Bitcoin has been facing a significant challenge in breaking through the $70,000 resistance level, making it uncertain whether the cryptocurrency’s price will see any immediate gains, according to market analysis by Wolfe Research. In a recent note, Rob Ginsberg of Wolfe Research drew parallels between bitcoin’s struggle and the difficulties faced by small-cap stocks.
Bitcoin’s price stalled out in 2021 after reaching $70,000, leading to a 50% decline over the next three months. Ginsberg highlighted the similarities between the struggles of small caps and bitcoin, pointing out that both suffered from higher interest rates and were treated with similar risk appetites by investors. Currently, while bitcoin has retested its highs, small caps have barely managed to stay above $2,000 in the Russell 2000 index.
Since the beginning of March, bitcoin has been hovering around the $60,000 mark. Although it briefly reached a record high of $73,797.68 on March 14, it has dipped to the $59,000 level a few times. Two important factors driving the market are the potential approvals of bitcoin exchange-traded funds (ETFs) and the halving event. However, the anticipation of a rate cut has been pushed further into the future, with the possibility that the Federal Reserve may not implement any cuts until 2025.
Ginsberg acknowledged the positive long-term outlook for bitcoin but cautioned that the pullback phase from its recent peak might persist for some time. He expressed doubt that bitcoin could thrive if equities continue to struggle. Currently, major stock indexes are down for the month, and the Russell 2000 is expected to suffer a deeper loss of around 6%.
While remaining bullish on bitcoin in the long term, Ginsberg noted that the signals for immediate gains are not yet compelling. The correlation between equities and bitcoin makes it challenging to envision a scenario where bitcoin diverges and surges higher while stocks decline.
Although the outlook for immediate price gains may be uncertain, the long-term prospects for bitcoin remain positive. The cryptocurrency’s ability to break through the $70,000 resistance level and overcome the challenges faced by small caps will be key factors to watch in the coming months.
Bitcoin Battles Resistance as Small Caps Struggle: What’s Next?
Bitcoin’s struggle to break through the $70,000 resistance level has raised uncertainty about its immediate price gains, as highlighted by market analysis from Wolfe Research. This article draws parallels between bitcoin’s challenges and the difficulties faced by small-cap stocks. Both have been affected by higher interest rates and similar risk appetites from investors. While bitcoin has retested its highs, small caps have struggled to stay above $2,000 in the Russell 2000 index.
Currently, bitcoin has been hovering around the $60,000 mark since the beginning of March. Although it briefly reached a record high of $73,797.68 on March 14, it has dipped back to the $59,000 level multiple times. Two significant factors driving the market are the potential approvals of bitcoin exchange-traded funds (ETFs) and the halving event. However, the anticipated rate cuts have been pushed further into the future, potentially not happening until 2025.
Wolfe Research acknowledges the positive long-term outlook for bitcoin but warns that the pullback phase may persist for some time. The article expresses doubt about bitcoin thriving if equities continue to struggle. Currently, major stock indexes are down for the month, and the Russell 2000 is expected to suffer a deeper loss of around 6%.
Although immediate gains are uncertain, the long-term prospects for bitcoin remain positive. Breaking through the $70,000 resistance level and overcoming the challenges faced by small caps will be crucial factors to watch in the coming months.
Advantages:
1. Bitcoin has a positive long-term outlook, which suggests potential gains in the future.
2. Breaking through the $70,000 resistance level would signal a significant milestone for bitcoin’s price growth.
3. The potential approval of bitcoin ETFs could attract more institutional investors, leading to increased market liquidity.
Disadvantages:
1. The correlation between bitcoin and equities makes it challenging to envision a scenario where bitcoin surges higher while stocks decline.
2. Bitcoin’s pullback phase may persist for some time, leading to a period of uncertainty for investors.
3. The delay in anticipated rate cuts may affect bitcoin’s immediate price gains.
Related links:
1. Coindesk
2. Cointelegraph
3. CNBC Bitcoin