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Bitcoin bounces back above $58,000 after falling into bear market

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  • BTC-USD

Yahoo Finance's Jennifer Schonberger discusses bitcoin's recent rise above $57,000.

Video Transcript

ALEXIS CHRISTOFOROUS: You know, equities aren't the only thing rallying today. We're seeing a really nice rebound in cryptocurrencies. In fact, Bitcoin now back above $57,000. I want to bring in Yahoo Finance's Jen Schonberger now for a look at what's behind that rally. Hi, Jen.

JENNIFER SCHONBERGER: Good afternoon, Alexis. That's right, Bitcoin and crypto getting a bid today, rebounding after the largest cryptocurrency touched into a bear market on Friday. The price of Bitcoin surging back above 57,000 after swooning last week to its lowest level since early October amid a broader sell-off on fears of the renewed coronavirus variant. Recall Bitcoin had been as high as a record of nearly 69,000 on just November 10th. So, a lot of whipsaw action, a hallmark of this asset class.

The rebound coming alongside a bounce in other risk assets today, as reports show that the new omicron variant comes with milder symptoms, quelling concerns for renewed lockdowns. And of course, just earlier today, President Biden reassuring investors that he will not attack omicron with new lockdowns, rather will use vaccines and testing to try to quell that. Bitcoin and crypto now appear to be trading alongside these risk assets, not operating so much as a safe haven as treasuries and gold have in the past.

And Jesse Proudman, CEO of crypto robo advisor Makara, tells me, quote, "Over the long-term, Bitcoin's characteristics lend itself to being a store of value akin to digital gold," so the long-term. "In the short term, though, as adoption continues to grow over fits and starts, volatility is likely to be a feature of the asset. And it will likely still be prone to sell-offs when traditional assets drop, and macro events like the pandemic are probably going to continue affecting the day-to-day valuations."

Now, the price of Bitcoin and crypto is also being tied to potential actions by the Federal Reserve in regards to the omicron variant. As the central bank eases monetary policy, i.e. decides to slow its taper, that could have a positive impact on the price of Bitcoin, though the Fed would have to balance that with inflation risks. Proudman says he's cautiously optimistic on the price of Bitcoin, but he is watching the omicron variant, as well as equities, closely in what that could mean for the price of Bitcoin going forward. So bottom line here, Alexis, we are clearly in a risk-on rally as investors breathe a sigh of relief in the face of perhaps a not so severe new variant and cryptocurrencies playing a role in that. Back to you.

KARINA MITCHELL: And hey, Jen, I'm just going to jump in. I know you touched on it, but what are the technicals [INAUDIBLE] about the outlook for the price of Bitcoin in the long-term?

JENNIFER SCHONBERGER: Hey, Karina, great to see you. Yeah, so bottom line up front, it appears that both Bitcoin and Ether are poised for moving towards new highs and a new bull run. And speaking with Jake Wujastyk, he's the chief market analyst at TrendSpider. It's a technical analysis firm for traders. He says both Bitcoin and Ether are at long-term support levels after hitting those all-time near lows, I should say.

And he says based on past performance, if you go back to March 2020, when the markets crashed when we first learned about the pandemic, you saw Bitcoin, when we had two red weeks in a row and then a green day followed afterwards, that typically kicked off a new bull run for the cryptocurrency. And that's exactly what we've seen. The past two weeks were red weeks, and now we are seeing a green day today. So if history repeats itself, we should see Bitcoin and Ether taking off. He says we could see new highs in the next couple of months.

I also spoke with Craig Johnson over at Piper Sandler. He's their chief market technician over there. And he, too, says that he doesn't think that this is a top in Bitcoin. And we should be moving higher from here. He says he would take a look at other tokens as well. He says if you're going to play the green token, you should be long ALGO. It doesn't do any mining, and there's proof of stake coin there. He says if you're excited about the metaverse, we should take a look at MANA, and Litecoin is another one that he likes if we're looking at just mirror transactions going forward.

ALEXIS CHRISTOFOROUS: All right, good stuff. Jen Schonberger, thanks so much for being with us.