Bitcoin and other cryptocurrencies are on the rise on Tuesday, although they continue to retreat below key levels amid a correction from the recent April peak as the agreement to raise the US debt ceiling remains incomplete, creating uncertainty for investors.
The price of bitcoin has risen 2% in the last 24 hours to $27,325 but remains stuck in the zone between $26,500 and $27,500, which has held for much of the last two weeks and represents one of the tightest trading ranges for the bitcoin price in years.
While the crypto has remained bullish for roughly two-thirds so far this year, it has failed to maintain its April high above $30,000 – the highest levels since June 2022 – with investors considering several catalysts for volatility.
“Bitcoin stabilized last week above important support near $25,200. Near-term momentum remains to the downside, however, suggesting that the correction will be sustained,” Katie Stockton, managing director at technical research firm Fairlead Strategies, told Marketwatch.
“Momentum over the medium term remains positive but has weakened… Bitcoin remains in doubt over the long term given the downward weekly indicators.”
Among the factors investors are watching are the US macroeconomic picture, including the path of interest rates and the risk of default if the debt ceiling is not raised.
Both forces also affect the stock market and are driving bitcoin to move in a similar fashion to the Dow Jones and the S&P 500. In particular, the prospect of a US debt default looks like a significant “brake” on the momentum for risk assets.
“The risk of default is very small, but if it happened, it could be a blow to risk appetite, which would send cryptocurrencies sharply lower,” said Edward Moya, an analyst at Oanda.
“Bitcoin seems content to trade near the lower boundaries of its recent trading range between $26,500 and $30,000… Cryptocurrency investors are unsure how bitcoin will behave during the next few days of debt ceiling negotiations.”
Beyond bitcoin, ether – the second largest crypto – is gaining 2% at $1,850. Smaller tokens or altcoins were also higher, with Cardano rising less than 1% and Polygon posting gains of 3%. Memecoins also rose, with dogecoin and Shiba Inu up 2%.
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