Bitcoin, alongside other risk-sensitive assets, experienced a slight increase of 1.5% trading around $26,650 on Friday. This rise followed a brief dip to mid-June lows near $25,000 earlier in the week. However, traders remain cautious due to the recent appearance of a "death cross," a technical indicator often seen as a harbinger of potential downtrends or bearish sentiment shifts.
The death cross event occurs when the 50-day moving average for prices falls below the 200-day moving average. According to Dow Jones Market Data, Bitcoin's value tends to decline by an average of 2.3% in the week following such an event. The most recent death cross occurrence was earlier this week, marking the first instance since January 2022. During that period, Bitcoin prices began at over $47,000 before plummeting more than 65% by November.
The recovery in Bitcoin's price this week mirrors a broader market trend. The Dow Jones Industrial Average recorded its best day since early August on Thursday, while the S&P 500 seemed to be on a three-day winning streak.
Despite the uptick in Bitcoin and other cryptocurrencies, the macroeconomic climate continues to pose challenges. With high interest rates expected to persist as a measure to control inflation, demand for riskier assets like cryptocurrencies may decrease.
Beyond Bitcoin, other cryptocurrencies also saw increases on Friday. Ether, the second-largest cryptocurrency by market capitalization, rose by 1% to $1,630. Smaller tokens such as Cardano and Polygon each increased by 1%, while "memecoins" like Dogecoin and Shiba Inu saw gains of 1% and 2%, respectively.
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