What’s moving bitcoin’s price right now?

2 years ago

Bitcoin is currently rallying after a brutal 2022 that saw 65% slashed from its price. But how long can the upturn last? Is it even a real rally? And why do bitcoin’s ups and downs over the past 12 months appear to be so closely tied to the fortunes of traditional stocks?

Here, Protos takes a look at bitcoin’s price history and some current activity to try and understand what’s going on in both markets. The last bitcoin bear market was in 2018 when the coin’s price fell by 70% during the course of the year. However, things soon picked up and in 2019 it rallied by 200%, closing the year 90% higher than the previous 12 months. 2018 was also a bad year for the S&P500 as it closed 6.24% down but it also rallied during the following year, picking up by almost 30%. So, are we back on our way to the moon?

Stocks and crypto are currently on an upward curve ahead of the CPI and Initial Jobless Claims figures, due to be released next Thursday. Previous CPI readings have come out lower than expected, indicating that inflation eased significantly in the last quarter of last year. Jobs reports are showing a strong labor market and an unemployment rate of only 3.5%.

Meanwhile, treasury markets look to be predicting a recession which, along with a falling inflation rate, may be interpreted by investors as a signal that the Federal Reserve could finally pivot and announce its plan to decrease its interest rate.

A low-interest rate environment with eased financial conditions may well help both bitcoin and traditional stocks to rise. However, copper, which is also a popular recession indicator, is showing signs of strength as it hovers about the $4 mark. The Federal Reserve’s target is to bring inflation to 2%, a figure that it believes is appropriate for employment levels.

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