crypto banks, Silvergate Capital and Signature Bank, have both collapsed in the past week, boding ill for both token liquidity and sentiment for digital assets among regulators. While the bank failures could lead to negative impacts on market functioning, prices have still soared.

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Ironically, federal regulators closing down Signature Bank as well as Silicon Valley Bankwhich marked the biggest bank failure since the 2008-09 financial crisislit the spark for the latest crypto price spike. Pressure on banks has been an unintended consequence of the Federal Reserves dramatic interest-rate increases over the past yeara campaign to tame decades-high inflation with aggressive monetary policy.

Higher rates also dampen demand for risk-sensitive assets, like stocks and especially cryptos. The bank collapses, as well as encouraging inflation data on Tuesday, have pushed traders to shift their expectations for the Feds next move on interest rates, which is due following the March 21-22 meeting of its policy-setting committee. Bitcoins jump higher was essentially a more extreme expression of the sentiment that similarly drove the Dow Jones Industrial Average and S&P 500 higher.

Weve seen Bitcoin act as the leading risk-on asset for the last two years, said James Lavish, managing partner at Bitcoin Opportunity Fund. Investors believe that the Fed has taken a 50 basis-point hike off the table for next week, and at worst there will be a 25 basis-point hike, and perhaps no more hikes at all. Bitcoin was able to harness this sentiment and move to risk-on before all other assets.

Beyond Bitcoin, Ether the second-largest cryptoadvanced 2% to $1,700. Smaller cryptos or altcoins were also in the green, with Cardano up 1% and Polygon popping 6%. Memecoins were also gaining, with Dogecoin climbing 5% and Shiba Inu

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

Read more from the original source:

Bitcoin Price on Its Best Winning Streak Since Last Bull Market. What's Next. - Barron's