Bitcoin Lingers Under $20,000 for Longest Stretch Since Late 2020

(Bloomberg) — Bitcoin has spent more than two weeks trading below a key threshold of $20,000 for the first time since breaching that level in late 2020, indicating a lack of optimism among traders as the asset class’s trademark volatility dissipates in the face of rising interest rates.

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The largest cryptocurrency by market value edged lower for a fourth trading session, dropping less than 1% to $18,969 as of 9:33 a.m. in New York. Other tokens were stuck in a similar malaise, with Ether down 0.25% and altcoins including Cardano, Solana and Avalanche all marking falls of between 1.2% and 3% in the last 24 hours.

Once billed by advocates as a hedge against inflation, Bitcoin has failed to break away from its strong correlation with other risk assets like tech stocks as the broader macroeconomic environment pushed investors toward safer havens. The crypto’s correlations with the S&P 500 and Nasdaq 100 traded above 0.6 on Friday, where a level of 1 would mean the two are trading in lockstep.

In the absence of volatility, traders have also turned to more active bets like US Treasuries and FX for profits. The T3 Bitcoin Volatility Index is down 37% in the last year, compared to the J.P. Morgan Global FX Volatility Index which is up 80.55%.

“Bitcoin has been stuck in a consolidation pattern since the summer and that seems like it will continue until investors can confidently believe the Fed will stop hiking once rates get to 5%,” Edward Moya, senior markets analyst at Oanda Corp., said in a note Thursday.

Bitcoin is going to be the “canary in the coal mine” alongside gold, Galaxy Digital CEO Mike Novogratz told the C4K Investors Conference on Thursday, suggesting that it is likely to rally before the rest of cryptoassets do. Novogratz himself is a major supporter of the token, while his company offers businesses ranging from digital asset trading and investment to crypto mining.

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Novogratz also repeated an earlier prediction that Bitcoin’s price will start to recover when people perceive the Federal Reserve as flinching on rising interest rates.

Bitcoin is down about 70% from a record high of almost $69,000 reached in November 2021. The digital token first broke above the $20,000 mark in December 2020.

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