(Kitco News) - The wider crypto market held steady in trading on Thursday following yesterday's surge higher as traders took stock of the state of the market, taking into account the headwinds facing the wider economy that continue to signal trouble on the horizon.
Stocks traded mixed on the day, as corporate earnings continued to roll out, while a better-than-expected GDP report out of the U.S. gave traders some cause for hope.
Data from TradingView shows that Bitcoin (BTC) price trended lower throughout the day, sliding from a high of $20,875 to an intraday low of $20,263, an intraday swing of 2.95%. At the time of writing, the top crypto is trading at $20,335.
BTC/USD 4-hour chart. Source: TradingView
The weakness in the top crypto was spotted early by Kitco senior technical analyst Jim Wyckoff, who suggested that it was the result of “a corrective pullback after hitting a six-week high on Wednesday.”
“Price action this week has seen a big and bullish upside “breakout” from the choppy and sideways trading range of the past few weeks,” Wyckoff said, adding that “A fledgling price uptrend is now in place on the daily bar chart. Bulls have the overall near-term technical advantage to suggest still more upside price action in the near term.”
While crypto Twitter continues to debate whether the recent gains are merely a “bull trap” or a sign that prices will soon head higher, pseudonymous crypto trader ‘Moustache’ posted the following tweet pointing to one sign that “the bear market/correction is over.”
#Bitcoin
— ????????????????? ?? (@el_crypto_prof) October 27, 2022
This is one of the biggest signs that the bear market/correction is over.$BTC has broken through the orange line in the MMB-Indicator.
This has happened only ONCE every year, for the last 4 years.
After that, the price of $BTC rose significantly.
Are you ready??? pic.twitter.com/AlMthJ14tY
All eyes on the Fed
Further insight into the state of things following the 2.6% GDP growth in the U.S. was provided by Marcus Sotiriou, an analyst at the digital asset broker GlobalBlock, who said that so far, “the market has responded positively to this news, potentially due to the decreased chances of an economic recession.”
Sotiriou warned that the reaction could be short-lived; however, as positive gains in the markets allow the Fed to continue moving forward with its aggressive rate hike policy.
“This argument is backed up by Core PCE inflation which was 4.5%, which although it came in lower than the previous month of 4.7%, remains persistently high,” the analyst said.
If the Federal Reserve does indeed continue with aggressive rate hikes, Sotiriou warned that “risk assets, like crypto, could react badly after the short-term volatility is out of the way. This is because an aggressive Federal Reserve policy removes liquidity from the market, which causes the most liquid assets like crypto and stocks to be sold off.”
One positive development that crypto has going for it is the fact that multiple governments around the world are attempting to become the next global hub for crypto, according to Sotiriou, highlighting that the UK has recognized Bitcoin and Ethereum as officially regulated financial instruments and Hong Kong is attempting to get the top two cryptos listed on trading platforms.
“I think government regulation could be a key catalyst for crypto adoption in the coming years,” Sotiriou concluded.
Altcoins consolidate
The majority of altcoins traded within a 3% range of their previous days price on Thursday, with a few notable exceptions.
Daily cryptocurrency market performance. Source: Coin360
The biggest gainer out of the top 200 was Klaytn (KLAY), which climbed 26.45% to a price of $0.2594, while Dogecoin (DOGE) saw its price increase 13.83% on the back of excitement about Elon Musk purchasing Twitter and rumors that the social media platform is working on integrating a crypto wallet.
At the close of traditional markets in the U.S., the Dow managed to finish in the green with a gain of 0.61%, while the S&P and Nasdaq closed in the red, down 0.61 and 1.63%, respectively.
The overall cryptocurrency market cap now stands at $1.001 trillion, and Bitcoin’s dominance rate is 39.5%.
