Bitcoin continues to trade in a tight range of $18,000 to $25,000, keeping investors in the loop as to where the price is headed next. The crypto market has been plagued by a range of issues, from collapsed projects to bankruptcies.
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Bitcoin surpassed $20,000 on Tuesday, hitting its highest level in more than a week but is still struggling to break out of its tight trading range.
According to data from CoinDesk, the world’s largest cryptocurrency was up more than 7% at $20,265.95 around 3:30 a.m. ET.
Bitcoin’s rally boosted the broader cryptocurrency market. Ether is up about 7% to $1,389.75.
Still, Bitcoin has struggled for direction, trading between $18,000 and $25,000 since mid-June after a crash that saw nearly $2 trillion wiped from the overall crypto market since its November peak.
This market decline was fueled by central bank rate hikes aimed at controlling rampant inflation, as well as a spate of bankruptcies and insolvency woes seeping through the crypto industry.
Crypto investors have been watching monetary policy because digital currencies have been closely correlated with US stock markets this year. Higher interest rates have weighed on the S&P 500 and the tech-heavy Nasdaq, which has been filtered through other risky assets, including cryptocurrencies.
The Federal Reserve’s 0.75 percentage point hike in interest rates last week was a “big event” for crypto markets, according to Vijay Ayyar, vice president of corporate development and international at cryptocurrency exchange Luno.
“This was broadly in line with market expectations and as such we have seen much of that sentiment priced in,” Ayyar said.
Interestingly, the Bitcoin rally that began Monday came despite a drop in US stocks, with the S&P 500 closing at its lowest level of 2022. Stock futures rose on Tuesday. So there are signs that the correlation between crypto and stocks could potentially weaken.
Meanwhile, investors are watching the US dollar closely. The dollar index, which tracks the greenback against a basket of currencies, is up more than 18% this year. Bitcoin moves inversely to the dollar, so a strong greenback is negative for bitcoin. However, Ayyar said the dollar index could be near its top, marking a potential bottom for Bitcoin. That could be a reason for Bitcoin’s surge.
“Retailers could therefore also position themselves accordingly,” said Ayyar.
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