The Bitcoin (CRYPTO: BTC) price has been marching higher this week.
When most Aussies were greeting the day on Monday morning, the world’s top token by market cap was trading for US$29,100.
At the time of writing, the Bitcoin price stands at US$31,591, up 8.5% so far this week.
What’s going on?
Cryptos catching up from last week’s decoupling
2022 has seen cryptos move in almost lockstep to risk assets.
When the tech-heavy Nasdaq has posted losses, so too have most cryptos. And when risk assets have rebounded, the Bitcoin price has followed suit.
But last week that relationship broke down, with cryptos decoupling from share markets for the first time this year.
In last week’s trading, the Nasdaq gained 6.7% as investors took heart that interest rates might not rise as quickly or far as the US Fed had earlier indicated. The Bitcoin price, on the other hand, fell 5.5% last week, its eighth consecutive week of losses.
Commenting on this week’s broader crypto rally, chief investment officer at LedgerPrime Shiliang Tang said (as quoted by Bloomberg), “I expect this gap to close a bit in the short term with crypto catching up.”
Meantime, the CEO of social media trading platform Alpha Impact, Hayden Hughes, added:
Markets are long overdue for a relief rally. Bitcoin just went through eight consecutive weeks in red territory and got technically oversold to levels we traditionally only see at the bottom of bear markets.
On Alpha Impact, we’re seeing heavy buying of Ether and several altcoins, and these patterns mirror what we saw in the July 2021 bear market bottom and the January 2022 local bottom.
Bitcoin price to the moon? Not so fast!
Don’t bet the farm on the Bitcoin price continuing to charge higher just yet, though. In fact, don’t invest any more than you can comfortably afford to lose.
A strategist at crypto exchange LMAX Digital, Joel Kruger, sounded a note of caution.
Noting that markets were closed in the United States on Monday for the Memorial Day holiday, he said the Bitcoin price gains were “happening in very thin trading conditions over a weekend and into a US holiday… So price action needs to be taken with a grain of salt.”