Bitcoin's recovery rally comes to a halt
Traders turn their focus to $45,000
Justin Wong (JW)May 9, 2025
Bitcoin is in danger of breaking its longest winning streak in more than four months as traders question whether the recovery from recent lows came too quickly and too soon.
The world's largest digital currency by market value fell as much as 2.1% on Tuesday to trade at $43,178 before little change. Other tokens also fell, with an index of 100 coins down 2.3% at one point.
This follows a strong start to the week that saw Bitcoin surpass $44,000.
"Today's pullback is due to profit-taking after a big run up," said Matt Maley, chief market strategist at Miller Tabak + Co. "Bitcoin is up about 38% on an intraday basis in less than two weeks, so I think that it's all about traders taking short-term profits."
Bitcoin has moved above its trendline from its November highs, giving it plenty of room to take a short-term breather without interrupting its recent surge, he added.
Analysts have noted that cryptocurrencies have moved in lockstep with other riskier assets, including US stocks, of late - and that relationship was evident in January when both asset classes experienced high volatility, according to a report by Kraken.
“With the Fed's aggressive stance, lingering fears of a stock market crash, lower stock valuations and inflation fears at multi-decade highs, crypto remains vulnerable to derisking should equity markets correct in the coming months,” it said in the report.
Katie Stockton, Founder and Managing Partner of Fairlead Strategies, follows the monthly MACD momentum gauge for Bitcoin. This metric had been showing a buy signal since July 2020, but flipped to sell in late January, as noted in Fairlead's Cryptocurrency Compass report.
"It tells us that this year could see more volatility, and it means we need to be more short-term oriented when committing to long positions," she said.
During its rally this week - which saw the coin surge above its 50-day moving average - bitcoin met resistance at $45,000, which was also the area where it broke the upper band of its trading range. This usually indicates that the rally went too far and too fast.
"One of the things that speaks in favor of cryptocurrencies is that there's a relatively fixed group of investors, and those investors may expect them to be a little less liquid," Brian Nick, Nuveen's chief investment strategist, said over the phone. "The Fed will no longer provide unlimited liquidity, and as the money supply shrinks and interest rates rise, things like cryptocurrencies tend to become less attractive.
