Things seem to have taken a turn lower in the crypto market, but bitcoin offers a glimmer of hope and Wolfe Research is defending its long view of the asset. The crypto market continues to struggle from low volume and liquidity that have dragged on for most of the year. It has traded in a narrow range between $25,000 and $30,000 all year, which many had seen as encouraging, demonstrating that although investors weren’t building positions, they weren’t exiting either. “That changed this week with Monday seeing over $105 million in crypto liquidations, and the equal weight crypto index we track breaking down in turn,” Wolfe Research’s Rob Ginsberg said in a note Wednesday. “We have repeatedly touched on how uninspiring the price action has been outside of bitcoin, and it appears the cracks are finally starting to show.” “While the resiliency of Bitcoin continues to be the one silver lining, it’s growing increasingly clear just how alone it stands,” he added. “[It’s] rolling over again in the near term, but our thesis on bitcoin is simple: [as] long as $25,000 support is holding, we’ll remain long.” It takes a patient investor, however. Although bitcoin is up about 61% this year, it’s off its all-time high by as much. Not only has it been unable to break out to new highs above $30,000 this year after hitting it for the first time this year as early as April, but it has also underperformed equities for the better part of two years. On top of that, Treasury yields remain high amid stubbornly high inflation and uncertainty around the Israel-Hamas war. “Higher yields have historically proven to be a headwind to crypto and growth alike,” Ginsberg said. “Having failed to take advantage of this pullback thus far, if yields reaccelerate like we think, it should throw some added pressure on BTC.” Crypto stocks are also trading down, but may be finding support now, according to Wolfe. “If these bases are for real … which we believe they are, a next leg higher will have to come soon,” Ginsberg said. He also highlighted the Bitwise Crypto Industry Innovators ETF , which is back to its February highs and up about 90% this year. — CNBC’s Michael Bloom contributed reporting.
