There has been an interesting narrative change surrounding Bitcoin (BTC) and the cryptocurrency market from some of the largest players in the financial markets over the past week amid rising token prices.
In a note to clients on Monday, JPMorgan analyst Kenneth Worthington indicated that "it appears that the crypto markets have found a floor" with prices recovering in July thanks to "a reprieve in the correction in token prices that has persisted since the cryptocurrency market prices peaked in November 2021."
And it's not just analysts at JPMorgan who see the tide turning for the crypto market as Mike McGlone, senior commodity strategist at Bloomberg, also sees a more positive future for the crypto market in the months ahead.
During a recent interview with McGlone, the analyst suggested that Bitcoin is likely to transition "to be more of a risk-off asset like bonds and gold and less of a risk-on asset like the stock market" in the second half of 2022.
According to McGlone, the speculative excesses of the 2021 bull market have now been flushed out, and the market is ripe for a fresh rally.
The Bitcoin price spike above $24,000 on Monday excited participants in the market and prompted them to call for the start of a new bull cycle. The move may have been a reaction to the triggering of short stop-loss orders and forced short covering, according to David Lifchitz, chief investment officer at ExoAlpha.
Lifchitz suggested that the other likely source for this latest rally is "stealth dip buyers" who have occasionally been triggering "mini short-squeeze melt-ups since the June 18 low of $17,593." There have been four such waves since June 18, with each wave "setting a low that was higher than the low of the previous wave, which is constructive."
Looking forward, Lifchitz pointed to the key overhead resistance levels at $24,700 and $26,000 as the important zones to keep an eye on but admitted that "what happens from there is anybody's guess."
One wildcard to keep an eye on, according to Lifchitz, is this Wednesday's CPI report in the U.S., with a focus more on the details and not on the headline "as food prices are expected to keep on skyrocketing while energy prices may retreat a bit, possibly leading to a 'moderate' headline level."
"If people cannot afford food, that is a problem... which may push the FED to keep on hiking rates for longer than the market expects, which may put some cold water on the price action sooner rather than later," Lifchitz stated.
As for the worst cased scenario, Lifchitz suggested that "any pullback should not break the $18k-ish bottom for BTC."
