The market’s strength indicator is overbought, signalling a pause in its 2023 climb.
HONG KONG: Bitcoin steadied after snapping a rare 14-day winning streak as a mood of caution supplanted the risk appetite that drove up a variety of assets at the start of the year.
The largest token swung between gains and losses on Thursday and was up about 0.2% at US$20,813 as of 12.50pm in Singapore. Smaller coins like Solana and Polkadot posted modest increases. Bitcoin on Wednesday retreated 2.5%, ending its longest run of daily gains since 2013.
Bitcoin “has now become very overbought on a near-term basis” and is “getting ready for a short-term pullback”, said Matt Maley, chief market strategist at Miller Tabak + Co.
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Shares fell and Treasuries rallied on Thursday on economic growth concerns, and that sombre sentiment washed across digital assets too. The crypto sector also continues to grapple with the fallout of the collapse of the FTX exchange.
Genesis Global Capital — the lending unit of Digital Currency Group — is laying the groundwork for a bankruptcy filing as soon as this week, according to people with knowledge of the situation. DCG’s businesses are key cogs in the ailing digital-asset industry.
Bitcoin’s 14-day relative strength index has dropped from more than 90 but remains above 70, the threshold for so-called overbought conditions. For some strategists, that hints at the possibility of a pause in Bitcoin’s 2023 advance.
Bitcoin and a gauge of the top 100 tokens have both jumped more than 20% this year, alleviating at least a sliver of last year’s digital-asset rout. Much of that has been driven by the view that debilitating interest-rate hikes are coming to an end as inflation cools.
Virtual coins have shed about US$2 trillion since a peak in November 2021, precipitating a series of blowups that led a swath of institutional and retail investors to wash their hands of crypto.