Major cryptocurrencies including Bitcoin and Ether have surged over the past week, but technical indicators show they’re butting up against a key resistance level.
The Bloomberg Galaxy Crypto Index, which includes most of the largest digital tokens, is nearing a critical juncture at the 400 mark, which has acted as both a support and a resistance line since March. A break below it led to one of its largest-ever selloffs earlier this year, but technical analysis now suggests a break higher could presage a rally that potentially takes the gauge to an annual high.
In addition, the index’s MACD — or the moving average convergence divergence gauge — shows a positive trend could be formed as soon as this week.
The index has gained more than 11 per cent since last Tuesday and is trading at its highest level since early March. Bitcoin has advanced near 8 per cent in the same period, while Ether is up more than 17 per cent — the two tokens make up 60 per cent of the index, according to Bloomberg data.
Cryptocurrencies, which sold off precipitously at the onset of the coronavirus-induced crash earlier this year, have regained their footing in recent weeks. A warning from Goldman Sachs Group Inc. last week about crypto assets did little to dent optimism. Fans have instead been buoyed by an embrace from some of Wall Street’s most famed investors, including Paul Tudor Jones, who is buying Bitcoin as a hedge against the inflation he sees coming from central bank money-printing.
“Cryptocurrencies have weathered the panic-selling storm that took place in March and seem poised to benefit from a wide-range of growing institutional interest,” said Edward Moya, senior market analyst at Oanda. “It is not just Bitcoin that is attracting interest — alternative coins such as Ether and Bitcoin Cash seem to have bigger upside potential.”