Bitcoin rallies past $40 000 level to highest since mid-May

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Market watchers have pointed to $40 000 as an important inflection point.
Market watchers have pointed to $40 000 as an important inflection point.
Artyom Geodakyan/Getty Images

Bitcoin hit its highest level since mid-May and continues to build momentum.

The largest cryptocurrency gained Sunday for an 11th day in the past 12 and traded up to $42 606 (around R622 218), its highest since May 18. Market watchers have pointed to $40 000 as an important inflection point. It was up about 0.5% at $41 739 as of 06:13 New York time on Sunday.

"A run like this certainly suggests some flow backing," said Jonathan Cheesman, head of over-the-counter and institutional sales at crypto derivatives exchange FTX, in a note Saturday. "Of course, it now needs to stabilise here - and above the high from May 20 would be further confirmation." Bitcoin traded as high as $42 541 on 20 May.

Bitcoin, which for weeks trended downward from its mid-April record near $65 000, has now spent more than a week building back as supportive comments from Elon Musk and Cathie Wood helped bump it out of a declining trend. Digital-asset-related job postings by Amazon.com Inc. and resulting speculation helped as well.

Edward Moya, senior market analyst for North America at Oanda Corp., offered a note of caution about the recent run.

"Retail interest is strong, while institutional interest is somewhat lagging and needing fresh endorsements," he said in a note on Friday. "Bitcoin volatility might remain elevated over the weekend and traders should not be surprised if a spike occurs toward the $42 000 level during some illiquid times."

Still, the cryptocurrency has risen over the past week back above its 50- and 100-day moving averages, with the 200-day at about $44 700 in sight.

"It won't be surprising to see Bitcoin expand the $30 000 to $42 000 trading range on the upside and attempt $45 000 " Pankaj Balani, chief executive officer of crypto derivatives exchange Delta Exchange, said in a note July 27.

"However, breaking above $50 000 will take some doing for Bitcoin. Only a conclusive break above $50 000 would attract fresh flows and signal a change in the broader direction for the market."

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