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Bitcoin and other cryptocurrencies edged lower Monday, with digital assets stumbling after the latest leg of this years major rally carried cryptos above key price levels. While catalysts lie ahead, it could take a while for the next big move.

The price of Bitcoin has fallen 1.5% over the past 24 hours to below $29,950, tumbling through the critical $30,000 level, which it surpassed last week for the first time since June 2022 when the selloff in digital assets accelerated into a brutal bear market. Bitcoin has recently traded as high as $31,000 in a rally that has taken it more than 80% higher so far this year, but has struggled to consolidate its latest gains.

Its overall technical outlook still looks strong, so its potential downside should not be severe. All in all, a little bit of correction should be expected and it will ultimately be healthy for Bitcoins upward trend to continue, said Yuya Hasegawa, an analyst at crypto exchange Bitbank.

Digital assets are likely to keep taking their cues from the macroeconomic backdrop and swings in the Dow Jones Industrial Average and S&P 500. The rally across cryptos in 2023 has come amid expectations that the Federal Reserve will soon become more accommodative on monetary policy, which also has buoyed the stock market.

A series of dramatic interest-rate hikes from the Fed over the past year, in a bid to tame decades-high inflation, slammed cryptos and stocks alike since higher rates dampen demand for risk-sensitive assets. But signs that inflation is cooling and that higher rates are putting stress on parts of the economy, including the banking sector, have pushed traders to reassess how much more the Fed will tighten financial conditions.

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Catalysts in the coming days include economic indicators, like the Empire State manufacturing index on Monday, weekly jobless claims Thursday, and Fridays services and manufacturing purchasing managers indexes (PMIs). A handful of officials from the Fed also will deliver public remarks, which will be scrutinized ahead of the May 2-3 meeting of the central banks policy-setting committee. All could move Bitcoin.

But it may take a lot to see prices move much higher from $30,000. Reclaiming that psychologically important mark was a long time coming for Bitcoin, and there have been signs that some traders are taking profit around this price level.

Traders should be prepared that the $30,000 mark for the first cryptocurrency could act as solid resistance after it was rigid support in 2021, said Alex Kuptsikevich, an analyst at broker FxPro. That said, technically, Bitcoin has already proven the end of the bear market by securing above key moving averages and steadily retreating from the bottom.

Beyond Bitcoin, Ether the second-largest crypto, which has recently outperformed following the success of a key upgrade called Shanghaiwas just below flat near $2,100. Smaller cryptos or altcoins were more mixed, with Cardano down 2% but Polygon popping 1% higher. Memecoins were buoyant, with Dogecoin up 4% and Shiba Inu

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Write to Jack Denton at jack.denton@barrons.com

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Bitcoin Price Falls Below $30,000. Why the Crypto Rally Has Stalled. - Barron's

The Bitcoin safe haven narrative may be back as data shows the cryptocurrencys correlation with Gold has surged in recent months.

According to the latest weekly report from Glassnode, the correlation between the two assets remained high during the recent US banking crisis. The BTC correlation to Gold indicates how closely Bitcoin is following the movements taking place in the price of one troy ounce of Gold.

When the value of this metric is negative, it means BTC is currently responding to movements in the price of Gold by traveling in the opposite direction. On the other hand, positive values of the indicator imply the two assets are moving in a similar trajectory right now.

Naturally, when the correlation is zero, it suggests there is no pattern regarding how the cryptocurrency and Gold are moving relative to each other.

Now, here is a chart that shows the trend in the 30-day Bitcoin correlation to Gold, as well as in its 90-day and 365-day versions, over the last few years:

The above chart uses the symbol XAU, but note that this term refers to one troy ounce of Gold here and not the Philadelphia Gold and Silver Index.

As displayed in the graph, the Bitcoin correlation to Gold didnt show much strong positive correlation during the bull run in 2021, as the metric had assumed negative values for a decent chunk of the period.

Correlation also remained weak in the first few months of 2022, but things started to change as the bear market took hold. In the last twelve months, the indicator has mostly registered high positive values, suggesting that the two assets have become strongly tied during this period.

The FTX crash provided one exception, however, as the indicators value had turned deep red around the time it took place. Nonetheless, with the rally this year, the assets quickly became strongly correlated again, as all three MAs (30-day, 90-day and 365-day) obtained positive values.

Gold has traditionally been considered a safe haven asset, while stocks and BTC have generally been considered risky investments. With the correlation between Bitcoin and Gold becoming high recently, it seems that the Digital Gold narrative may be making a comeback.

Interestingly, the correlation also remained high during the US banking crisis a while ago, when institutions like Silicon Valley Bank (SVB) collapsed and shook the market. This may be further evidence of BTC being looked at in a better light recently.

This does suggest that an appreciation for both sound money and the realities of counter-party risk are increasingly front of mind for investors, notes Glassnode.

At the time of writing, Bitcoin is trading around $29,500, up 1% in the last week.

Featured image from Aleksi Ris on Unsplash.com, charts from TradingView.com, Glassnode.com

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Bitcoin Safe Haven: BTC Correlation With Gold Surges - Bitcoinist

Many investors have dismissed the notion that bitcoin could be a type of digital gold since the cryptocurrency has been trading like a speculative risk asset for much of the past two years. But about 50 years ago, gold did the same thing, Morgan Stanley said in a recent note. If bitcoin's current moves continue to follow those of gold in the 1970s, the cryptocurrency could be in for some tough times ahead. In 1971, individuals could no longer convert U.S. dollars to a specified amount of gold. Since 2008, governments have become more reliant on central banks creating new fiat currency money that isn't backed by a commodity to provide support in times of crisis, according to Morgan Stanley's note. That's different from bitcoin, which has a limited supply. In the '70s, "gold was tracking the rising rate of consumer price inflation (CPI), which was largely a result of the recent explosion of fiat money supply," said Sheena Shah, a strategist at Morgan Stanley and a coauthor of the note. "Bitcoin, on a logarithmic scale, has so far followed a similar path to the price speculation of gold in the 1970s, which also seemed to follow a four year cycle." Starting in 1971, gold prices quadrupled within four years as the U.S. dollar money supply grew rapidly, the strategist said. "That wasn't the height of the speculation, however: from August 1976 to January 1980, the price of gold rose eightfold from $102 to $850." "As the gold price was still managed for the first few years, the similarities may be a statistical coincidence more likely, in our view, is that both were driven by similar speculation cycles," she added. Bitcoin fans have long highlighted its potential to act as a "digital gold" because it's divisible, scarce and doesn't rely on a central issuer. They also once argued that bitcoin offered a hedge against equities, but last year's market havoc threw cold water on that idea as the cryptocurrency's correlation with stocks hit an all-time high . At the end of March, that correlation fell to its lowest since 2021 , while bitcoin's correlation with gold has been climbing. After the Federal Reserve loosened monetary policy to support the economy at the start of the Covid pandemic, bitcoin outperformed gold 2.9x over the three-and-a-half-year period, Bernstein recently noted. This year, banking crisis fears in the U.S. helped push bitcoin to even greater gains. CNBC's Michael Bloom and Gabriel Cortes contributed reporting

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Bitcoin's chart has some eerie parallels to gold in the 1970s - CNBC

Big investors continue to feel bullish on Bitcoin, with more cash flowing into funds from institutions, according to a new report.

Last week, investors plugged over $114 million into big funds for the fourth consecutive week, digital assets firm CoinShares said in a Monday report. The cash flowed into big funds for accredited investors, such as Grayscale, 3iQ, and 21 Shares.

And by far, the main focus was Bitcoin, with $104 million invested, CoinShares said. It added that on the whole, there are very low volumes in the Bitcoin market.

CoinShares Head of Research James Butterfill noted that the improving sentiment for the asset class was down to a flight to safety by investors fearful of the ongoing traditional finance challenges.

Some investors are seeing Bitcoin as a safe-haven product following the collapse of a number of crypto- and tech-friendly banks in the U.S., such as Silicon Valley Bank and Signature Bank.

The report added that despite Ethereums long-awaitedand successfulupgrade last week, only $0.3 million of inflows hit such funds.

Ethereum, the second largest cryptocurrency by market cap, on Wednesday implemented its historic Shanghai upgrade, allowing the withdrawal of staked ETH by the networks participants.

Some analysts estimated that over $300 million of the crypto would immediately be sold following Shanghai but the price of ETH has actually pumped since the upgrade.

Despite the increased appetite from investors, Bitcoin at the time of writing was trading for $29,414, according to CoinGecko, down 2.9% in the past 24 hours and sitting firmly below the $30,000 mark it smashed past one week ago.

And the biggest cryptocurrency by market cap is still way belowby 57%the $69,044 all-time high it hit in November 2021.

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Bitcoin Fund Inflows Top $100M in One Week as Investors 'Flee to Safety' - Decrypt

What happened

It's been a rocky day for most risk assets today, with all three major indexes seeing red in today's early afternoon session. This bearish sentiment has bled into the crypto market, with the world's largest cryptocurrency, Bitcoin(BTC -2.86%), slumping 3% over the past 24 hours, as of 12:30 p.m. ET.

This move coincides with some strong liquidation data, suggesting investors who have taken bullish bets using derivatives and leverage have been forced to unwind their positions. Approximately 80% of Bitcoin liquidations today took place on the long side, with $41.9 million in total liquidations taking place today, according to data fromCoinglass.

This liquidation-linked move in Bitcoin highlights the importance of understanding how leverage works, to the upside and downside. The digital asset ecosystem is driven in large part by significant large bets, often linked to leverage. Thus, many investors in this space constantly keep a close eye on what so-called whales, or large investors, are doing, and how the derivatives markets look at a given point in time.

It's also worth noting that today's move in Bitcoin follows yet another week of inflows into digital asset investment products. Bitcoin alone saw more than $100 million of capital flow into such products, making up approximately 90% of the total inflows into the sector. Thus, with demand appearing to remain high for Bitcoin, today's move looks to be driven more by leverage and profit-taking than anything else.

The $30,000 level appears to be a key psychological level investors, traders, and speculators are watching closely. For many, this may have been a trigger level to force some profit taking, after a rather incredible run this year. On a year-to-date basis, Bitcoin is up approximately 78%, a very strong move in just a few months' time. Accordingly, investors shouldn't be lambasted for taking some off the table here.

Now, the question is whether Bitcoin can break through the $30,000 level and resume its move higher. Currently trading around $29,500, Bitcoin will remain a must-watch crypto for investors interested in this sector.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.

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Why Bitcoin Slumped 3% Today - The Motley Fool