Bitcoin continues to trade in the tight $18,000 to $25,000 range, keeping investors on edge as to where the price will go next. The cryptocurrency market has been plagued by a number of problems from collapsed projects to bankruptcies.

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Bitcoin broke above $20,000 on Tuesday, hitting its highest level in more than a week, but is still struggling to break out of its tight trading range.

The world’s largest cryptocurrency was more than 7% higher at $20,265.95 around 3:30 a.m. ET, according to data from CoinDesk.

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Bitcoin’s rally has lifted the broader cryptocurrency market. Ether rose about 7% to $1,389.75.

Still, bitcoin has been struggling for direction, trading between $18,000 and $25,000 since mid-June after a crash that saw nearly $2 trillion wiped from the entire crypto market since its peak in November.

This market decline was triggered by interest rate hikes by central banks aimed at controlling rampant inflation, as well as a wave of bankruptcies and insolvency issues that swept through the crypto industry.

Crypto investors are watching monetary policy as digital currencies are closely linked to US stock markets this year. Higher interest rates pressured the S&P 500 and the tech-heavy Nasdaq, which slipped through other risk assets, including cryptocurrencies.

The US Federal Reserve’s 0.75 percentage point interest rate hike last week marked a “major event” for crypto markets, according to Vijay Iyar, vice president of corporate development and international affairs at crypto exchange Luno.

“It was broadly in line with market expectations and therefore we saw a lot of that sentiment priced in,” Ayyar said.

Interestingly, the bitcoin rally that began on Monday came despite a fall in US stocks, with the S&P 500 closing at its lowest level since 2022. Stock futures rose on Tuesday. So there are signs that perhaps the relationship between crypto and stocks may be weakening.

Meanwhile, investors are keeping a close eye on the US dollar. The dollar index, which tracks the greenback against a basket of currencies, is up more than 18% this year. Bitcoin is moving back against the dollar, so strong greenbacks are negative for Bitcoin. However, Aiyar said the dollar index could be nearing its top, which would mark a potential bottom for Bitcoin. This may be the reason for Bitcoin’s surge.

“Therefore, traders may also position themselves accordingly,” Ayyar said.

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