The value of bitcoin exceeded the threshold of $66,895 in October for the first time in history.
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The price of bitcoin got a small relief bounce this week as investors hoped that the worst of the crypto liquidity crisis is over.
By Friday, bitcoin had risen 13.63% for the seven-day trading week beginning Sunday, and was on pace for its best week since October, according to Coin Metrics. The price rose as high as $22,478.37 at one point, climbing back from a low of about $17,000 in June.
It last traded less than 1% higher on the day at $21,798.40, at 4:00 p.m. ET, according to CoinMetrics.
“A lot of the insolvencies and forced unwinding from a volume perspective are behind us,” said Felix Hartmann, managing partner of Hartmann Capital. “Three Arrows filing for bankruptcy was kind of the final pin in that.”
Three Arrows, a crypto-focused hedge fund, filed for bankruptcy last week after a sharp decline in digital currency prices exposed a liquidity crisis at the firm.
The market contagion could spread into smaller crypto exchanges or funds, Hartmann added, but there aren’t any bigger, more impactful dominoes left to fall. If the crypto industry can go a month without bad news or insolvencies, he said, it’s “very likely” that that market could double.
Still, doing so would only lift bitcoin’s price back up to April levels. It’s currently about 70% below its November all-time high of $68,982.20.
Gritt Trakulhoon, lead crypto analyst at Titan, called bitcoin’s weekly rise a “much needed” short-term relief rally coming after a major capitulation going back to May when Terra’s stablecoin project crumbled. Indeed, as digital currency prices tumbled and strained liquidity, crypto lenders and other firms have also suffered.
Having an unofficial lender of last resort like Sam Bankman-Fried to bail out some of the embattled crypto lenders is also providing relief to investors, Trakulhoon added. This week, the FTX CEO said he and his company still have a “few billion” on hand to shore up struggling firms that could further destabilize the digital asset industry.
Trakulhoon said $22,500 to $23,000 is the resistance level to watch for bitcoin. If it breaks above that threshold, it should rise “pretty quickly” to its next stop: $28,000, he added.
Ryan Shea, economist at Trakx, pointed to this week’s news that Federal Reserve officials said another interest rate hike of 50 or 75 basis points is likely at their July meeting. That, combined with increasing signs that the U.S. economy is slowing more markedly than policymakers’ projections, is making investors view the Fed’s aggressive stance “with more circumspection,” he said.
“In effect, they are looking through the hikes and instead are focused on the expectation of eventual Fed capitulation, something that is a positive scenario for crypto prices, and risk assets more generally,” Shea said.
Read More:Bitcoin heads toward best week since October as crypto collapse stabilizes