Bitcoin has regained momentum, climbing above $65,400 as of early Wednesday, following a decline in the U.S. dollar and a positive sentiment in Asian equity markets. This marks a significant rebound for the cryptocurrency, which had recently approached lows seen earlier in February.
The overall cryptocurrency market capitalization had dropped to $2.19 trillion, nearing the lows recorded during the market downturn on February 5. Analysts are now observing whether this recent uptick can sustain itself. Alex Kuptsikevich, chief market analyst at FxPro, noted that if the current price level holds, it could indicate a classic “double bottom” pattern, suggesting a potential 10% increase. Conversely, a failure to maintain this level could lead to a further decline of up to 25%.
A double bottom pattern occurs when the price of an asset falls to a low point, rebounds slightly, and then falls again to the same low before rising again. This creates a W-shaped pattern, signaling a possible reversal in trend once the price surpasses the middle peak.
The market’s focus is now on whether the recovery can extend beyond the brief peak of $2.47 trillion seen approximately ten days ago. In conjunction with Bitcoin’s rise, other major cryptocurrencies have also experienced gains. Ether increased by 4.2%, Solana rose by 7%, and XRP added 3%. This upward movement coincided with a 1.4% rise in MSCI’s index for Asian equities, driven by strong performances from AI-related chipmakers in South Korea and Taiwan ahead of Nvidia’s earnings report.
The decline of the U.S. dollar has provided supportive conditions for riskier assets. The Bloomberg Dollar Spot Index fell following President Trump’s State of the Union address, where he reiterated his tariff plans despite a Supreme Court ruling against his global import taxes. He suggested that tariffs could eventually replace the income tax system.
Historically, a weaker dollar has been beneficial for Bitcoin, although this relationship has shown inconsistencies during the current market cycle. Despite the recent bounce, analysts remain cautious. A Bloomberg survey indicated a prevalent “crisis of confidence” in Bitcoin, particularly after its nearly 50% drop from its all-time highs. Kuptsikevich warned that the market may not have reached its bottom yet, suggesting that further capitulation could be on the horizon.
Bitcoin's recent rise above $65,000 is attributed to a weaker U.S. dollar and positive trends in Asian equities. However, analysts express caution regarding the sustainability of this recovery amid ongoing market uncertainties.