Despite a selloff in the stock market on Wednesday, BitcoinBTCUSD +0.07% and other cryptocurrencies remained mostly stable as riskier assets were pressured by increasing bond yields. Traders are still optimistic about significant increases in the upcoming weeks.
After bouncing between $27,300 and $27,700 throughout the previous day, the price of Bitcoin has dropped by less than 1% to $27,550 in the last 24 hours. Although Bitcoin has dropped from a recent top above $28,000 earlier this week, the largest digital currency is still solidly above the $26,000 zone that has characterised trade for more than a month during a historically calm time for cryptos.
Stock Market Dips, Bitcoin Holds: Insights into Crypto Trader Confidence.,Stock Market Dips, Bitcoin Holds: Insights into Crypto Trader Confidence.
According to Alex Thorn, head of research at cryptocurrency financial services company Galaxy, “Bitcoin has held up remarkably well due to limited selling and strong conviction from long-term holders,” despite rising rates and the strength of the dollar. “Bitcoin could test the $30,000 range if there was a clear break above $28,000.”
In fact, despite a spike in bond rates, Bitcoin has been comparatively steady, remaining above its prior range and just shy of recent highs, while the Dow Jones Industrial Average (DJIA -0.31%) and S&P 500 (SPX -0.11%) have dropped down this week. For the first time since 2007, the yield on the benchmark 10-year U.S. Treasury note exceeded 4.8% on Wednesday, as investors’ concerns about the trajectory of interest rates persisted.
Because improved returns on risk-free government debt deter investors from piling into riskier investments like Bitcoin, higher rates tend to put more pressure on risk-sensitive assets. Cryptocurrencies have remained stable this week despite rising rates having severely damaged stocks this week.
This is likely due to traders’ continued optimism following a historically strong September, which may lead to more increases in the next month.
With the exception of 2018, October has been Bitcoin’s best-performing month since 2014, with an average gain of 19.48% for the month over the previous nine years, according to Thorn. “Many market participants were prepared to pay high options premiums in order to seize possible gains, as they were actively positioning themselves for significant Bitcoin upside in October.”
The second-largest cryptocurrency behind Bitcoin, EtherETHUSD -1.40%, dropped less than 1% to $1,650. The performance of smaller tokens, or altcoins, was more uneven; Cardano fell 1.5% while Polygon rose 3%. Memecoins saw a decline, with Shiba Inu losing 1% and DogecoinDOGEUSD -1.01% falling 2%.
Stock Market Dips, Bitcoin Holds: Insights into Crypto Trader Confidence.,Stock Market Dips, Bitcoin Holds: Insights into Crypto Trader Confidence.,Stock Market Dips, Bitcoin Holds: Insights into Crypto Trader Confidence.