Bitcoin rallies above $30,000 as it shows signs of bottoming out

Stocks rise in Asia and Europe after China says it will ease Covid-19 curbs

Bitcoin fell for eight weeks in a row but appears to be turning a corner. Reuters
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Bitcoin rose the most in two weeks, trading above $30,000 as investors and strategists said the digital currency was showing signs of bottoming out.

The largest cryptocurrency rose by 7.93 per cent to $31,780.51 at 2200 GMT on Monday, up $2,334.8 from its previous close, its biggest increase since May 15.

Ether and smaller tokens such as Avalanche, which were pummelled last week even as Bitcoin held relatively steady, were also up.

Stocks rose in Asia and Europe after China said it would ease Covid-19 curbs, while US markets were closed for the Memorial Day holiday.

“Markets are long overdue for a relief rally,” said Hayden Hughes, chief executive of social media trading platform Alpha Impact.

“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.”

The correlation between Bitcoin and stocks began to break down last week as the S&P 500 Index posted its biggest weekly gain since November 2020, while Bitcoin fell for the eighth week in a row.

Shiliang Tang, chief investment officer at crypto fund LedgerPrime, expects the gap to “close a bit in the short term, with crypto catching up”.

Ether jumped as much as 7.7 per cent on Monday while Avalanche and Solana rose as much as 12 per cent and 7 per cent, respectively, before giving up some of those gains.

“On Alpha Impact, we are 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,” Mr Hughes said.

Trading volume was muted due to the US holiday.

Joel Kruger, a strategist at crypto exchange LMAX Digital, said the price rally was “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”.

Inflation reports from Spain and Germany on Monday underscored that the macroeconomic forces that have weighed on cryptocurrencies in recent weeks are not about to ease.

Consumer prices in both countries jumped faster than expected in May, adding pressure on the European Central Bank to remove crisis-era stimulus.

Rising interest rates around the world have triggered a sell-off in risk assets this year, sending Bitcoin down 34 per cent since December 31.

Updated: May 31, 2022, 9:11 AM