Crypto proponents rejoiced in the early hours on Tuesday as Bitcoin (BTC) spiked above $69,000 to set a new all-time high more than a month and a half before its next halving, a development that has never occurred in the 15 years since the network launched.
In true crypto fashion, the new all-time high was met with a flash crash that saw the top crypto plunge 14.6% from its peak of $69,330 on Coinbase to hit a low near $59,230 in the afternoon before dip buyers pushed it back above $63,700.
BTC/USD Chart by TradingView
It wasn’t just Bitcoin that saw its good luck run out on Tuesday as stocks fell under pressure, pulling further away from record highs as uncertainty over interest rate cuts and a rough day for the ‘Magnificent 7’ stocks put investors on notice that it won’t always be ‘up only’ for equities.
At the closing bell, the S&P, Dow, and Nasdaq were all in the red, down 1.02%, 1.04%, and 1.65%, respectively.
The struggle for stocks and other risk assets comes one day after Atlanta Fed president Raphael Bostic hinted that the first interest rate cut may not come until the third quarter of 2024, and that may be the only rate cut to occur this year.
When it was all said and done, gold offered investors the least amount of drama on Tuesday as the yellow metal spiked within a few basis points of hitting a new record high before pulling back near support at $2,130, notching a 0.76% for the session.
Rollercoaster ride for Bitcoin holders
The push to a new all-time high for Bitcoin has been somewhat of a rollercoaster journey as ETF inflows dominated headlines and sparked the first round of institutional FOMO.
“Bitcoin's price often reaches new highs that are not just small bumps, but large leaps beyond the previous records,” said Sergey Nazarov, co-founder of Chainlink. “This suggests that we may be at the beginning of a new positive market cycle for Bitcoin. When Bitcoin's price surges, it attracts more capital to the ecosystem, which fuels innovation and development within the space.”
“At the same time, we're observing an alignment of macro-environmental factors that bolster Bitcoin's growth,” he added. “The interplay of global economic trends, regulatory evolution, and market dynamics is merging with the rise of Bitcoin ETFs. These ETFs are more than investment tools; they're bridges linking traditional finance with the crypto world, broadening Bitcoin's appeal and accessibility. This convergence of supportive macro factors and the innovation and capital within the Bitcoin ecosystem is creating a reinforcing loop and setting the stage for Bitcoin's continued ascent in the financial landscape."
According to Greg Magadini, Director of Derivatives at Amberdata, this past weekend saw option volatility briefly decrease “due to consolidation” before making “a U-turn higher.”
He said the best quote he heard in the lead-up to a new BTC ATH was “selling all-time highs in Bitcoin seems like a boomer move,” which he “completely agrees” with.
“Market Max-Pain right now isn’t a Bitcoin pull-back, in my opinion. Most people are not invested in Bitcoin (or any crypto) and watching this rally from the sidelines IS THE Max – Pain,” Magadini said. “I think we continue higher! The halving cycle still continues to be the BTC narrative.”
He noted that the supply issuance drop that comes with the halving, “combined with one of the best-performing ETFs in history, is very bullish for this ‘fixed supply’ asset. Then mix in the MicroStrategy INDEX EFFECT, and you really have compounding demand. From a volatility perspective, it seems like overall volatility can move higher, too.”
In the short-term, market analyst Bloodgood said, “The primary target for bulls here is to defend the $60k level and avoid a fake breakout, which could lead to a drop towards low $50k.”
“Ideally, the breakout above $60k sticks, and we have another go at the ATH. You know the saying, the more times a level is tested, the more likely it is that it breaks,” he said. “Once BTC manages to break above the ATH, things will get very frothy, but in a good way.”
He noted that the daily chart “clearly [shows] the rejection at the All-Time-High and the potential support level if it keeps dropping.”
“In any case, I suggest staying patient as the market is volatile and direction is unclear at this point,” Bloodgood concluded. “As crypto and other risk-on assets are flying, DXY is fighting to stay above its 103.5 support level, but the question is, how long will it hold?”
Sea of red for altcoins
Altcoins took a beating in the wake of Bitcoin’s pullback, with many giving up the gains they’ve seen in recent months and all but a dozen tokens in the top 200 recording a loss on Tuesday.
Daily cryptocurrency market performance. Source: Coin360
Lisk (LSK) bucked the prevailing trend to post a gain of 49.6%, followed by an increase of 27.8% for Terra (LUNA), and a gain of 18.9% for StarkNet (STRK). High-flying meme coins led the losers, with Bonk (BONK) declining 28.2%, FLOKI (FLOKI) falling 27.4%, and Memecoin (MEME) declining 24.2%.
The overall cryptocurrency market cap now stands at $2.31 trillion, and Bitcoin’s dominance rate is 53.1%.
