The crypto market got the week off to a hot start as Bitcoin’s (BTC) price climbed to its highest level since December 2021, with bulls showing no signs of halting their push amid ETF inflows and the approaching halving, which is anticipated to occur around April 20.
While cryptos climbed higher, stocks traded sideways, as traders took a breather from last week's feverish price action that saw the S&P 500 and Dow hit new record highs. All eyes are now on the upcoming Personal Consumption Expenditures (PCE) report, which could put a halt to the stock market rally if it comes in hotter-than-expected for the second month in a row.
At the closing bell, the S&P, Dow, and Nasdaq all finished in the red, down 0.38%, 0.16%, and 0.13%, respectively.
Data provided by TradingView shows that an early attempt by bears to smash Bitcoin’s price lower was halted by bulls at $51,000, who then reversed course to rally the top crypto to an afternoon high of $55,000.
BTC/USD Chart by TradingView
Emboldened by the sharp turnaround, bulls now have their sights on resistance at $55,000, and BTC trades at $54,370 at the time of writing, an increase of 5.4% on the 24-hour chart.
Bitcoin and inflation
The threat of rising inflation could put a halt to the Bitcoin rally, according to Aurelie Barthere, Principal Research Analyst at Nansen.
“BTC tends to perform well in disinflation periods but not when inflation is above 2% YoY and accelerating,” Barthere said in a note shared with Kitco Crypto. “Currently, we're in a disinflation phase, with markets aligned with the Fed's guidance of three cuts by December 2024.”
“Crypto prices, including BTC, have shown resilience despite recent rate repricing,” she said. “Looking forward, any signs of growth weakness could be the next catalyst for crypto prices.”
“To sum up, BTC historically fares poorly when inflation is high and rising, but we're not in that regime now. If inflation were to re-accelerate significantly, it might be negative for crypto prices,” Barthere said. “Currently, the focus is on catalysts like the ETH ETF, with a watchful eye on potential growth slowdowns.”
While many analysts have been calling for a major pullback for Bitcoin following the hype-driven gains seen amid the launch of the first spot Bitcoin ETFs in the U.S. – with some warning about a potential sub-$20,000 plunge – macro investor and CEO of 10T Holdings Dan Tapiero says that digital assets are still in the early stages of their bull run, and a deep correction for BTC is very unlikely.
“So if you’re saying do I think we’re going to go back down to the $20,000, $18,000 lows in Bitcoin, I don’t see it at all,” Tapiero said during an interview with SkyBridge Capital founder Anthony Scaramucci.
He noted that while there could be a short-term correction for the top crypto, it won’t be that deep, and it is unlikely to last long as several bullish factors, including the halving, could provide a boost as 2024 progresses.
“I think we’re in the second inning of this bull market, so I’d be much more concerned and think that there [could be] problems potentially if I felt we were in the seventh inning, the eighth inning,” he said. “The bullish consensus at 75%-80% – I mean that’s an issue but maybe [it] just means you have a short-term correction. We’re just getting started here.”
Tapiero said that the struggles the crypto market faced in 2022, with the collapse of Terra/Luna and the FTX bankruptcy, have now faded into the background, and he doesn’t see any major black swans on the horizon that could plunge the market back into crypto winter.
“Markets are discounting mechanisms, and I think that all the bad news that you could possibly have ever dreamed up happened in 2022, and I think you had a low in Q4 2022 that was relatively obvious,” he said. “So do I think that there’s another FTX out there? No… I’m seeing a lot of really interesting information from companies and anyone that was having difficulty is now not – and we were not seeing that three years ago, two years ago.”
And according to market analyst Rekt Capital, “It's over… The time for deeper pullbacks has ended. It's now time for the $BTC pre-halving rally. And after that - one last pre-halving retrace.”
“Bitcoin is doing very well thus far,” Rekt Capital said in a follow-up post. “Already reclaimed one of the final resistances as new support. Only three major resistances left before a new all-time high.”
Altcoins climb higher
The bull market is at the stage where a rising tide lifts all boats, as altcoins followed BTC’s lead higher, with 85% of the tokens in the top 200 recording gains on Monday.
Daily cryptocurrency market performance. Source: Coin360
Coti (COTI) was the biggest gainer, increasing by 27.5% to trade at $0.276, followed by a gain of 26.9 for dogwifhat (WIF), and an increase of 21.2% for Pepe (PEPE). Worldcoin (WLD) recorded the biggest loss after falling 8.65%, while Nervos Network (CKB) declined 8.5%, and Metis (METIS) lost 6.45%.
The overall cryptocurrency market cap now stands at $2.08 trillion, and Bitcoin’s dominance rate is 51.3%.
