By Akshay Chinchalkar and Isabelle Lee
Bitcoin’s 2023 rally has put it on the cusp of breaching $30,000 for the first time since June — but it has proved to be a tough level to crack. Seasonal trends may help give it a push.
The largest cryptocurrency was trading around $28,100 as of 1 p.m. in New York — roughly within 15% of a key trendline, its average price over the past 30 days. The coin has been hovering near that resistance area since March, after rallying 72% in the first three months of the year to close out its best quarter in two years.
Despite the double-digit rally, Bitcoin has not even recovered half of its value since its record peak of nearly $69,000 in November 2021. While the $29,000-to-$30,000 zone served as support several times in the past when Bitcoin was trading above that level, the range is now acting as an upside barrier. The pattern of resistance — known in technical analysis as a “spinning-top” candlestick pattern — represents indecision, or a stalemate between bulls and bears.
Multiple narratives helped fuel Bitcoin’s first-quarter surge — including how Bitcoin is meant to act as an inflation hedge and how the coin is supposed to circumvent vulnerabilities found in traditional banking systems. Fundamentally, though, little has changed in the world of digital assets. Add to this is the fact that crypto market liquidity and trading volumes have dried up as investors who had waded in during the pandemic stay on the sidelines following 2022’s scandals and implosions, including that of FTX in November.
“After an impressive rally in March, we are now seeing a period of consolidation just below the key $30,000. Bulls are pausing for breath before the next attack on this key resistance,” Fiona Cincotta, senior financial markets analyst at City Index, said. Still, she said, a break above $30,000 still “looks likely.”
Perhaps seasonality will play a hand. April has typically been a solid period for Bitcoin, ranking as the second-best month behind October, according to data compiled by Bespoke Investment Group. In the past five years, Bitcoin has posted an average gain of 15.63% in April, Bespoke data shows. For Ethereum, the second-largest digital asset, April has been its strongest month going back to 2018, with an average gain of 33%.
In some ways, Bitcoin may be a victim of its own success. After recent sharp moves one way or the other in the token, such as the spurt in March, Bitcoin has tended to trade in a range for a while, said Matt Maley, chief market strategist at Miller Tabak + Co.
“Once it makes that move, investors get nervous about the move, and then the crypto falls into a sideways range for a while,” Maley said. “This is the sixth time this has happened in the last year.”
More stories like this are available on bloomberg.com
