Bloomberg
Bitcoin slipped back on Wednesday after touching a near two-week high, spotlighting the token’s struggle to vault a key technical hurdle and reclaim the $40,000 level.
The world’s largest cryptocurrency retreated about 1.3% to $38,300 as of 3:40 pm in Singapore, after touching $39,267 a day earlier. Ether, the second-largest coin, falls some 1.5%.
A Bitcoin price trendline drawn from its record high of almost $69,000 in November is proving to be a challenge to overcome. A sustained break above the line could engender optimism that brighter days lie ahead for cryptocurrencies.
A study using Fibonacci ratios — proportions found in nature that are also used to help identify market shifts — suggests another test for Bitcoin lies at the $40,000 mark.
The movements of Bitcoin and Ether have closely mirrored stocks of late. For instance, one measure of the correlation between Ether and the S&P 500 has reached a record high.
That backdrop suggests that if shares rally, the tokens might too. Equities may get a tailwind from signs that Federal Reserve officials favor measured monetary-policy tightening rather than more aggressive steps.
“Bitcoin will continue to trade like a risky asset and most likely benefit if central banks continue to show some hesitancy in turning very aggressive with tightening monetary policy,†Edward Moya, senior market analyst at Oanda, wrote in a note.
The upcoming Bank of England and European Central Bank rate decisions “might have a larger impact on cryptos than normal as Wall Street is looking for a cue on which direction risk appetite is headed,†he added.