A growing narrative amongst crypto and traditional asset class investors that Bitcoin might actually be a viable safe haven against potential turmoil in the traditional fiat-based fractional reserve banking system has helped propel the BTC to fresh multi-month highs versus its major altcoin peers this week.
According to TradingView, Bitcoin dominance (i.e. the percentage of the cryptocurrency market’s total capitalization taken up by Bitcoin) hit its highest level in nine months above 45.5% on Wednesday. That comes after the BTC/ETH exchange rate hit its highest level since November around 15 earlier this week.
BTC/BNB, meanwhile, is near its highest since last August around 80, BTC/XRP is at its best levels since last September above 62,200, while BTC/ADA is at its lowest level since early 2021. Blockchaincenter.net’s Altcoin Season Index has thus slumped firmly back into “Bitcoin Season” (defined as scores below 25, with the current score 22), down from late February highs in the 47 area.
Can Bitcoin Hit $30,000?
Bitcoin’s leap in dominance comes after the cryptocurrency hit its highest levels since last June in the mid-$26,000s earlier this week, a stunning recovery from last week’s dip to new two-month lows under the $20,000 level. Last week’s dip was triggered by broader risk-off flows after a spate of crypto/tech-friendly US banks went under.
This week’s recovery was triggered by a combination of bullish factors, analysts think, including 1) a proactive response from US authorities to backstop deposits and 2) launch a new bank liquidity program (which helped USDC, a key part of the crypto market’s plumbing, recover back to its $1 peg), and 3) expectations that the risk of a banking crisis would deter the Fed from engaging in substantial further rate hikes.
The aforementioned narrative around Bitcoin being a safe haven against trouble in the traditional financial system is also touted to have helped, just as it is being touted as boosting Bitcoin versus its major crypto rivals. What the cause of the rebound, analyst price predictions have become substantially more bullish.
Technical signals look good; Bitcoin rebounded strongly from its recent retest of the 200DMA and Realized Price (both just under $20,000), a sign the bull market is robust, and the recent breakout above $25,200-400 area resistance is deemed as opening the door to a run higher towards the next resistance area in the $28,000 area.
On-chain indicators that can signal when a bear market is over continue to send good signals, as discussed in this recent article. Metrics relating to Bitcoin’s on-chain activity (like daily transactions, new address creation, daily active users, no. of addresses with a non-zero balance) generally also continue to trend in a positive direction.
Traders will continue to monitor the health of the US and global financial system, with any signs of further cracks potentially adding further fuel to Bitcoin’s rally. Next week’s Fed meeting will be another key event to watch, with this week’s US CPI and PPI (thankfully for the Fed) giving them some room to signal a slightly less aggressive tightening outlook. That could be another tailwind for Bitcoin.
If Bitcoin can make it to and break above $28,000 resistance, the door would then be opened to more upside beyond $30,000 to the next major resistance around in the $32,500-$33,000 area.
Source: Crypto News