Bitcoin suddenly springs to life Image Credit: Screengrab

Bitcoin broke above $20,000, ending its longest run below that price level since the token first breached the threshold in late 2020.

The largest cryptocurrency by market value, rose as much as 4.15% to $20,185 Tuesday. The token has traded below $20,000 for nearly three weeks, breaking from the coin's trademark volatility. Other digital assets followed with Ether gaining as much as 11% to trade at $1,505, its highest price this month. And so-called alt-coins like Solana and Dogeoin also advanced.

Despite the gains, Bitcoin still remains in its multi-month price slump as central banks hike interest rates to curb rising inflation. The token has lost close to 60% of its value since the start of the year.

Cryptocurrencies rose Tuesday alongside US stocks as investors assess mixed corporate earnings and weighed risks to economic growth. New economic data revealed slumping US consumer confidence, a sign that buyers may slow spending amid recessionary fears and aggressive interest-rate hikes.

Bitcoin's strong correlation to risk assets like tech stocks has dashed hopes that Bitcoin would serve as a hedge against inflation. The coin has traded in line with US stocks for much of the year. A 60-day correlation coefficient for Bitcoin and contracts on the S&P 500 hovered around 0.63 on Tuesday. (A coefficient of 1 means the assets are moving in lockstep, while minus-1 would show they're moving in opposite directions.)

Bitcoin's 30-day volatility is near a six-year low, according to a note by Arcane Crypto's Vetle Lunde and Bendik Norheim Schei, and that could mean a breakout is due. The last time it reached those levels was in the summer of 2020. Bitcoin maintained levels below its current price at the time for four days before "the price exploded up," said the note.

But whether the token can maintain trading above $20,000 remains to be seen.

"Some people are watching $20,000 for the psychological significance of it," said Katie Stockton, co-founder of Fairlead Strategies. She said that based on her firm's models, she would need to see "consecutive daily closes" above roughly $19,600 to "confirm a minor breakout."