Bitcoin is poised for its third straight weekly gain, trading 19% higher at around $43,500. It seems that the token is already recovering from its sharp decline last month, when it fell below $33,000 from an all-time high of nearly $69,000.
But it closed with a pin bar last week, which is a signal for another dip.
The crypto market has been rocked lately by growing expectations that central banks, led by the Federal Reserve, are ready to taper pandemic-era stimulus.
Sam Doktor, CSO of Bitooda Holdings said that risky assets, including crypto, could enter a period of moderate decline after the Fed starts raising interest rates. "We're still in a low-rate environment," he said. "History at least suggests that risk assets tend to do well early in a tightening cycle. The market is still digesting the tightening cycle that is just beginning," he added.
Meanwhile, James Butterfill of CoinShares noted that Bitcoin, as a real inflationary asset, is increasingly asserting itself among investors and therefore becoming more sensitive to news about inflation and rates. He said the recent price moves highlight how investors' perception of Bitcoin as an asset class is maturing.
But Arcane Research analyst Vetle Lunde said individual stock-related news, such as earnings reports, had less impact on cryptocurrencies. "We saw signs of Bitcoin decoupling from the equity markets following disappointing fourth-quarter results from Meta and other tech companies last week. However, as soon as the spicy inflation numbers ticked in, markets reacted promptly," he said.
Asset classes continue to mimic each other's movements, especially the tech-heavy Nasdaq 100 index. The correlation between the two stands at 0.42.