Bitcoin tops $30,000 for first time since June 2022

World’s largest cryptocurrency is up about 80% year to date and analysts say rebound is partially due to lower liquidity

A physical imitation of a Bitcoin. The world's largest currency is up about 80 per cent since the start of this year. AFP
Powered by automated translation

Bitcoin climbed above $30,000 for the first time since June 2022, rallying more than 80 per cent since the start of the year.

The rebound is even more intense than a nearly 20 per cent gain on the Nasdaq 100 — with which Bitcoin has tended to move in tandem — and retraces some of the digital token’s losses from 2022 following a series of crypto-related crashes.

Still, Bitcoin is down more than 50 per cent from its all-time high in November 2021.

What is Bitcoin and how did it start?

What is Bitcoin and how did it start?

“30k is very significant for both technical and fundamental reasons,” said Mati Greenspan, chief executive at Quantum Economics.

“The resistance has been building up for three weeks straight and has now finally broken. This is the first time we’ve crossed that level since the collapse of Terra/Luna and Three Arrows Capital. It basically means that the price has fully recovered from Celsius, FTX and the US regulatory crackdown.”

Bitcoin’s breakout above stiff resistance at $30,000 comes after a so-called squeeze of the Bollinger Band, which experienced historical volatility fall to the lowest since January.

The compression, back then, resulted in a sharp upward movement that looks similar to Tuesday’s upside breakout. Traders following technical patterns may now be looking at the $30,800 area as a first potential objective, followed by $31,200.

To be sure, the crypto industry is still facing immense scrutiny.

Crypto exchange Coinbase Global said it had received a notice from the US Securities and Exchange Commission declaring its intention to bring an enforcement action.

The SEC has sued crypto mogul Justin Sun for allegedly violating securities rules. But Mr Sun says the case lacks merit.

Elsewhere, the US Commodity Futures Trading Commission has sued Binance founder Changpeng Zhao and his crypto exchange for alleged violations of derivatives regulations, though Binance has said it does not agree with many of the agency’s characterisations.

But even with the setbacks, Bitcoin’s rally has gained strength over the past month following the collapse of three US banks, which revived the narrative among Bitcoin bulls that the token offers a more attractive alternative to traditional finance.

Analysts say a drop in liquidity to a 10-month low — after market makers lost access to US banking rails provided by Silvergate Capital Corporation and Signature Bank — could also explain the rebound, at least in part.

With lower trading volume, price swings can look more dramatic.

“Order books are thin and trading activity is depressed,” said Strahinja Savic, head of data and analytics at FRNT Financial. “Under these circumstances, it is possible that we see price action that is difficult to pin to any one reason.”

Updated: April 11, 2023, 4:50 AM