Bitcoin is rising in a new bull market. How Cryptocurrency Can Outperform the S&P 500.

“From a technical perspective, if bitcoin closes above $26,000, it could signal the start of a bull market,” said Yuya Hasegawa, an analyst at cryptocurrency exchange Bitbank.

Traders have weathered headwinds from the collapse of US cryptocurrency-focused banks Silvergate and Signature Bank in recent weeks, even as these bank failures expose them to new regulatory pressures and negative impacts on digital asset market liquidity. Instead, the stress on banks — including the collapse of a Silicon Valley bank, the largest since the 2008-2009 financial crisis — that came as an unintended consequence of rapidly rising interest rates over the past year has proven to be a tailwind.

The Federal Reserve has raised rates dramatically in an effort to control decades-high inflation, squeezing demand for risk-sensitive assets like stocks and cryptocurrencies — and making bitcoin closely correlated with

Dow Jones Industrial Average

And

Standard & Poor’s 500.

While traders assumed that the Fed would continue to raise interest rates in the face of continued higher rates, pressure on banks has changed the face of expectations, as markets are now setting more accommodative monetary policy.

“We are seeing more signs that the Fed will be forced to pause its tightening measures. A reversal or pause by the Fed will boost risk assets, including bitcoin,” said Alex Thorne, head of research at digital asset group Galaxy. “We expect to see demand.” Significantly with Bitcoin moving over $25,000.”

But this does not mean that both cryptocurrencies and stocks will benefit from this trend. Some investors fear that as the impact of higher interest rates continues to ripple through the US economy – a process that could take several months – the risk of a slowdown to recessionary levels will rise. While this will hurt corporate earnings and weigh on major stock indices, Bitcoin may be more immune, especially if the outlook remains focused on the eventual reversal by the Federal Reserve towards a rate cut. Lower prices and easier politics laid the foundation for Bitcoin’s recent rally.

“As the economy heads into recession, cryptocurrencies could look more attractive than stocks. The downside risks appear to be greater for the S&P 500 than for bitcoin,” said Edward Moya, an analyst at broker Oanda.

Cryptocurrencies remain a risky asset – but this week bank stocks behaved as well – with a laundry list of issues including regulatory background and investor interest waning amid the bear market. But there is at least a logical case for Bitcoin to outperform the stock market. If the rally continues beyond $30,000 – where bitcoin fell off a cliff last summer – this case could strengthen.

For now, the technical picture is positive.

“Bitcoin is above trading range resistance near $25.2k with short-term momentum to the upside,” writes Katie Stockton, managing partner at tech research firm Fairlead Strategies. “The breakout would require consecutive weekly closes (this Sunday and next Sunday) above the resistance and would complete the base stage in a long-term bullish development. The next resistance is an area near $27,300 to $28,200.”

beyond bitcoin,

ether

– The second largest cryptocurrency – advanced 5% to approach $1,750. Smaller cryptocurrencies, or altcoins, were also in the green

Cardano

by 3% and

ribbed

4% appeared. Memecoins offered a lot of the same, eg

Dogecoin

jumped 5% and

shiba inu

3% profit.

Write to Jack Denton at [email protected]