Bitcoin It held above $77,000 on Friday, consolidating after hitting its highest level since early February earlier this week.
The largest cryptocurrency gained about 13.6% in April, on track for its best monthly performance in a year, according to CoinGlass. The cryptocurrency market has endured its longest losing streak since 2018, with consecutive monthly declines from October to February before rebounding.
The improvement came as the broader macro backdrop improved. U.S. stocks have enjoyed a strong recovery, with the S&P 500 and Nasdaq rising back to record highs after briefly slipping into correction territory earlier this year.
But there is also a cryptocurrency-specific driver behind the move.
Tether’s USDT supply The largest and most popular stablecoin has surged to nearly $150 billion after months of stagnation, adding about $5 billion in the past two weeks.
This is important because stablecoins—cryptocurrencies pegged to fiat currencies such as the U.S. dollar—serve as liquidity in the cryptocurrency market and are used by capital traders to purchase digital assets in the blockchain economy. Analysts often interpret the growth of stablecoins as a clue that capital is flowing into the cryptocurrency market, which is a healthy sign for asset prices.
Markets ‘no longer care’ about Iran war
Still, the macro picture is not yet clear. Continued geopolitical tensions in the Middle East and uncertainty over a war with Iran have kept oil prices high.
But the market seems to be ignoring this for now, said Jasper de Maere, OTC trader at Wintermute.
“The stock and cryptocurrency markets appear to have stopped caring about complex headlines about the direction of the conflict,” Demel said. “This indicates a level of fatigue and underlying complacency.”
He noted that strong corporate earnings and resilient stock markets are helping offset concerns about rising energy costs and geopolitical risks.
FOMC test coming soon
In this environment, Bitcoin is hovering near the top of its trading range, with the $79,000 level proving a strong ceiling for traders to take profits.
Adam Haeems, head of asset management at Tesseract Group, said the level was “structurally important because a significant amount of institutional overhead supply sits above it”.
Whether Bitcoin can breakout will depend on what drives this move and who is buying. Moves driven primarily by short covering tend to fade once momentum cools, while a breakout supported by sustained institutional demand could signal a more permanent shift, he said.
Himes said the next test will come soon at the April Fed meeting, which could determine whether the current rally can be sustained.
If ETF inflows continue during that event, $79,000 could shift from resistance to support, opening the door to a higher trading range, he said. If flows weaken, Bitcoin could fall back to the $75,000 to $77,000 range.
