Crypto stocks rally as bitcoin shows resilience, with analysts predicting continued growth potential
On Wednesday, Bitcoin rose above $96,000, recovering from earlier losses this week that had pushed it down from record highs, according to CNBC.
The cryptocurrency increased by nearly 6 percent to $96,676.70, as per Coin Metrics, while ether surged by more than 9 percent to $3,636.46. The broader crypto market, tracked by the CoinDesk 20 index, gained 7 percent.
Bitcoin, often seen as a store of value and a digital alternative to gold, usually moves in tandem with the stock market.
However, on Wednesday, it decoupled from major indices such as the Nasdaq Composite, which fell by 0.6 percent, alongside declines in the Dow Jones Industrial Average and the S&P 500.
Crypto-related stocks rallied on Bitcoin’s rebound. Coinbase jumped over 6 percent, while Robinhood rose 3 percent, benefiting from expectations of a more crypto-friendly approach under the incoming Trump administration.
MicroStrategy, often viewed as a proxy for Bitcoin, advanced 9 percent.
Bitcoin’s price has been on a remarkable trajectory since the November 5 presidential election, climbing 38 percent in that period. Last Friday, it hit a high of $99,849.99 before testing the $90,000 support level earlier this week.
Alex Thorn, head of firmwide research at Galaxy Digital, remarked in a Wednesday report, “The Bitcoin bull market has legs.”
He acknowledged, “There will be corrections and hiccups, which is normal. There could even [be] some twilight regulatory or law enforcement actions from the outgoing Biden administration that jitter markets.”
Thorn highlighted several factors driving his optimism. These include increasing institutional, corporate, and potentially nation-state adoption. He also pointed to a new US administration, which he described as “extremely pro-Bitcoin.”
Additionally, strong positioning and network data were cited as indicators of higher prices in the near and medium term.
Fairlead Strategies’ Katie Stockton explained on CNBC’s “Squawk Box” that Bitcoin investors are entering “unchartered territory” regarding resistance, as Bitcoin reached $92,000 for the first time on November 13.
Stockton identified support around $74,000 and described Bitcoin’s pattern of sharp price increases followed by consolidation.
“Bitcoin does tend to stair step both to the downside and to the upside, meaning that it sees these very sharp runups and then consolidates,” she said.
She added that investors should expect and prepare for significant volatility while keeping an eye on the cryptocurrency’s long-term potential.
Bitcoin has risen 126 percent for the year and remains on track to hit the anticipated $100,000 milestone before the end of the year.
Ether, which has outperformed Bitcoin since the election, has gained 59 percent year-to-date but lags Bitcoin in overall annual performance.
