Bitcoin hits record high. Why the crypto's rally may lose steam after briefly topping $112,000.
By Frances YueBitcoin briefly rose above $112,000 to a record high Wednesday afternoon. However, the rally may stall if trade tensions intensify, according to some analysts.The largest cryptocurrency (BTCUSD) reached a lofty $112,022 Wednesday afternoon, a new record high, before pulling back to about $111,199, according to FactSet data."Thus far it just seems like a retest of the May 22 [previous all-time] high, and has run into selling pressure there," according to John Glover, chief investment officer at crypto lending platform Ledn and a former managing director at Barclays Investment Bank.Some investors have been taking profits while several publicly listed companies, including Trump Media & Technology Group (DJT) and GameStop (GME), have recently announced plans to buy bitcoin to add to their treasuries. "It will be a battle to see who has more firepower," Glover wrote in emailed comments to MarketWatch.Whether the rally can continue largely depends on the macroeconomic conditions and any developments on the trade front, said Sid Powell, chief executive and co-founder of crypto asset-management firm Maple. If trade dialogues falter ahead of President Donald Trump's Aug. 1 deadline for trade deals, it could add to the headwinds facing bitcoin, according to Powell.However, if further progress on trade deals and lower inflation prints prompt the Fed to resume cutting its key interest rate, it could help sustain bitcoin's rally.Bitcoin's Wednesday gain was in part driven by the risk-on sentiment after minutes from the Fed meeting last month showed that most officials believe some reduction in interest rates would be appropriate this year, noted Powell.In addition, the dollar's DXY recent weakness has also supported bitcoin's strength, as bitcoin is primarily priced in the U.S. dollar, according to analysts at QCP Capital.U.S. stocks also ended higher on Wednesday, with the Dow Jones Industrial Average DJIA and the S&P 500 SPX finishing higher for the first time in three days. The Nasdaq Composite COMP posted a record close at 20,611.34.-Frances YueThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.