Bitcoin surged past US$99,000 late last week, sparking optimism that it might hit the six-figure mark as soon as the weekend. However, that milestone has yet to be reached, with the cryptocurrency now dipping back into the mid-US$90,000s.
Speaking on Ausbiz on Wednesday, IG analyst Tony Sycamore said the pullback didn’t come as too much of a surprise and nor is it necessarily a bad sign.
“Markets don’t move in straight lines and even crypto isn’t exempt from that rule,” Sycamore said.
“It failed to get through $100,000 but that’s not the end of the story for me for bitcoin,” he added.
While the strategist hasn’t ruled out the possibility of bitcoin dipping back into the US$80,000s, he expects the US$100,000 threshold to be tested again.
“I’m talking about weeks, not days, so please keep that in mind. It is something in which it had a huge move, a little bit of consolidation over a period of three or four weeks would not surprise now,” he said.
Nonetheless, Sycamore maintains that for BTC, “the trend is strong”.
Jonathan de Wet, chief investment officer at Zerocap, also weighed in last week, acknowledging bitcoin’s rise as a sign of growing maturity.
However, he noted that this is not in spite of prevailing headwinds.
“Downside risks are centred around the war in Ukraine and conflicts in the Middle East escalating, as well as more dramatic shifts in interest rate expectations from the Fed,” de Wet told InvestorDaily.
“If the Fed turns more hawkish as Trump takes office, this could take the wind out of BTC’s sails, at least for the short-term.”
Despite these risks, de Wet pointed to bitcoin’s recent rally as a “watershed moment”.
“Expect buoyancy on the back of Gary Gensler leaving the SEC as Trump takes office, the potential for the US Treasury to purchase up to 1 million coins as part of Senator Lummis’ proposed Strategic Bitcoin Reserve policy, and MicroStrategy’s moves to become a bitcoin bank,” he said, to cite a few tailwinds.
“These factors all play into further institutional adoption, and that’s before the retirement funds have begun allocating, which could happen in the coming years should the adoption curve continue.”
