Bitcoin: Will This Rally Last?

Copper bitcoin coins against a blue background
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The price of bitcoin (BTC) has had a healthy increase this month, climbing by about forty percent since the beginning of the month. But that leaves open questions about the durability of this rise and whether or not the price of bitcoin will continue to surge from this point forward.

Bitcoin's Price

The price of Bitcoin has not yet recovered from its precipitous drop after reaching an all-time high of $68,904 in November 2021. The crash in cryptocurrency values was brought about by a variety of factors, including the ultra hawkish-monetary policies of the Federal Reserve and the big failures of cryptocurrency fraud schemes like Celsius. Nevertheless, the BTC price has staged a respectable rebound this month, rising dramatically from last month's low of $16,263 to this month's high of $23,324.

Why Has There Been Such a Big Jump in Price?

It is imperative that I first discuss the fundamentals that are the driving force for the present rally before I begin to discuss the resilience of the current rally. The Fed's aggressive monetary policy was the primary factor in the precipitous drop in the price of bitcoin. The Federal Reserve has since shifted its position on monetary policy, going from one that was very hawkish to one that is less aggressive. For instance, it is a near certainty that the Federal Reserve will raise interest rates by just 25 basis points next month. This indicates that the Fed has altered its view despite on inflation as it comes off its peak.

The risk-on rally is another factor that has contributed to the price of bitcoin being relatively stable. Bitcoin's price has formed a significant positive correlation with the S&P 500 index, which indicates that as the index goes up, we also see an increase in the price of BTC. This suggests that Bitcoin's value will continue to rise in the future as long as the risk-on rally continues.

In addition, there is a widespread view among traders and investors that Bitcoin has prevailed despite disastrous events such as the collapse of FTX and the domino effect that it triggered as a result. Hodlers have begun to ponder the possibility that crypto winter is over and that we are going to emerge from this predicament unscathed.

Will the Price of Bitcoin Continue to Climb?

There are two critical aspects of this situation that need close attention. First, there is an influx of money that is being invested for speculative purposes. Everyone is aware that cryptocurrencies have taken a significant hit in prices, and if Bitcoin starts to rise, then there is a strong possibility that other cryptocurrencies will also start to rally. It is quite probable that if the price of bitcoin continues to spike, it will induce more FOMO, which implies that more speculative money will flow into the cryptocurrency industry. This has the potential to drive up the price of BTC.

Secondly, the dollar could weaken if the Fed does start to slow down the process of raising interest rates, as is expected. This has the potential to have two different effects on the price of bitcoin. One is a possibility that the risk-on rally could gain additional momentum, which would be beneficial for bitcoin. The other is that the decline in the value of the dollar index might also lead to an increase in the price of bitcoin.

From a technical point of view, there is no doubt that the price of BTC is overbought, as shown by the RSI on a daily time frame. Any reading that is either close to or over 70 suggests that a retracement in prices is probable, while any value that is either close to or below 30 indicates that the price of the asset has been grossly oversold.

To technical analysts, the $30,000 level is the most significant point of resistance for the price of bitcoin. If the price does not break above this level of resistance, then the bull rally will be in jeopardy. But if BTC breaks through this level and maintains its position above this price point, the likelihood that the price action of BTC will once again attempt to re-test its all-time high will significantly increase.


To summarize, the price of bitcoin has recently begun to attract more attention, but we are not yet out of the woods, and won't be until the price breaks through the $30,000 resistance level and then continues its ascent from that point forward.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Naeem Aslam

I am a former Hedge Fund Trader with over 15 years of experience in investment banking. During my early career, I was awarded a national award (Young Irish Broker) in 2010. Over the years, I have worked with Bank of America in equity trading and with Bank of New York in hedge fund trading. I specialize in Blockchain technologies (cryptocurrencies and digital assets) and Sustainable Investments. In my career thus far, I have also extensively covered Equities, Commodities and Forex.

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