Crypto market reaches inflection point following recent rally

NEW YORK – Following a swift rally over the past week, the Bloomberg Galaxy Crypto Index is now coming up against a key inflection point.

The index, which tracks some of the largest digital currencies, is approaching 350, a so-called technical resistance line that once acted as a support. If it can break through 350, then it could rally toward the 400 area, implying a near 15 percent gain.

The index has flirted with that resistance level over the past three trading days, with Bitcoin and Ether – its two largest holdings – leading it higher. On the downside, the index could find support around 300.

Cryptocurrencies have moved in tandem with riskier assets over the past month. On Monday, US stocks rose, spurred by optimism the world’s largest economy may start to re-open soon, with the Bloomberg Galaxy Crypto Index gaining as much as 2.9 percent to trade around 343. Bitcoin, which makes up about 30 percent of the index, advanced as much as 1.9 percent to trade near $7 700.

A 260-day volatility measure of Bitcoin is at a record low versus the S&P 500, which indicates a price appreciation tilt toward the cryptocurrency, according to Bloomberg Intelligence’s Mike McGlone.