Cryptocurrencies lack the momentum to stage a sustained ascent, as the correlation between traditional financial assets and digital currencies remains tight
Bitcoin rallied to $32,300 yesterday, extending the rally from the $29,000 mark. On Wednesday, however, the digital currency struggles to continue its ascent, trading with a modest bearish bias as the European trading session begins.
It looks like tailwinds in the traditional financial markets continue to cap the buying pressure in the crypto space. After negative close on Wall Street, Asian stocks were mixed during the session. European indexes opened slightly higher, but the overall tone remains cautious as investors continue to assess economic risks amid monetary policy tightening by global central banks.
Also, the potential buyers stay deterred by rallying commodity prices, elevated inflation, supply chain disruptions, and the ongoing geopolitical tensions. Against this backdrop, cryptocurrencies lack robust upside momentum to stage a sustained ascent, as the correlation between traditional financial assets and digital currencies remains tight this year.
The BTCUSD pair is holding around $31,500 on Wednesday, shedding just 0.25% on the day. On the positive side, the most popular cryptocurrency stays well above a slightly ascending 20-DMA while also holding above the $30,000 psychological level these days. Should the coin regain the upside momentum anytime soon, the $32,600 intermediate barrier will come back into the market focus. This hurdle is followed by the $34,400 zone while the key target remains around last month’s peaks around $40,000.
In a wider picture, the outlook for bitcoin remains cloudy as financial markets remain unstable and vulnerable. So the upside potential for cryptos remains limited, while the selling rallies strategy could persist in the coming weeks or even months. On the downside, bitcoin could threaten the $28,000 figure if both the $30,000 mark and the mentioned 20-DMA give up in the near term.