The top cryptocurrencies gained on Friday as strong earnings from tech giant Amazon.com Inc. bolstered confidence in technology stocks, which digital tokens have largely tracked over the past months.
Bitcoin rose as much as 2.9 per cent to $38,043, while Ether rallied as much as 5.6 per cent to $2,810. Both tokens jumped in Asia's early afternoon after trading sideways for the last few days.
The major cryptocurrencies have been largely trapped in a range over the past couple of weeks. Their struggle to break out came as growth stocks and other riskier assets faltered amid concern about the impact of imminent Federal Reserve rate hikes and a trend toward tightening of monetary policy globally.
At the same time, the range-bound trading offered some relief for crypto bulls who see it as a sign that the sharp selloff that began in November may be mostly over. The Nasdaq 100 Index, by comparison, tumbled 4.2 per cent Thursday on dismal results from Facebook parent Meta Platforms Inc.
"Bitcoin continues to consolidate below the $40,000 level," said Edward Moya, senior market analyst at Oanda, in a note Thursday. "Bitcoin is forming a base and considering the selloff in tech stocks crypto investors should be feeling a bit more optimistic that the bottom is in."
Bitcoin to bottom out soon?
Bitcoin stands a good chance of bottoming by the next few months, according to a technical analyst at Fundstrat.
The largest cryptocurrency has stabilized recently after falling about 50 per cent from a record in November. According to a pricing model tracked by Fundstrat's Mark Newton, there's a "good likelihood" that the low for Bitcoin is coming by the spring months.
Still, he cautioned against getting bullish now. "This minor two-week bounce might still be premature in expecting a new intermediate-term rally has begun," Newton said.
Among key technical levels to watch, prices moving above $40,000 would be important for bulls, he added. A decline under $35,511 would set up a test of $32,950, around the January 24 intraday low, he said.
Bitcoin has declined in recent weeks amid a global rout in risk assets on growing concerns about a hawkish Federal Reserve. Tokens like Bitcoin and Ether are growing more correlated with assets like stocks as more traditional investors start to jump in.
Even if Newton expects a bottom sometime soon, he's still thinking cautiously.
"Until $40,000 is exceeded on a daily close, it remains in a downward sloping pattern, and it's tough to rule out further weakness technically speaking," he wrote.
