This week, the BTC reached new multi-month highs relative to its major altcoin peers, supported by a growing narrative among investors in traditional and crypto asset classes that Bitcoin might actually be a viable safe haven against potential turmoil in the traditional fiat-based fractional reserve banking system.
TradingView reports that on Wednesday, Bitcoin dominance, or the proportion of the cryptocurrency market’s total value that is accounted for by Bitcoin, reached its highest level in nine months over 45.5%. That comes after the BTC/ETH exchange rate earlier this week reached its highest level since about November 15.
While BTC/XRP is at its greatest levels since last September above 62,200, BTC/BNB is close to its highest level since last August around 80, while BTC/ADA is at its lowest level since early 2021.
After a dramatic recovery from last week’s plunge to fresh two-month lows beneath the $20,000 level, Bitcoin surged in dominance this week, reaching its highest levels since late June in the mid-$26,000 range. The decline last week was brought on by larger risk-off flows following a string of failed crypto/tech-friendly US banks.
According to analysts, a combination of bullish factors helped USDC, a crucial component of the crypto market’s infrastructure, recover back to its $1 peg this week. These factors included: 1) a proactive response from US authorities to backstop deposits; 2) the introduction of a new bank liquidity programme; and 3) expectations that the risk of a banking crisis would prevent the Fed from undertaking significant further rate hikes.
It is also claimed that the narrative that Bitcoin is a haven from problems in the old financial system, as well as that it strengthens Bitcoin’s position against its main crypto rivals, has been helpful. Notwithstanding the reason for the recovery, expert price forecasts have significantly shifted in favour of the bull.
The bull market is strong, as evidenced by Bitcoin’s strong rebound from its recent retest of the 200DMA and Realized Price (both just under $20,000), and the recent breakout above the $25,200-400 area resistance is seen as paving the way for a move higher towards the next resistance area in the $28,000 area. Technical signals are bullish.
As detailed in this recent piece, on-chain indicators that can indicate when a bear market is over are still sending out reliable signals. Indicators measuring Bitcoin’s on-chain activity, including as daily transactions, address creation, daily active users, and the number of addresses with a non-zero balance, are typically also continuing to rise.
Traders will continue to keep an eye on the state of the US and international financial systems, and any new hints of fissures might drive the rise of Bitcoin even more. With this week’s US CPI and PPI (happily for the Fed) providing them some flexibility to telegraph a slightly less aggressive tightening outlook, next week’s Fed meeting will be another important event to watch. That might provide Bitcoin with more support. If Bitcoin can reach and beyond the $28,000 resistance, it will then be possible to move higher past $30,000 to the next significant resistance, which is located between $32,500 and $33,000.
