$60K is now more likely for Bitcoin than $20K, Bloomberg’s senior strategist asserts

The analyst also treats the latest crypto ban in China as bullish for Bitcoin and the U.S. dollar.

Bitcoin (BTC) has a better probability of recovering back to $60,000 than breaking below its current support level of $30,000 to target $20,000, believes Mike McGlone, senior commodity strategist at Bloomberg Intelligence.

A screenshot from McGlone's latest analysis on the flagship cryptocurrency, first shared by Bloomberg senior ETF analyst Eric Balchunas, shows him comparing Bitcoin's ongoing price action with the "too-cold" period of the 2018–2019 trading session.

In detail, the BTC/USD exchange rate entered a prolonged consolidation period near $4,000 following an 80%-plus crash in 2018, but a sudden run-up in 2019 sent its prices to as high as $14,000 on some exchanges.

McGlone, who's known for his previous bullish calls on Bitcoin, noted that BTC, which has been consolidating near $30,000 since May, could post a similarly surprising rally while aiming to hit a refreshed resistance target near $60,000.

"The more tactical-trading-oriented bears seem to proliferate when Bitcoin sustains at about 30% threshold below its 20-week moving average, allowing the buy-and-hold types time to accumulate," the strategist wrote.

The moving average trio

Bitcoin's bearish and bullish cycles appear to wobble around three key moving average indicators: the 20-week exponential moving average (20-week EMA; the green wave), which serves as interim support/resistance, the 50-week simple moving average (50-week SMA; the blue wave), and the 200-week simple moving average (20-week SMA; the orange wave).

Bitcoin bear trends tend to exhaust after BTC price tests the 200-day simple moving average as resistance. Source: TradingView

During bull trends, Bitcoin prices typically stay above the three moving averages. Meanwhile, bear trends see the cryptocurrency's prices closing below the 20-week EMA and the 50-week SMA, as shown in the chart above.

The 200-week SMA typically serves as the last line of defense in a bear market. So far, Bitcoin has bottomed out twice near the orange wave, each time sending the prices explosively higher. For instance, a take-off from the 200-week SMA in 2018 drove Bitcoin prices to almost $14,000.

Similarly, the wave support capped the cryptocurrency's downside attempts during the COVID-19-led crash in March 2020. Later, the price bounced from as low as $3,858 to over $65,000.

Bitcoin is now in its third drop below this trendline since 2018. The cryptocurrency has broken below the 20-week SMA (near $39,000) and is now targeting the 50-week SMA (circa $32,200) as support. If the old fractal is repeated, it should continue falling toward the 200-week SMA (around $14,000).

However, McGlone believes there could be an early rebound. As a bullish fundamental, the strategist pointed toward the recent China crypto ban.

Tether takes the cake

Beijing announced a complete ban on cryptocurrency operations in May. The decision stonewalled the mining operations in the country, which were forced to either cease or move their base outside. Bitcoin prices fell sharply in response.

Nevertheless, McGlone highlighted China's rejection of open-source software crypto assets as a plateau in their economic ascent. In a tweet published Friday, the analyst attached an index showcasing booming volumes and capitalization of U.S. dollar-backed digital assets, including Tether (USDT). 

He then pitted the rising demand for digitized dollars against the Chinese yuan-to-dollar exchange rates, noting that the logarithmic scale of market capitalization fluctuations between the two fiat currencies was below the baseline zero between 2018 and 2020. That means the yuan was depreciating against the dollar.

Tether's appreciation against the U.S. dollar index and Chinese yuan. Source: Bloomberg Intelligence

The scale just went back above zero, signaling interim growth for the yuan against the dollar. But its uptrend still appeared dwarfed by Tether, whose market cap rose by more than 40% above the baseline. McGlone noted:

"China's rejection of open-source software crypto-assets may mark a plateau in the country's economic ascent, we believe while extolling the value of the U.S. dollar and Bitcoin."

Additionally, Petr Kozyakov, co-founder and CEO of global payment network Mercuryo, noted that while the United States government has not officially launched a central bank-backed digital dollar as China has, the availability of many other alternatives — including Tether, USD Coin (USDC) and Binance USD (BUSD) — could pose a challenge to the Chinese-controlled digital yuan.

"These cryptocurrencies are pegged 1:1 against the U.S. dollar and as shown in the chart McGlone shared, the dollar is leading the digital rise over the Chinese Yuan," Kozyakov said.

"While China's crackdown has had an impact on Bitcoin's price as it hovers above $30K on 23rd June, fundamentals have improved vastly since 2018 due to institutional FOMO. [...] Bitcoin should recover to $50K by the turn of the year."

The Chinese economy will keep growing

However, rejecting McGlone's take, Yuriy Mazur of CEX.IO Broker noted that the Chinese economy should continue flourishing with or without cryptocurrencies, saying that it has nothing to do with the demand for digital assets.

Related: US–China trade war and its effect on cryptocurrencies

"The Chinese government is too smart to miss out on something the world deems valuable," Mazur told Cointelegraph.

"So, expect them to take considerable measures to roll out a Yuan-backed cryptocurrency (in the future) that they have complete control over."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.

Axie Infinity refreshes record high as AXS ascends 131% in just three days

Traders flock to the gaming cryptocurrency in the wake of a sector-wide price rally. But its gains are comparatively higher—much, much higher.

The price of Axie Infinity's native token AXS more than doubled in just three days of trading amid speculation that it is going to revolutionalize the blockchain-enabled gaming industry forever.

The AXS/USD exchange rate reached a record value of $32.69 on Friday, up 31.28% intraday, and circa 131% from its Tuesday low of $14.09. That placed the pair in the list of best-performing digital assets on a year-to-date timeframe; its 2021 gains are now above 5,000%.

Axie Infinity's massive upside moves appeared due to its rising popularity as a play-to-earn gaming service. In detail, the Ethereum-enabled blockchain project is a Pokemon-like game wherein players adopt, breed, and trade digital pets—called Axies—in the form of non-fungible tokens.

Axie developer Sky Mavis called the game "a nation with a real economy," which allows people to shape economic policies and practice local governance in a metaverse. The virtual environment has gained traction among netizens, insomuch that its total revenue closed towards $120M in July versus $1.92M at the beginning of this year.

Axie Infinity revenue is close to hitting $120M. Source: Axie World

Analysts at Delphi Digital forecasted that Axie's revenue would reach approximately $153M by the end of July and $1.1B by the 2021's close.

What's AXS?

Axie developers focus on creating a play-to-earn model. In doing so, the project rewards players for the effort and time they put in both playing and growing the ecosystem. Every functional ecosystem needs tokens to transfer value. In Axie's case, two assets fill that role: Axie Infinity Shards (AXS) and Smooth Love Potion (SLP).

Players earn SLP through Axie gameplay. They can later exchange the token for fiat, enabling a system where playing time turns into person-hour wage. Axie reported that many of its players were making $5 a day by playing Axie, but the income surged to $20 as of late.

Meanwhile, AXS operates as a settlement currency inside the Axie Infinity ecosystem, using trading fees, governance, and Axies' buying and selling. As a result, its holders receive 95% of Axie Infinity's total revenue, just like a government that receives tax revenues from its citizens.

Sky Mavis holds about 20% of the total AXS tokens.

The proposition has helped to push AXS demand higher even amid an ongoing sector-wide downtrend. Since its launch, the Axie Infinity token has raked in more than 18,000% profits for its investors.

AXS price technicals

The latest AXS rally also surfaced in the wake of a sector-wide rebound, led by Elon Musk's revelation that his space technology firm SpaceX holds Bitcoin. He also committed that Tesla would resume the Bitcoin payment option for its electric vehicles once the flagship cryptocurrency would switch to green energy solutions for mining.

Related: Axie Infinity (AXS) axes almost half its value following 971% bull run

Bitcoin's rebound from below $30,000 sent altcoins in a similar retracement trajectory, thereby benefiting AXS. However, the Axie Infinity token posted better short-term profits than its digital asset rivals, given the euphoria surrounding its gaming project.

AXS has been in a steady uptrend since launch. Source: TradingView.com

Technically, AXS's latest move uphill had it break above its parabolic resistance. The cryptocurrency now holds $24.07 as its interim support while eyeing a run-up towards its next potential upside targets at $36.48, $56.57, $76.65, and so on.

Conversely, slipping below $24.07 exposes AXS to deeper downside levels at $19.78, $16.40, and $14.03.

AXS trading volume, market sentiment rise 

Additionally, VORTECS™ data from Cointelegraph Markets Pro detected a bullish outlook for AXS on June 23, before its recent price rise.

In detail, the VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. AXS price. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score for AXS first flipped green early on June 23, 0015 UTC, after which the AXS prices began to rise, reaching as high as 78, four hours before the price peaked at $32.14.

At the time of writing, the VORTECS™ Score for AXS has slid back down to 65, suggesting that the conditions are still favorable for more upside price potential.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

16% Ethereum price rebound activates a classic bullish pattern — $2.5K next?

The cryptocurrency market recovered on Thursday after renewed endorsements from Elon Musk at the 'B' Word Conference Wednesday.

Ethereum's native crypto Ether (ETH) rebounded sharply on Thursday after Elon Musk disclosed for the first time that his private rocket firm SpaceX holds Bitcoin (BTC), and Tesla would probably resuming the bitcoin payment option for its electric cars.

The BTC/USD exchange rate was below $30,000 but bounced by more than 5% after the big reveal, touching an intraday high of $32,895. Ether, which tends to move in lockstep with the flagship cryptocurrency, surged likewise.

Ether was holding onto its previous session's gains on Thursday. Source: TradingView.com

It reclaimed $2,000 on Wednesday, rising by as much as 18.20% from its week-to-date low of $1,720.

Lukas Enzersdorfer-Konrad, chief product officer at financial services company Bitpanda, told Cointelegraph in an email statement that Ethereum would continue tailing Bitcoin in the coming sessions.

"As soon as the “big brother” finds its support level," he added, "Ethereum will most likely follow suit."

Classic pattern sets $2.5K target for Ethereum 

The latest bounce in the Ethereum market also originated from a support level that had earlier capped Ether's downside attempts.

Independent market analyst, known by the pseudonym Rekt Capital, flashed a so-called "orange area" on a weekly ETH/USD chart, illustrating three bearish wicks and their ability to shied the pair from falling lower.

"ETH has rallied +16% since rebounding from the orange area," the analyst explained, coupling the price floor with a support trendline that apprehensively constituted a Falling Wedge.

In detail, Falling Wedges are bullish reversal patterns that start wide at the top but start contracting as the prices move lower, forming a sequence of lower highs and lower lows. A bullish confirmation comes when the price breaks above the Wedge's upper trendline with a spike in volumes.

In doing so, bulls place their upside profit target as up as the maximum wedge height.

Ether prices almost check all the boxes when it comes to trading inside a Falling Wedge pattern. Rekt Capital highlighted the same in a chart he published Thursday.

Ether falling wedge setup highlighted by Rekt Capital. Source: TradingView.com

"As long as ETH holds the bottom of the structure as support until the end of the week, [it] will confirm a return to the structure after briefly losing it earlier this week," added Rekt Capital.

The maximum distance between the Wedge's upper and lower trendline is roughly $850. Therefore, according to the classic technical setup, a breakout above the upper trendline could send the prices to at least $2,500.

Related: Decoupling ahead? Bitcoin and Ethereum may finally snap their 36-month correlation

Nonetheless, the prices still risk falling sharply below $2,000 based on a short-term technical setup, as shown in the chart below.

ETH falling wedge setup on its daily chart. Source: TradingView.com

The daily Ethereum chart shows price could fluctuate between $1,850-2,080 before the potential bullish breakout, noted Rekt Capital.

Kirkpatrick and Dalquist's book titled "Technical Analysis" notes that falling wedges have a failure rate of just 8% to 11%. Moreover, the possibility of a bearish breakout has a higher failure rate of 15% to 24%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Decoupling ahead? Bitcoin and Ethereum may finally snap their 36-month correlation

Bitcoin and Ethereum have been majorly trading in sync since 2018, increasing risk exposure of crypto-only investment portfolios.

Anish Saxena, a New Delhi-based automobile dealer, made "incredible" profits by investing in cryptocurrencies in 2020, just as his business took a hit from the coronavirus pandemic-induced lockdown.

"I had known about Bitcoin and Ethereum and dozens of other assets for years," the 33-year old businessman said. "But I only got to invest in them after the lockdown pushed me and my family members out of work. And it helped us survive big time."

Anish revealed that he had allocated about 80% of his investment portfolio to Bitcoin (BTC) and Ether (ETH) with the rest of his capital distributed across Polygon, Dogecoin (DOGE), and Chainlink (LINK). His crypto-only investment netted him great profits, the numbers of which Anish declined to reveal. 

However, he did notice that how he almost got half of its unrealized profits wiped by deciding not to liquidate ahead of the May 2021 crash.

"I was liquidating cryptocurrencies based on my household demand for cash," Anish said. "While I am still in profits, seeing my profits decline by more than 50% has prompted me to get a huge portion of my investments back into cash.

Correlation risks

Retail traders like Anish have come under pressure due to over-reliance on two of the leading and popular cryptocurrencies: Bitcoin and Ether.

While different in terms of economics and use cases, both digital assets tend to move in the same direction. In recent history, their losses and profits appeared well-synced, illustrating that their holders might see their investments grow rapidly during bull trends but, at the same time, risk losing a lot when the uptrend exhausts and reverses to the bearish side.

"If it is a pure crypto portfolio, then, of course, having two cryptos which are highly correlated with one another adds risk to the portfolio," said Simon Peters, a crypto analyst at multi-asset brokerage company eToro.

"While the portfolio could see exceptional performance one month with the two cryptos making gains in tandem, you could also see huge drawdowns in a bad month as the cryptos move lower together."
The realized correlation between Bitcoin and Ethereum seldom dropped below 50% in the previous three years. Source: Skew

On the other hand, Liam Bussell, head of corporate communications at fiat-to-crypto gateway provider Banxa, called Bitcoin and Ethereum liquidity backstops for crypto traders.

In his comments to Cointelegraph, the executive said that traders utilize their initial gains in the top two cryptocurrency markets to invest in mid and lower-cap digital assets, citing rallies in Dogecoin and across non-fungible token projects. He noted:

"Once the market begins to slow, traders try to move back to liquid assets like BTC and ETH. This can offset declines for a short time but can’t maintain the market indefinitely. There are gains to be made in bear markets, but it is volatile coins, and the risk is high."
Bitcoin and Ethereum trends throughout the history. Source: TradingView.com

Additionally, Peters advised traders and investors to counterbalance their crypto investments risks by allocating a good portion of their capital in traditional financial instruments, including stocks, commodities, and fixed-income securities/funds.

"Historically crypto has shown itself to be pretty uncorrelated to other asset classes and offers better risk-adjusted returns," the analyst explained.

Decoupling ahead?

Peters meanwhile reminded that the Ethereum network's transition from proof-of-work to proof-of-stake—known as Ethereum 2.0—might limit its correlation with Bitcoin.

In detail, one of the principal features included in the upcoming Ethereum blockchain upgrade is deflation. Dubbed as EIP-1559, the Ethereum improvement proposal intends to burn a portion of transaction fees collected from users.

That could wipe out at least a million ETH tokens every year out of circulating supply, thus making the asset scarcer, according to crypto education publication Coinmonks

Bitcoin exhibits a similar scarcity by reducing its newly issued supply rate by half every four years, a process called halving. The cryptocurrency has a limited supply cap of 21 million tokens.

Related: London fork enters testnet on Ethereum as difficulty bomb sees delay

"It's possible that a decoupling could occur between bitcoin and ether following the completion of the transition to 2.0 as the 'tokenomics' — how ETH works on the 2.0 blockchain will be different to at present," said Peters, adding that:

"Demand for ETH could vary depending on staking reward yields at that time, which in turn could drive the price of ETH higher or lower independently from other cryptos."

As for Anish, the novice trader said he would "HODL" on to a portion of his BTC and ETH.

"If business picks up again after a full economy reopening, I'm planning to invest consistently across Bitcoin, Ethereum, gold, and mutual funds," he noted.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Trading firm of richest crypto billionaire reveals buying ‘a lot more’ Bitcoin below $30K

Alameda Research, headed by Sam Bankman-Fried, whose net worth lately has reached over $8 billion, has upped its Bitcoin buying around its key psychological support of $30,000.

Bitcoin’s (BTC) painful plunge below $30,000 on Tuesday turned into a so-called “buy the dip” opportunity for Alameda Research, a Hong Kong-based quantitative trading firm and liquidity solutions firm headed by FTX CEO and founder Sam Bankman-Fried.

Quantitative trader Sam Trabucco revealed late Tuesday that the company purchased Bitcoin during its latest price decline, adding that the company’s cautious strategy to go long BTC/USD surfaced out of at least three “recovery” catalysts: a potential end to the ongoing crypto FUD (China ban, Grayscale epic unlock, etc.), the stock market’s intraday recovery, and weaker long liquidations in the derivatives market.

“In my view, all these points [to] a similar (if vague) direction,” Trabucco wrote.

“News impact tends to revert? I’d expect crypto to rally more. Stock market *did* revert? I’d expect crypto to have reverted more, too. Liquidation moves usually revert? Same story.”

Panic-sell ahead? Opinions differ

The statements appeared as Bitcoin attempted a modest recovery above $30,000 on Wednesday. The cryptocurrency established an intraday high at $31,669 on the FTX exchange, which just raised a record $900 million. Later, the price corrected lower, albeit minimally, thus showcasing limited selling pressure near the said sessional peak.

Meanwhile, Naeem Aslam, chief market analyst with AvaTrade Ltd, highlighted Bitcoin’s resilience to recent bearish outlooks, with some earlier noting that a close below $30,000 would have the cryptocurrency move lower violently.

“In reality, that is not what we have seen,” the executive told Bloomberg. “The Bitcoin price has been stable, and we have not seen any panic selling.”

But Jeffrey Wang, head of Americas at crypto finance startup Amber Group, provided a cautious outlook. Speaking to Cointelegraph, the former Morgan Stanley executive said that Bitcoin continues to trade under the global risk-on influence, which may subject the cryptocurrency to further losses. He continued:

“With relatively calm price action, recently, short-term speculation and trading have waned somewhat. When we do see more volatile movements, expect more traders to show interest. But that could push the price down further if the risk backdrop remains weak.”
Bitcoin's recovery lagged the Wall Street indexes despite falling in tandem earlier this week. Source: TradingView

Edward Moya, senior market analyst for the Americas at Oanda, also weighed negatively on the latest Bitcoin–Wall Street correlation. He noted that if the United States stock indexes enter into the “panic selling mode,” it would lead the flagship cryptocurrency lower in tandem.

“It is critical that the digital coin regains ground above the $30,000 level, as a significant breach could result in a massive technical selloff,” Moya wrote in a Tuesday note.

Related: $13K Bitcoin price predictions emerge with BTC falling below historic trendline

As for Alameda, Trabucco admitted that the company had realized downside risks in the Bitcoin market, but its latest accumulation spree has been focusing more on the cryptocurrency’s long-term outlook. He said:

“We do put on fairly big delta positions longish-term for a quant team, and I’ve been glad that it’s been this direction so frequently — bull markets are way more fun.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

$13K Bitcoin price predictions emerge with BTC falling below historic trendline

The 50-week simple moving average earlier offered incredible support to Bitcoin's long-term bullish bias. But bears took it convincingly during the Monday sell-off.

Bitcoin (BTC) prices broke below a long-standing support wave, which was instrumental in keeping its strong bullish bias intact after March 2020's crypto market crash.

Dubbed as the 50-week simple moving average, or 50-week SMA, the wave represents the average price traders have paid for Bitcoin over the past 50 weeks. Over the years, and in 2020, its invalidation as price floor has contributed to pushing the Bitcoin market into severe bearish cycles.

Bitcoin price breakdowns below 50-week SMA through the history. Source: TradingView.com

For instance, the 50-week SMA acted as support during the 2018 bear market. The wave capped Bitcoin from undergoing deeper downtrends—between February 2018 and May 2018—as its price corrected from the then-record high of $20,000.

Similarly, the wave provided Bitcoin incredible support during its correction from the $15,000-high in 2019. Moreover, it held well as a price floor until March 2020, when the arrival of the Covid-19 pandemic caused a global market crash.

Fractal targets $12-$13K

Pseudonymous chartist Bitcoin Master flashed concerns about Bitcoin's potential to undergo an 80% average price decline upon breaking bearish on its 50-day SMA. The analyst noted that—if the said fractal plays out—BTC/USD rates could crash to as low as $13,000.

Meanwhile, Bloomberg Intelligence's senior commodity strategist Mike McGlone also highlighted the 50-week SMA in a tweet published earlier in July, albeit recalling the wave's ability to withhold selling pressure. The analyst recommended that investors should not dump their Bitcoin holdings right away on initial dips below the wave.

"Selling Bitcoin on initial dips below its 50-week moving average in the past has proven a good way to lose money, even in bear markets," McGlone explained.

Bitcoin market analysts are mixed

The latest Bitcoin dip came in the wake of a global risk-on market decline, driven by fears that the highly-transmissible Delta variant of the Covid-19 would slow down the recovery generated by the reopening of economies.

Vijay Ayyar, head of business development at cryptocurrency exchange Luno, noted that Bitcoin could drop further. In his comments to Bloomberg, the former Google executive said the BTC/USD exchange rates could fall to as low as $20,000. Nonetheless, he anticipated the pair to retest $40,000 on the next bounce.

“We’re going to need to form another base first before resuming another bull trend,” Ayyar noted.

“We are going to be ranging between $20,000 and $40,000 for the rest of the year.”

Jehan Chu, the founder of cryptocurrency-focused venture capital and trading firm Kenetic Capital, placed a safe downside target near $25,000 but warned about accelerated sell-offs should bulls fail to log a rebound from the said level. He said: 

“Q1′s crypto market momentum has stalled and is threatening further reversal potentially below the $25K levels."

Strong fundamentals and bullish signals remain

However, another analyst offered a different and more optimistic perspective on the current Bitcoin position. 

James Wo, founder & CEO of the global crypto investment firm Digital Finance Group, highlighted on-chain indicators, including an ongoing decline in exchange inflows and active wallet addresses, as a reason to stay bullish on Bitcoin.

Bitcoin net position change across all exchanges: Glassnode 

"Looking at these on-chain indicators, we can say that the majority of investors are waiting for major signals to enter the market again," Wo told Cointelegraph.

Related: Bitcoin bull outlines 7 steps to more fiscal stimulus and higher BTC prices

Data provided by CryptoQuant, a South Korea-based blockchain analytics firm, also provided a bullish setup for Bitcoin, citing the cryptocurrency's MVRV.

In detail, MVRV represents the ratio of an asset's market capitalization divided by realized capitalization. When the outcome is too high, traders may interpret the Bitcoin price as overvalued, thereby implying selling pressure. On the other hand, when the MVRV value is too low, traders may treat Bitcoin prices as undervalued, implying buying pressure.

Bitcoin MVRV has reached September 2020 low. Source: CryptoQuant

"Buying [Bitcoin] at this same level in the past cycle was seen between January to March 2017," noted one of the CryptoQuant analysts, adding:

"It does not sell at the bottom but prepares ammunition for the bottom. Short-term data offer the probability of test at support, good exposure opportunity."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin bull outlines 7 steps to more fiscal stimulus and higher BTC prices

Bitcoin's drop below $30,000 has sparked worries that it is heading to $20,000 next. But is such a massive drop feasible against the current macro fundamentals?

A recent sell-off in the Bitcoin (BTC) market pushed its prices below the key psychological support of $30,000.

While the cryptocurrency's move downhill prompted many analysts, including Luno exchange's Vijay Nayyar and Kinetic Capital's Jehan Chu, to predict a further depressive move below $25,000, Anthony Pompliano offered a contrasting bullish outlook.

The Morgan Creek Digital Assets founder pitted risk-on markets against the fears of the fast-spreading Delta variant of the Covid-19. He noted that governments, on the whole, would introduce "more aggressive monetary stimulus" programs should the new coronavirus strain spread at the scale of its alpha version.

"History is not necessarily an indicator of the future, but it is hard to imagine a scenario where if we had a second wave of lockdowns, we wouldn’t also get more aggressive monetary stimulus efforts," Pompliano wrote.

"If that occurred, we would likely see all assets continue to go higher and higher."

In saying so, Pompliano envisioned that the road to more dollar liquidity would like come in seven successive stages, as shown in the snapshot below:

The seven potential stages ahead as the new Delta variant clouds recovery hopes. Source: Anthony Pompliano Newsletter

Risk-on FOMO expected

Pompliano's statements appeared as the Bitcoin market fell in sync with other risk-on assets across the globe on Monday.

For instance, all the three Wall Street indexes—the S&P 500, the Nasdaq Composite, and the Dow Jones—logged their steepest declines in weeks. Also, gold at one point in time fell to as low as $1,795.12 an ounce but recovered to $1,812.145 an ounce to close the session.

Bitcoin slipped in tandem with US equity market on Monday. Source: TradingView.com

Meanwhile, the U.S. government bond rallied alongside the dollar, showing that investors were heading for safe-havens amid the global market turmoil.

Behind the rout, global media reported, was a growing list of worries about the recovery. In detail, the Delta variant of the Covid-19 has spread rapidly, reigniting the dialogue in several countries about whether authorities should reimpose lockdown and curb economic activity.

"The hope was that [the Covid-19] vaccines would provide us with the endgame," Mohammed Kazmi, a portfolio manager at Union Bancaire Privée, told Financial Times. "Now investors are looking at the UK and there’s a bit of fear with regards to reopening so aggressively when cases are still so high."

Kazmi added that markets are now stepping from hopes of a V-shaped recovery, and are feeling uncertain about the future of their economies.

Related: Stock-to-flow model possibly invalidated as Bitcoin price loses $30K

Pompliano's comments also appeared as the Federal Reserve flirted with the idea of hiking its near-zero lending rates by the end of 2023 to curb rising inflation.

Additionally, several central bank officials also favored the idea of tapering their aggressive $120B a month asset purchase program, albeit chairman Jerome Powell clarified that the Fed intends to run the quantitative easing policy hot until the U.S. economy recovers completely.

James Wo, founder & chief executive of global blockchain and digital asset investment firm Digital Finance Group also noted that even though the Bitcoin industry has encountered downside volatility during this current market cycle, the fundamentals that have driven its and other markets' value higher all across 2020 continue unaffected. He added:

"Any combination of narratives that have brought digital assets to this discounted price can be checked off of lists of FUD that would have eventually affected the price of the whole market."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

No hard fork love for Ethereum as ETH price falls to a three-week low

Ether continues to trade lower under the shadow of Bitcoin in days leading up to its supply-crunching hard fork event.

Ether (ETH) prices slid in tandem on July 20, in tandem with Bitcoin's (BTC) drop below $30,000.

The ETH/USD exchange rate dropped 5.41% to an intraday low of $1,720 — or roughly $400 above its 2018 all-time high price, which should serve as an important psychological support level. 

The pair's bid had climbed to as high as $1,994 on the Coinbase exchange on Sunday. Meanwhile, its price action looked strikingly similar to Bitcoin's, the flagship cryptocurrency that topped at $32,450 on Sunday but later corrected to as low as $29,507 during the Tuesday session.

Bitcoin price trends continue to influence Ethereum's interim bias. Source: TradingView

The plunge also followed the Ethereum network's co-founder Anthony Di Iorio's exit from the cryptocurrency industry, partially because of personal safety concerns. Di Iorio, who's likely a large Ether holder, hinted to Bloomberg in an exclusive interview that he would liquidate his entire crypto-related holdings without specifically mentioning the Ethereum blockchain's native token.

"[Crypto is] really a small percentage of what the world needs," he said, adding that he wants "to diversify to not being a crypto guy, but being a guy tackling complex problems."

Hard fork FOMO snubbed?

The latest bout of sell-off surfaced despite Ethereum's upcoming network upgrade. Dubbed as London hard fork, the major code update is another step from turning Ethereum into a speedier and scalable proof-of-stake network from an energy-intensive proof-of-work one.

But the most talked-about feature in the upcoming hard fork is deflation. The upgrade expects to burn a portion of the base fee paid to miners, thereby making reducing the supply of Ether. Crypto education platform CoinMonk noted in March that the London hard fork upgrade could ideally burn 1 million ETH in 365 days, an equivalent to almost one percent of the network.

Grayscale, a New York-based digital asset investment firm, also wrote in a report in February that deflationary dynamics would prove extremely bullish for Ether prices. ETH/USD surged by almost 180% to its record high of $4,385 after the report came out.

The latest downturn in Ethereum markets has flashed serious concerns about London hard fork's ability to withhold bullish bias. For instance, analysts at TradingView said in their timeline updates that inflationary pressures from U.S. markets might have boosted ETH/USD's downside sentiment.

Ethereum has crashed by more than 60% from its record highs. Source: TradingView

In detail, the U.S. Labor Department last week released June's Consumer Price Index (CPI) report. The latest data showed that inflation in the US rose 0.9% in June to 5.4%, the fastest just before the 2008 financial crisis. Bitcoin and Ether prices dropped after the report was released.

"Typically, cryptocurrency has been seen by digital asset investors as a hedge against inflation," TradingView analysts wrote, adding:

"However, in this case, the data itself matters less than what the Federal Reserve might do in response to that data. Traders began selling off cryptos like Ethereum and Bitcoin on fears that continuously rising inflation would prompt the Fed to take back its quantitative easing policies."

Bullish all the way

But not everyone is bearish. For instance, Konstantin Anissimov, executive director at CEX.IO exchange, anticipates Ether prices to reach $3,000 following the London hard fork.

"As things stand, the Federal Reserve has increased the size of its balance sheet from early 2020 to more than $8 trillion — a substantial rise," he said, adding that the reduced prices in the cryptocurrency markets are an opportunity for investors against beaten-down safe-havens in traditional markets.

"Market investors could accumulate the coins at a discount while trusting in their abilities to serve as the right hedge against the inherent inflation. Both coins with the renewed buy ups are likely to retest new price levels at $45,000, and $3,000 respectively."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Axie Infinity (AXS) axes almost half its value following 971% bull run

The governance token earlier rallied exponentially despite dull price actions in the broader cryptocurrency market.

A supersonic rally in the Axie Infinity market that saw its native token AXS surge by 972% in just 23 days is now risking exhaustion.

AXS price Fib fractal

The AXS/USD exchange rate plunged to as low as $16.02 on Monday, four days after topping out at $29.86. In doing so, the pair attempted to neutralize its extremely overbought sentiments, as flashed by its daily relative strength index (RSI) that treaded above 84 last week, showcasing profit-taking sentiment among investors.

Comparing Axie Infinity's current and mid-March Fibonacci setup. Source: TradingView.com

AXS/USD showed signs of rebound at $16.38, a level that coincides with the 61.8% Fib level that—in turn—constitutes a Fibonacci retracement graph made from $23.98-swing high to $4.07-swing low. The two levels represent the top and bottom of the AXS/USD’s current curve range.

Additional support came from the pair's 20-day exponential moving average (20-day EMA; the green wave). The wave (now near $15.38) was instrumental in strengthening AXS/USD’s upside bias at the beginning of this year, capping wild downside retracements and sending prices in the direction of their previous uptrend.

Previous top-to-bottom Fib retracement setups present th 38.2% Fib level as a key reversal indicator. For example, AXD/USD rebounded by almost 225% after testing $3.62—the 38.2% Fib level during the late March 2021's pullback move.

Similarly, the level held the AXS/USD's bearish attempts during April-May before giving up and paving the way for a price crash, as shown in the chart below.

Comparing Axie Infinity's current and April-May Fibonacci setup. Source: TradingView.com

Therefore, the previous fractal hints at an extended downside correction for the Axie Infinity token in the sessions ahead. As a result, the current 38.2% Fib level ($11.68) serves as the interim profit target for bears.

Nonetheless, breaking below the 38.2% Fib level could expose AXS/USD to the support confluence of 23.6% Fib level ($8.77) and the 50-day simple moving average (around $8.29).

Fundamentals

Despite its latest bearish move, AXS was up more than 2,5000% on a year-to-date timeframe.

In detail, the cryptocurrency serves as a governance token at Axie Infinity, a nonfungible token-based online video game developed by a Vietnamese studio Sky Mavis. Players get to compete and win rewards in an in-house token called Small Love Potion (SLN). In turn, they could use SLN to breed digital pets, called Axies, inside the game.

By doing so, dedicated players can make between 100 to 200 SLP tokens a day on average. That roughly equals $77.8 to $155.6 a day, per the current exchange rate of $0.77 per token.

The play-to-earn feature has been received well by crypto-philes. Just last week, Axie Infinity raked in over $84M in fees in the last 30 days, more than Bitcoin and Ethereum made in protocol revenue, and more than all the top decentralized finance apps, including PancakeSwap, MetaMask, MakerDAO, Synthetix, and others.

Axie Infinity revenue versus other decentralized finance protocols. Source: Token Terminal

Moreover, while AXS can be exchanged on other platforms, 97% of its volume comes from the Axie Marketplace, a dedicated portal to trade digital pets, which, in turn, passes the fees to the Axie Treasury.

According to Axie World, the Treasury now holds about $23.42mm in marketplace fee and $76.15M in breeding fees (fee charged to breed digital pets).

Axie Treasury is now valued at $99.57mm. Source: Axie World

In turn, the fee is given as a weekly yield to users who stake AXS to run and govern the Axie Protocol.

"Axie Infinity has set itself apart from the rest of the pack – crypto games – and continues to rise," commented Mason Nystrom, a researcher at Messari, adding:

"The next major milestone will be the launch of the alpha of its virtual world, Lunacia in Q4."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin price set to rebound? BTC shorts on Bitfinex crash by 25% after record spikes

The latest meltdown in BitFinex BTC shorts could follow up with a spike in spot Bitcoin bids, stated one analyst.

Bitcoin (BTC) bears should watch out for a potential blow as the number of margined short positions on the Bitfinex exchange crashes by roughly 25%.

The dataset dropped to 11,066 BTC as of 12:20 GMT Saturday, compared to 14,897 BTC at the session's open. Meanwhile, the drop came as a part of a bigger downside move that started on July 15. On the day, the total number of margined short positions had reached 17,053 BTC.

BTCUSDSHORTS on July 17 plunged as a part of a prevailing downside correction. Source: TradingView

In simple terms, BTCUSDSHORTS represents the number of margined bearish positions on Bitfinex, measured in BTC. Traders borrow funds from Bitfinex — their broker — to bet on bearish outcomes for the instrument BTC/USD. That said, the latest data shows that traders have reduced their leveraged bearish exposure in the Bitcoin market.

Bitcoin spike expected?

Popular trader Scott Melker claimed that each massive drop in the BTCUSDSHORTS positions on Bitfinex leads to a run-up in the spot Bitcoin prices, adding that he will be watching markest for a similar bullish reaction.

Throwing a closer look at the BTCUSD-BTCUSDSHORTS correlation showed an erratic positive correlation. The Bitfinex short positions went for a Bear Run after December 2020, a period that coincided with a spike across Bitcoin spot and derivatives markets.

In April-May, a run-down in Bitfinex short positions coincided with the Bitcoin price surging from sub-$45,000 to a record high of $65,000. 

The recent correlation between Bitcoin spot prices and its margin short positions on Bitfinex. Source: TradingView

Nonetheless, similar BTCUSDSHORTS crashes in June—at best—kept Bitcoin stabilized above a psychological support level of $30,000, if not pumped it outright.

Grayscale FUD

Downside pressure on Bitcoin sustains despite a recent drop in BTCUSDShorts also as Grayscale Investments unlock 16,000 BTC worth of its Grayscale Bitcoin Trust (GBTC) shares on July 18, after a six-month lock-up period.

JPMorgan & Chase strategists led by Nikolaos Panigirtzoglou warned in June that Grayscale's massive unlocking event could become the source of the next selling wave in the Bitcoin market.

On-chain analyst Willy Woo echoed similar concerns last week, explaining that when GBTC premium drops relative to the Bitcoin units held in Grayscale's reserves, it tends to divert investors from spot markets.

"Investors now have more incentive to by GBTC shares rather than BTC, it diverts some of the buying pressure on BTC spot markets," said Woo. "This is bearish."

Bitcoin holds $31K

As an optimistic BTCUSDSHORTS drop offsets a pessimistic GBTC unlock event, the spot BTC/USD exchange rate holds $31,000 as its interim support.

BTC/USD has repeatedly tested the $30,000-$31,000 range as support before rebounding higher. A maximum of its retracement has been able to pierce through the $35,000-resistance level. Nonetheless, profit-taking sentiment pushed the pair back toward $30,000.

As a result, the bearish sentiment for Bitcoin among analysts is extremely high, below $30,000. For instance, pseudonymous chartist Fomocap sees BTC/USD crashing to $20,000 if the pair closes below $30,000.

NebraskanGooner also expects a "nuke" like scenario for Bitcoin should it drop below $30K.

The formation of a potential inverse cup and handle formation also sees Bitcoin crashing below $20,000 on the next breakdown below the $30K-$31K range, as shown in the chart below.

Inverse cup and handle pattern on the Bitcoin chart. Source: TradingView

Woo rested on on-chain fundamentals to predict a bullish outcome. The analyst said that smart money has ceased selling while long-term investors have been absorbing Bitcoin at peak levels just as price flirts with $30K-support.

Spot exchange net flows on a 2-week moving average. Source: Willy Woo Newsletter

"Coins are moving away from speculators to long-term investors (strong hands) now at a rate unseen since February when price propelled from $30k to $56k," he wrote in his recent note to clients, adding:

"I’m expecting price to break from its bearish sideways band in the coming week followed by a recovery to the $50k-$60k zone before some further consolidation."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Big bullish pattern on US dollar index chart puts Bitcoin at risk of losing $30K

A strengthening dollar could be negative for pretty much every risk asset on board, including Bitcoin, whose value boomed against the dwindling greenback after March 2020.

Dollar traders have kept a close eye on a potentially bullish "inverse head-and-shoulders" pattern building in the U.S. dollar index (DXY) chart. Meanwhile, the smell of a stronger greenback is weakening Bitcoin's (BTC) upside case, especially as the flagship cryptocurrency struggles to break out of its current $30,000-35,000 trading range.

Three troughs, one price ceiling

In detail, the inverse head-and-shoulders (IH&S) pattern forms after a downtrend. It contains three successive troughs, with the middle trough (head) being the deepest than the other two (shoulders). Ideally, the two shoulders are of equal height and width. All three troughs hang by a price ceiling known as a neckline that serves as resistance.

DXY, which measures the dollar's strength against a basket of top foreign currencies, currently checks all the boxes to prove that it has formed an IH&S pattern.

The index now stares at the prospect of undergoing a bullish breakout upon closing above its neckline resistance. In doing so, it would set up a technical profit target at a distance equal to the price gap between the neckline to the bottom of the head.

U.S. dollar index's inverse head and shoulder technical setup. Source: TradingView

The bullish setup expects DXY to rise by almost 5% on a potential neckline breakout move.

Meanwhile, the index's 50-day simple moving average (50-day SMA; the blue wave) also anticipates to cross above its 200-day simple moving average (20-day SMA; the saffron wave) to confirm a Golden Cross. Traders consider golden crosses as bullish indicators.

Dollar fundamentals

A weaker dollar environment after March 2020 served as a tailwind for risk assets and global growth, propelled by the U.S. Federal Reserve's quantitative easing policies to cushion the economic aftermath of the coronavirus pandemic. DXY closed 2020 at a 6.83% loss.

But entering 2021, the dollar showed signs of trend reversals as the U.S. economy rebounded strongly amid a speedy coronavirus vaccination program. As markets reopened, demand for the dollar and dollar-based investments rose among global investors.

Brent Johnson, chief executive of Santiago Capital, called the dollar "Giffen Good," a type of asset whose demand increases with its prices. He noted that despite rising inflation caused by Fed's money printing, global investors had increased their dollar debts, adding:

"This continued debt issuance denominated in USD increases future demand for USD (the debt must be repaid in USD), and as noted above, this demand does not abate as price rises."

Kevin Kelly, the chief financial analyst at Delphi Digital, said that net speculative futures positioning on DXY is not as bearish it was at the beginning of 2021. He added that the setup is very similar to DXY's positioning in early 2018 that followed by a roughly 10% price rally in the next 18 months.

Inflation setup

A recent run-up in the DXY market came alongside three back-to-back monthly spikes in inflation. Per the latest Labor Department released this Tuesday, the U.S. consumer price index rose to 5.4% year-over-year, the highest 12-month rate since August 2008. 

James Freeman, the assistant editor at the Wall Street Journal, blamed the Fed's money printing policies for the ongoing inflationary pressure, noting that the dollars in each wallet have been actively losing their value as a result. Nonetheless, the Fed has assured that inflation was a temporary problem, providing a bullish backstop to the DXY rally.

In his congressional testimony on Wednesday, Fed chairman Jerome Powell admitted that the economic conditions at present do not allow them to taper bank their quantitative easing programs, including a $120bn a month bond-buying program. However, Powell added that the Fed would alert markets in advance if they ever decided to scale back its purchasing.

Combined with lower rates, the Fed's expansionary policies have spurred cheaper lending, thus creating more demand for assets, including homes, tech stocks, gold, and even Bitcoin. But, at the same time, fears that a consistently rising inflation would prompt the central bank to cut rates have also pressured seemingly overvalued assets to lose a portion of their yearlong gains.

For example, Bitcoin, often propagated as a hedge against higher inflation, dropped by more than 50% from its record high of about $65,000. Its plunge largely appeared in the wake of regulatory crackdowns around the world, a Chinese mining exodus, among other factors. But the Federal Open Market Committee's decision mid-June to cut interest rates in 2023 may have also added to its downside momentum.

Bitcoin dropped from $65K to $28.6K at one point in time. Source: TradingView

"If the US dollar reverses trend, it threatens to throw cold water on some of this year’s most popular trades," noted Kelly.

"Commodities, gold, emerging market equities, bitcoin are all vulnerable to a strengthening greenback, though the speed of its move also remains a critical factor."

Nevertheless, some analysts see a rising dollar as no threat to Bitcoin, believing that investors would keep allocating a portion of their portfolio to the emerging global asset.

ARK Invest Founder and CEO Cathie Wood, for example, told CNBC Bitcoin could end up on a more solid footing after overcoming worries related to the recent China crypto mining ban and its alarming carbon footprints, an issue raised by Tesla CEO Elon Musk in May.

An Intertrust survey of hedge fund chief financial officers worldwide also found that they would increase their crypto exposure significantly by 2026. 17% of respondents expected to allocate more than 10% in Bitcoin and similar digital assets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Record outflows from Canada’s biggest Bitcoin fund see BTC reserves drop by 50%

On-chain data shows two dramatic declines in the Bitcoin reserves held by a Canadian Bitcoin fund but there's a catch.

A Canada-based Bitcoin fund, operated by 3iQ Corp, has witnessed a dramatic decline in its BTC reserves since June.

Literally named the Bitcoin Fund (QBTC:CN), the closed-end investment product, was holding around 24,000 BTC in its vaults in early June. However, as the monthly session progressed, the reserves first dropped to below 16,000 BTC in a dramatic, straight-line decline.

Later, another massive withdrawal pushed the Bitcoin Fund's BTC reserves to around 13,000 BTC, according to on-chain data from South Korea-based analytics firm CryptoQuant.

QBTC vs. GBTC Bitcoin reserves (red) vs. BTC price (black). Source: CryptoQuant

However, the withdrawals from the QBTC fund across June coincided with an inflow spike in 3iQ's exchange-traded fund (ETF), called 3iQ CoinShares Bitcoin ETF (BTCQ). In detail, the Canadian ETF attracted inflows of 2,088 BTC in June 2021 against the QBTC outflows of 10,432 BTC in the same month.

ByteTree CIO, Charlie Morris, noted that 3iQ allowed its clients to convert their QBTC units into 3iQ CoinShares Bitcoin ETF. He added that the growth of crypto ETFs across major stock exchanges—which allows redemptions and withdrawals—prompted investors to reduce their exposure in the closed-ended fund.

A lesser Bitcoin exposure, nonetheless

In comparison, 3iQ's top rival, the New York-based Grayscale Bitcoin Trust (GBTC), did not witness declines in its BTC reserves. Grayscale Investments has closed GBTC since February, citing "administrative purposes." The closed-end fund does not allow redemptions and withdrawals.

Additionally, data collected by ByteTree Asset Management shows that the 90-day inflow into the United States and Canada-based Bitcoin funds has dropped to 12,794 BTC compared to 191,846 BTC in January 2021, a 93.3% decline.

Bitcoin funds saw their BTC reserves decline by 93.3%. Source: ByteTree

The 3iQ CoinShares Bitcoin ETF (BTCQ), despite attracting 2,088 BTC in June 2021, has so far experienced outflows of 354 BTC in July 2021.

Fund reserves reflect rising and declining institutional interest in Bitcoin. That is primarily because these investment products tend to work provide accredited investors ways to gain indirect exposure to crypto markets by issuing shares backed by real Bitcoin sitting in vaults.

Closed-ended funds, trading at negative premium, are seeing no major inflows/outflows in July. Source: ByteTree

Thus, as the Bitcoin reserves on average drop across the funds, it typically suggests a lower demand for cryptocurrencies among institutional investors.

The Fed angle

Institutional investors reducing their exposure in the Bitcoin funds coincide with the Federal Reserve's hawkish signals at the end of June's Federal Open Market Committee's meeting.

In detail, the U.S. central bank said mid-June that it could hike interest rates by the end of 2023 to contain prevailing inflationary pressures. It referred to the US consumer price index (CPI), a gauge to measure inflation, that surged 0.6% in May 2021 to reach a three-decade high of 4.5%; CPI climbed another 0.9% in June to reach 5.4% at its fastest pace in the last 13 years.

The index for all items less food and energy rose 0.9 percent in June after increasing 0.7 percent in May. Source: US Bureau of Labor Statistics

Since the Fed's outlook, Bitcoin has dropped below $32,000. However, the flagship cryptocurrency has mostly remained inside the $30,000-34,000 price range, suggesting a mixed outlook among retail and institutional investors about the cryptocurrency's next directional bias.

The bias conflict emerges despite popular narratives that pose Bitcoin as an ultimate edge against rising consumer prices. The record goes like this: Unlike the U.S. dollar or other fiat currencies, Bitcoin comes with a limited supply of 21 million tokens, which makes it scarcer than inflationary currencies, and in turn, more valuable in the long run.

But Bitcoin has reacted negatively to rising inflation in the previous months, prompting critics to question its safe-haven narrative, at least in the short term. For instance, Fortune covered a special section on Bitcoin's erratic response to surging consumer prices, stating that the cryptocurrency is now marching "to its own drummer."

Bitcoin has slipped by more than 50% since mid-April top near $65K. Source: TradingView

Eric Diton, president and managing director of The Wealth Alliance, noted that Bitcoin had become an overvalued asset after rising from below $4,000 to a record $65,000 in almost a year. However, based on how far the cryptocurrency has come, its prices have to correct before continuing higher. 

Nevertheless, a Bank of America survey of fund managers also found "long Bitcoin" among their most crowded trades, alongside long ESG and long commodities.

As Cointelegraph reported, traders are now closely watching the last major unlock dates over the next few days and weeks due to their potential impact on the cryptocurrency market. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum bounces but ETH price in danger of turning $2.3K into new resistance

The Federal Reserve chairman sidelined inflation concerns, which appears to have coincided with a relief bounce for Ethereum.

Ethereum's native token Ether (ETH) reclaimed $2,000 in the early New York trading hours Wednesday as crypto traders assessed the Federal Reserve Chairman Jerome Powell's prepared congressional testimony.

The ETH/USD exchange rate surged 7.19% to reach its intraday high of $2,019.90. Likewise, Bitcoin (BTC), whose 7-day positive correlation with Ether stands at 0.84 above zero, climbed, albeit by a modest 0.75%, hitting $32,379.

Ether bounces of key support area Wednesday morning. Source: TradingView

Powell gave his semi-annual monetary policy report to Congress on Wednesday, a day after the U.S. consumer price index report showed an increase of 0.9% between May and June, reaching 5.4% for the first time in three decades.

In prepared remarks ahead of his congressional testimony, Powell noted that inflation in the coming months would remain elevated. Nevertheless, the central bank chief added that rising consumer prices wouldn't deter them away from their ongoing bond-buying policy.

Powell said that the threshold of limiting its $120 billion monthly debt purchases—that have cushioned the U.S. economy throughout the coronavirus pandemic—is "still a way off." In saying so, he cited the U.S. labor markets, stating that its full recovery "still has a long way to go."

The statements appeared after a Bank of America survey of the global fund managers, who thought the global economy would keep on improving, dropped dramatically from 91% in March to 47% in July. The same poll named long Bitcoin—bet on rising BTC/USD rates—one of the most crowded trades alongside long ESG and long commodities.

Economic expectations have peaked. Source: BoA

But both Bitcoin and Ether dropped after Tuesday's CPI report and ahead of Powell's testimony release, thus drawing flak from critics for not behaving like a haven in the face of higher consumer prices. Part of the reasons were fears that the Fed would signal tapering its bond purchases sometime in 2020 and hike its benchmark lending rates only in January 2023.

Powell's assurance that their plans to taper is still away injected short-term optimism in the cryptocurrency market, benefiting Bitcoin and Ether alike. 

 A technical bounce?

Ether's latest upside also appeared in the wake of a technical support level having a recent history of limiting ETH/USD's bearish bias.

ETH stuck inside a symmetrical triangle range. Source: TradingView

The said price floor serves as a rising trendline in a symmetrical triangle pattern. Ether has been fluctuating inside the said structure since mid-June, as shown in the chart above, which raises its probability to retest the triangle's resistance trendline (above the $2,300 level) in the coming sessions.

Nevertheless, Symmetric Triangles are continuation patterns that typically send the prices in the direction of their previous trend. Since Ether's current triangle formation appears in a downtrend, the path of ETH/USD's least resistance is to the downside.

Symmetrical triangles breakout scenarios. Source: Scanz Trading Blog 

Therefore, Ether continues to face bearish risks on technical patterns. Nevertheless, the cryptocurrency has performed better than expectations despite a brutal crypto market sell off in the second quarter of 2021.

In its Q2 report released in July, data intelligence firm CoinMetrics noted that Ether finished the financial quarter 13.2% higher versus Bitcoin's -38.88%. It wrote:

"ETH benefited from a renewed surge of retail interest which was partially driven by the rapid rise of NFTs. Although NFT media interest peaked in March, it helped bring unprecedented mainstream attention to Ethereum which led to a flood of new users."

More upside prospects for Ether come from London hardfork. The upgrade would implement four improvement proposals on the Ethereum blockchain. One of the proposals, dubbed as EIP-1559, expects to make ETH a deflationary asset by burning a portion of the fee collected from Ethereum users.

Investment sentiment tracker Santiment appeared a bit cautious, however, warning traders about excessive speculation attached to the London hard fork event. An excerpt from its July 7 newsletter reads:

"One could say that 'This time it's different,' as ETH can be staked now, and with EIP1559 coming up, it'll be a gamechanger, etc. [...] It's all speculative at the moment, and no one will really know how the market will react to the implementation. It could be 'buy the rumor, sell the news.'

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin sell-off continues as BTC nears $31K ahead of Powell’s speech

The latest price declines came after the U.S. inflation rose to a 30-year high in June.

Bitcoin’s (BTC) price continued its downtrend Wednesday ahead of the testimony from United States Federal Reserve Chairman Jerome Powell.

The spot BTC/USD exchange rate fell to its 17-day low of $31,600 following a 3.46% intraday dip. Meanwhile, CME futures tied to the pair plunged 3.41% to $31,515, extending their week-to-date losses to 9.5%.

Bulls step in at $31.5K to buy the Bitcoin dip. Source: TradingView

Bitcoin had powered to $35,000 at the beginning of July, as bulls continued to defend support levels around $30,000 against each downside attempt.

Independent market analyst Will Clemente III noted that entities with a low history of selling kept absorbing Bitcoin at lower levels from speculative traders, adding that the strategy is in the process of effectively removing a good BTC supply out of the market.

“Given no capitulation event, in my humble opinion, it is a matter of ‘when’ the re-accumulation process will be finished rather than ‘if,’” Clemente wrote.

“Once the process completes, the market would experience a supply shock.”

But...

Bitcoin sold off at $35,000 and dropped to near $31,500 during the Wednesday session. One factor that made traders cautious is uncertainty about how the Federal Reserve would respond to the bout of higher inflation — now running upward at its fastest pace in 13 years.

In detail, the U.S. Consumer Price Index (CPI) rose 0.9% in June 2021 from the previous month and by 5.4% compared to June 2020. The higher inflation readings honed focus on Powell’s appearance before the House Financial Services Committee on Tuesday at 9:30 am EST.

U.S. core inflation data hits its highest levels since the year 1991. Source: Bureau of Labor Statistics

The central bank chief expects to clarify his position on the ongoing spike in consumer-related inflation. In his earlier statements, Powell has suggested that the Fed should move cautiously unless it sees a “maximum recovery” in the U.S. labor markets.

Therefore, with support from some like-minded dovish Fed officials, including New York branch head John Williams, Powell might ignore trimming the Fed’s $120-billion monthly asset purchase program in the wake of strong U.S. growth and high inflation.

The Fed’s hawkish tone coincides with lower BTC prices

Meanwhile, Evercore ISI economist Peter Williams forecasted that rising CPI readings would increase tensions among the Federal Open Market Committee’s members.

He noted that some hawkish members might demand tapering to begin as early as September, albeit adding that the Fed, in general, would follow a wait-and-watch approach, thinking inflation is transitory in nature.

As for Bitcoin, the outlook remains mixed, especially after the cryptocurrency failed to respond to inflation alarms in recent months, China’s crackdown on the crypto sector, increasing regulatory scrutiny, the Fed’s rate hike plans for 2023, and Elon Musk’s anti-crypto tweets.

Fortune reported that Bitcoin is marching “on its own drummer,” ignoring the recent spikes in key inflation metrics. That makes the cryptocurrency a doubtful hedge against rising consumer prices.

However, Joel Kruger, a forex strategist at London-based investment firm LMAX, thinks differently. The analyst noted that Bitcoin’s long-term prospects remain skewed to the upside because there’s a “legit fear of rising inflation.”

“Setbacks more about SOME investors looking at Bitcoin as a risk correlated emerging asset,” he tweeted late Tuesday.

“Short-term could see more downside if stocks plunge. But ultimately, Bitcoin should be well supported on the longer-term value proposition.”

Additionally, Greg Waisman, co-founder and chief operating officer of cryptocurrency infrastructure company Mercuryo, offered a more critical outlook.

First, he noted that macro investors do not believe in Bitcoin’s true value even against rising inflation. And second, he projected Ether (ETH) as a better cryptocurrency, given its recent run-up against Bitcoin.

Ether prices against Bitcoin has surged 136% on a year-to-date basis. Source: TradingView

“Bitcoin is the most expensive and renowned cryptocurrency, but it’s not a cryptocurrency of the present,” Waisman explained, adding:

“Ethereum is the true king of cryptocurrencies. Investors will continue to ride the Bitcoin high and dump at their convenience. That said, Bitcoin will once again surpass the $50k mark.”

Technical outlook

Currently, lackluster volumes and a two-month-old downside move continue to keep Bitcoin in a bearish state.

Bitcoin holds above second-quarter support around $30,000. Source: TradingView

Since May 20, the BTC/USD exchange rate has been trending lower inside a falling parallel channel, rebounding off its support trendline and pulling back lower upon testing resistance. At the same time, the $30,000–$32,000 area has been providing a confluence of additional support.

The pair appears to be heading back toward the lower trendline following the latest retest of the Channel’s upper trendline. However, the short target in the current scenario is below $30,000 (toward the Q2 bottom of $28,732).

Conversely, a break north of the Channel’s resistance trendline could have BTC/USD test the 50-day simple moving average (50-day SMA; the blue wave) at $35,363 as the next upside target. The area has witnessed sell-offs in the recent sessions.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum price dragged down below $2K as US inflation hits highest level since 1991

The second-largest cryptocurrency sells off in line with Bitcoin as traders assess the latest U.S. inflation data.

Ether (ETH) perhaps had the most bullish outlook entering the July session, with a key technical update dubbed EIP-1559, promising to make its native token ETH scarcer through the network's first-ever burning mechanism.

But so far into the month, the second-largest cryptocurrency by market cap has vastly tailed its top rival Bitcoin. The positive correlation was visible on July 13, following the New York opening bell, when Ether plunged below $2,000 to hit its two-week low in sync with Bitcoin, which slipped slipping below $32,500.

ETH/USD vs. BTC/USD on Coinbase. Source: TradingView

As it happened, the ETH/USD exchange rate reached its intraday low of $1,961.10 following a 3.43% drop. The pair's modestly bearish move locked step with Bitcoin, which apprehensively fell as traders assessed the latest U.S. inflation data.

The U.S. consumer price index ticked up 0.9% in June to hit 5.4% year-over-year, marking its highest level since 1991. Traders sold off Bitcoin and other cryptocurrencies on the news, pointing to fears that a continuously rising inflation rate would prompt the U.S. Federal Reserve to withdraw its quantitative easing policies.

Macro inflation vs. Ethereum deflation

In detail, the minutes of the Federal Open Market Committee's June meeting revealed officials in favor of at least two rate hikes by the end of 2023, providing the inflation rate runs too hot above their 2% target. The central bank has been maintaining interest rates below 0.25% since March 2020, which sapped investors' dollar demand and, in turn, had boosted demand for so-called safe-haven assets, including Bitcoin.

Ether, whose one-year correlation coefficient with Bitcoin stands at 0.64, according to Crypto Watch, surged all across 2020 and in the first quarter of 2021 on similar macroeconomic fundamentals.

The cryptocurrency, however, logged better gains than Bitcoin, owing to its role in a flurry of booming crypto sectors, including decentralized finance (DeFi), nonfungible tokens (NFT), and stablecoins.

Bitcoin's one-year correlation with Ethereum. Source: Crypto Watch

But the Ethereum network also suffered from technical setbacks in the form of a jammed bandwidth. An overloaded blockchain prompted miners—entities that process and add transactions to Ethereum's public ledger—to raise their fees. In some cases, users were forced to pay more gas fees than the amount they were transferring.

The problems appear to have come to a final resolution as Ethereum intends to switch its protocol from a miner-friendly but energy-intensive proof-of-work to a faster and cheaper proof-of-stake. In detail, the so-called London hard fork, which includes five improvement proposals, expects to counter those inefficiencies.

One of the improvement protocols, called EIP-1559, introduces a new fee structure to make Ether less inflationary.

It proposes to burn a portion of the fee collected in ETH, thus adding deflationary pressure on the cryptocurrency. In addition, the upgrade replaces miners with validators. In doing so, Ethereum requires each validator to lock at least 32 ETH to run its proof-of-stake network.

That also put a good portion of ETH supply out of circulation, making it as scarcer as Bitcoin. 

For Konstantin Anissimov, executive director at CEX.IO, rising macro inflation provides more bullish opportunities to Ether as much as it does to Bitcoin. He adds that he anticipates the ETH/USD exchange rate to hit $3,000 on an anti-inflation narrative.

"As things stand, the Federal Reserve has increased the size of its balance sheet from early 2020 to over $8 trillion—a substantial rise," he explained, adding:

"The reduced pricing is an avenue for market investors to accumulate the coins at a discount while trusting in their abilities to serve as the right hedge against the inherent inflation."

And so it appears, Ether accumulation is happening at a rapid pace. According to CryptoQuant, a South Korea-based blockchain analytics firm, the total ETH reserves across all the crypto exchanges have dropped by more than half in the wake of its Q2/2021 price correction from $4,384-top to $1,700-low.

ETH all exchange reserves are declining since September 2020. Source: CryptoQuant

Correlation risks

Ether's correlation with Bitcoin remains a bottleneck as ETH eyes further highs. Nevertheless, Josh Arnold, a financial analyst associated with Seeking Alpha, highlighted that Ether and Bitcoin are sometimes negatively correlated. A 0.64 correlation efficiency is not perfect.

Arnold instead focused on Ether's price chart structure, noting that the cryptocurrency formed a descending triangle pattern upon topping out in mid-May 2021. Descending triangles are typically continuation patterns that lead the prices in the direction of their previous trends after a small period of consolidation.

Descending triangle outlook based on Josh Arnold's trade setup. Source: TradingView

Arnold noted that Ether bulls need to hold Triangle support to maintain their upside bias or they would risk losing the market to bears. He explained:

"A descending triangle break to the downside would see Ethereum plumb new 2021 lows and try to find support again, but at much lower levels."

But given Ether's resilience against bears, Arnold anticipated that the cryptocurrency might end up rising higher. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin rebounds from $33K-support as US dollar inflation comes back into focus

Bitcoin moved inversely to the dollar at the beginning of this week as traders awaited the June CPI report due Tuesday.

Bitcoin (BTC) prices steadied on Tuesday after closing the previous session at a 3.41% loss, supported by a weakening dollar sentiment ahead of a key United States' inflation report due later today.

Spot BTC/USD exchange rate rose by a modest 1.31% to $33,096 after bottoming out on Monday at $32,996 on Coinbase exchange. The CME Bitcoin Futures was up 1.64% from its previous session's low of $32,600.

Bitcoin Futures reclaimed the $33,000-support after briefly flipping it late Monday. Source: TradingView

Meanwhile, the US dollar index was down about 0.03% ahead of the London opening bell. The index represents the greenback's strength against a basket of top foreign currencies.

Inflation data awaited

Bitcoin and the dollar moved inversely in the week of key inflation reports and a crucial congressional testimony from the Federal Reserve Chairman Jerome Powell.

On Tuesday, the US Consumer-Price Index (CPI) expects to post another significant spike in June, highlighting a run-up in inflation as the economy attempts to recover from the coronavirus pandemic slowdown. A Reuters poll of economists noted that the CPI might have increased by 0.5% from May and 4.9% from a year earlier.

Many traders bet on Bitcoin against the prospects of higher inflation, partly due to popular narratives that project the flagship cryptocurrency as a hedge against central banks' inflationary policies that hurt fiat currencies' purchasing power.

In detail, the Federal Reserve has been running a $120 billion monthly asset purchase program since March 2020 while keeping its benchmark lending rate near zero. As a result, the U.S. central bank's policies have doubled the size of its balance sheet to more than $8 trillion. Meanwhile, the same period has witnessed Bitcoin spiking by up to 1,528%—from $3,858 to almost $65,000.

The cryptocurrency declined by more than half by the said mid-April peak but sustained its overall bullish bias by relentlessly holding $30,000 as its psychological price floor. The support came extremely handy following the previous two CPI reports showing that inflation jumped to 4.2% in April and 4.9% in May.

"The uptick in the CPI readings is an indication that the economy has not healed completely from the pangs of the pandemic, and the crypto market is trailing the negative inflation figures," Gustavo De La Torre, director of business development at N.exchange, told Cointelegraph. He added that lower Bitcoin prices combined mixed economic outlook would drive more investors to accumulate the cryptocurrency.

"Should the buyup intensify, a price push up to $40,000 for Bitcoin may be seen in the short term," added De La Torre.

Consumer-price index through the years. Source: U.S. Bureau of Labor Statistics

Additionally, Konstantin Anissimov of CEX.IO warned about Fed's potential hawkish reaction to further inflation hikes, noting that it might prompt the central bank to unwind its bond-buying program and cut interest rates earlier than expected.

"As things stand, the Federal Reserve has increased the size of its balance sheet from early 2020 to more than $8 trillion — a substantial rise," Anissimov said, adding that lower crypto prices would keep serving as the right hedge against inflationary fears for the time being. He further noted:

"Both Bitcoin and Ethereum with the renewed buy-ups are likely to retest new price levels at $45,000, and $3,000, respectively."

Bitcoin enters accumulation

On-chain indicators continued to point towards an ongoing Bitcoin accumulation. As of the last week's close, as per Glassnode's data, entities with little history of selling continued piling up Bitcoin from weaker hands, while net exchange flows dipped into negative territory, suggesting that traders have been withdrawing their Bitcoin from trading platforms to hold.

Bitcoin supply held by whales with a balance of 1K-10K spiked as BTC trades near $30,000. Source: Glassnode

"Retail has been buying heavily for weeks now, but we finally got the uptick in whales that we were waiting for," noted Will Clemente, an independent market analyst.

"There were 17 new whales birthed on the blockchain this week, while at the same time the overall holdings of whales increase up by 65,429 BTC."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Synthetix hits one-month high as SNX rallies 25% ahead of layer 2 exchange launch

The SNX/USD exchange reached $13.76 on Monday for the first time since June 3.

Synthetix (SNX) prices reached a one-month high on Monday as traders looked for alternative upside bets against a mixed cryptocurrency market.

Bids for SNX/USD achieved an intraday high of $13.76 during the Asia-Pacific trading session, following an approximately 25% price rally that started Sunday. A flurry of technical and fundamental factors contributed to the sudden market demand for Synthetix tokens, including founder Kain Warwick's update on the project's much-awaited layer 2 solutions.

A new synthetic exchange underway

Layer 2 refers to the techniques for scaling blockchains by taking computation and transaction load from the parent layer and put them onto a base layer. Synthetix, an Ethereum-based synthetic asset platform, has been testing such scalability solutions since October 2020 to limit its dependency of Ethereum's higher gas and transaction fees model.

Last Saturday, more than 12 hours before the SNX/USD rate started rallying, Warwick announced Synthetix would launch a layer 2 exchange in the week beginning July 26. He also revealed Optimistic Ethereum (OΞ) has the underlying technology that would back the synthetic asset (or Synths) trading platform.

Synthetix posted a lagging rally after Warwick's layer 2 exchange announcement. Source: TradingView

"The initial Synths supported will be sETH, sBTC, and sLINK. In addition, the price feed for SNX will also be deployed by Chainlink," Warwick stated.

Optimistic Ethereum, formerly known as Plasma Group, proposes to scale Ethereum blockchain via a unique mechanism called Rollup. Rollups are Ethereum-based Smart Contracts that receive transaction data from the blockchain's main layer and send it to L2, where the computations take place. It then receives the computational result from the L2.

Rollups process more transactions than Ethereum's parent chain by compressing block sizes. Source: Messari

So far, the Optimism team has demonstrated that it could process more transactions with lower fees than Ethereum. Meanwhile, Synthetix has chosen to become one of the earliest Optimism adopters in anticipation that it would inspire other decentralized finance projects to adopt it as well.

"If other major DeFi protocols can adopt Optimism, all transactions between them will be able to remain on L2," wrote Will Comyns, a researcher at Messari, in his June 23 report.

"This means users will not have to wait an entire week for their funds to be integrated back on the Ethereum main chain before they can interact with another protocol."

So far, the "optimistic" fundamental has proved beneficial to raise the Synthetix prices. That is partly because SNX serves as a collateral token to create Synth. In return, stakers receive additional SNX on their staked amount through Synthetix's "inflationary supply" model. They also receive a fixed amount of fees in SNX on the trading of the Synth.

Golden cross

Synthetix's latest 25% pump has pushed its 20-day exponential moving average (20-day EMA; the green wave) above its 50-day simple moving average (50-day SMA; the blue wave). As a result, the 20-50 MA golden cross has been instrumental in predicting the price rally from November 2020 to March 2021.

The Fibonacci level confluence coupled with 20-50 MA crossover. Source: TradingView

Nonetheless, SNX/USD remains at crossroads with the $13.85-$14.80 resistance area, a range with a history of capping the pair's upside attempts, and which was also holding as support during its correction period between February and May 2021. Closing above the resistance area would have bulls test the following Fibonacci range of $16.37-$17.69.

Conversely, a sharp pullback from the $13.85-$14.80 would likely push SNX/USD towards the $11.92-$10.74 range. Such a move would also risk invalidating the 20-50 golden cross setup.

VORTECS™ data leaned bullish prior to SNX rally

Meanwhile, VORTECS™ data from Cointelegraph Markets Pro started rising 24 hours ahead of the Sunday rally, thereby detecting a bullish outlook for SNX  prior to the recent price rise.

VORTECS™ Score (transitioning from saffron to green) vs. SNX price. Source: Cointelegraph Markets Pro

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points, including market sentiment, trading volume, recent price movements, and Twitter activity.

As seen in the chart above, the VORTECS™ Score flashed green at midnight Sunday with a peak score of 79 — up from as low as 47 in 24 hours — with the price continuing to climb higher to $13.88 thereafter.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Strong Bitcoin accumulation spotted as BTC price refuses to fall below $30K

Glassnode data reveals that investors with a long-term risk outlook have started accumulating Bitcoin during its recent downtrend.

Bitcoin (BTC)  price remained relatively flat over the weekend, inching closer to $34,000 on July 11. Nevertheless, BTC/USD has tumbled by almost 50% from its all-time high, near $65,000 in mid-April. But the massive downside move has not deterred investors from betting on the digital asset's long-term bullish outlook.

According to one of the Glassnode metrics, dubbed as Liveliness, the Bitcoin market has been noticing a shift in long-term investors' "macro hodling behavior." Hodling represents crypto investors' ritualized response to market downtrends, a meme-driven investment strategy that originated from a drunken forum post in 2013 and typo. 

Meanwhile, Liveliness is the ratio of cumulative coin days destroyed to the cumulative sum of all coin days ever accumulated by the network. It varies between zero and 1, with zero representing the highest proportion of dormant Bitcoin supply, i.e., HODLing behavior. It shows that the global coin day accumulation has been outpacing coin days destroyed in on-chain activity.

Bitcoin Liveliness ratio signals accumulation phase. Source: Glassnode

Nonetheless, a higher degree of distribution does not necessarily predict bearish cycles. For example, between November 2020 and April 2021, the Liveliness Ratio increased alongside the Bitcoin prices, suggesting that despite lower HODLing behavior, the Bitcoin market did not enter a bearish phase. 

That could be due to massive spikes in trade volumes at the beginning of this year. In the first quarter, Bitcoin trading activity, on the whole, spiked to over $6 trillion, compared to $1.14 trillion in the fourth quarter of 2020, according to data obtained from Bitcoinity.

Monthly Bitcoin trading volumes. Source: Bitcoinity.org

Therefore, while the long-term holders started spending their Bitcoin between November 2020 and April 2021, higher trading volumes across all crypto exchanges show that retail demand absorbed the selling pressure. But by April, as analyst Willy Woo noted, the selling overran the normal bull market buying pressure.

Speculative participants started selling off their new coins to long-term holders, Woo wrote in a newsletter published on July 2 while referring to a so-called “Rick Astley” chart that studies Bitcoin flows between strong and weak hands. Excerpts:

"It’s very clear to see that long-term holders are mopping up the speculative coins at a strong pace. It’s now a waiting game until this is reflected in the price action, the data is confidently pointing to an accumulation bottom forming."
Bitcoin is moving from weak hands from strong hands. Source: Willy Woo Newsletter

Bitcoin holds $30K

A spike in Bitcoin accumulation sentiment appears as the cryptocurrency continues to maintain its bullish bias above a strongly-held $30,000-support level. 

Bitcoin trend remains stuck between $30,000 and $40,000. Source: TradingView

The BTC/USD exchange first dropped to $30,000-level on May 19, during the overall cryptocurrency market crash. Since then, the pair has tested the price floor at least four times, only to witness a strong upside rebound later. That has made $30,000 a psychological support level, which, if broken to the downside, risks crashing the Bitcoin prices to as low as $20,000.

Joel Kruger, a forex strategist at London-based investment management group LMAX, noted earlier this week that Bitcoin could revisit $20,000, for it remains under the pressure of global market sentiment. The analyst was referring to the latest meltdown in stock markets, on worries linked to the spread of the Delta variant of Covid-19.

"It would be foolish to rule out the possibility for a drop back below the June low, and we think there would be a risk in that scenario where the #Bitcoin price could revisit the old record high area around $20,000," he added.

"But at that stage, we see the market very well supported."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin price is 3–4 weeks away from new $24K–$29K range, market analyst warns

The bearish outlook surfaces as Bitcoin prices form a classic cup and handle pattern, now in the last stage of its maturity.

Popular cryptocurrency trader Keith Wareing warned Bitcoin (BTC) traders about a critical bearish scenario brewing in the market.

The trader spotted Bitcoin inside an inverse cup-and-handle pattern earlier this month, a bearish structure that forms during a price wave downward, followed by a stabilizing period. The technical design typically leads the price lower by as much as the size of the previous decline.

Bitcoin topped near $65,000 in mid-April before reversing to the downside in later sessions. The cryptocurrency crashed to as low as $28,800 on June 22 after attempting to keep prices above $30,000 repeatedly. It successfully did so but fell short of extending its bullish reversal momentum after facing comparatively higher selling pressure in the $35,000–$36,000 range.

Bitcoin cup-and-handle pattern visualized. Source: TradingView, Keith Wareing

The pattern’s handle part appeared like it is nearing exhaustion, prompting Wareing to say that Bitcoin’s price would fluctuate inside the structure for another three to four weeks. After that, the cryptocurrency would rally lower, insomuch that it could hit $24,000.

“If the handle breaks down, expect 24k -29k to be the new range. [...] 3-4 more weeks of range-bound imo,” Wareing wrote in an update on Friday.

Negative outlook throughout riskier assets

Bearish warnings for Bitcoin picked up momentum in the weeks after global regulators increased their crackdown against the cryptocurrency sector. For example, in China, the central bank effectively banned all forms of crypto-related activities, including mining, one of the few surviving crypto industries following Beijing’s restriction on cryptocurrency trading in 2018.

Meanwhile, Binance, the world’s leading cryptocurrency exchange by volume, came under pressure from regulators in the United Kingdom, Thailand, Canada, Japan, and Cayman Islands over its sprawling crypto operations.

The U.K.’s Financial Conduct Authority banned Binance from regulated financial activities last month. That prompted Barclays, Faster Payments and Santander to block its banking customers from accessing Binance.

Bids for BTC/USD also went down alongside traditional markets on rising concerns about the global economy primarily after days of sharp moves in sovereign bonds hinted at slower growth and inflation than previously anticipated.

“We are seeing an asset allocation change with people selling risky assets across the board and buying into the safer returns of government bonds,” noted Shaniel Ramjee, senior investment manager at Pictet Asset Management, after yields on the 10-year United States Treasury note fell to as low as 1.276% on Thursday for the first time since February 2021.

Yields drop when bond prices rise.

Bitcoin shows erratic positive correlation with the U.S.10-year Treasury note yields. Source: TradingView

Clem Chambers, CEO of financial analysis service ADVFN, suggested that bulls should wait for a crash before dipping their toes in the Bitcoin market again, noting that the next best accumulation opportunities appear when the cryptocurrency dumps to $20,000.

Nevertheless, bulls remained hopeful that Bitcoin’s growing recognition in the mainstream space, especially against the persistent fears of higher inflation, would take the cryptocurrency out of its bearish slumber.

“Bitcoin has been trapped for most of the last 3 weeks in a long and tight (8%) trading range $32,500-$35,000,” said Ronnie Moas, founder of Standpoint Research.

“I see 20% downside [on] China, GBTC lockup, or some other negative headline [but] 150% upside between now and the year-end on an exchange-traded fund approval, some other positive headline, [and] supply-side shock.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

FLOW faces 20% crash risk after intraday pump-and-dump

A recent rundown in the FLOW market has activated a bearish technical pattern, risking huge declines in the sessions ahead.

FLOW prices slipped on Thursday as traders unwind their bullish bets from the lately bullish digital assets.

The FLOW/USDT exchange rate lost up to 15.22% New York morning, a sharp reversal from Wednesday when the pair closed at a one-month high of $16.99 following a 43.87% rally. However, it continued its upside momentum in the early Asia-Pacific session, hitting $18.44 before correcting lower.

Thursday's selloff in the FLOW market was broad-based and came in sync with a massive downside correction in the cryptocurrency market. For instance, Bitcoin, the flagship cryptocurrency that typically influences its digital asset rivals, plunged more than 5% in the previous 24 hours. The second-best Ethereum dipped more than 8% in the same timeframe.

Top-10 token performances in the previous 24 hours. Source: Messari

All and all, the cryptocurrency market was down $52 billion on a 24-hour adjusted timeframe as of 15:52 UTC.

FLOW forms classic bearish pattern

More downside risks for FLOW appeared on an occurrence of a potentially bearish chart pattern dubbed as Head and Shoulders.

In detail, Head and Shoulders are bearish reversal structures that appear as a baseline—a.k.a. neckline—with three peaks. The middle peak is higher than the other two. The smaller peaks are more or less of the same height.

Traders usually fill their order below the neckline by calculating the downside target based on the high point of the head to the neckline. The distance is approximately how far the price could move after it breaks below the neckline.

FLOW's head and shoulder setup (red peaks) with downside target (lower purple level). Source: TradingView

FLOW appears to tick all the boxes so far, as shown in the chart above. The cryptocurrency formed a middle peak—the head—above $18 and the other two—the shoulders—within an approximately half a cent range of one another. Meanwhile, $14.522 served as a neckline.

The price broke below the support level with a slightly higher volume and continues to move lower into the U.S. session. Its profit target, as per the Head and Shoulder's technical description, should be near $11.567, based on the percentile distance between the head and baseline (~20%). 

On the daily chart, the path of least resistance also looks skewed to the downside.

A downside correction towards short-term moving averages look possible. Source: TradingView 

FLOW/USDT holds $13.6682 as its last line of defense as its relative strength index shows signs of correction after closing in towards its overbought level (70). Should the selloff continue owing to market-wide bearish pressure, the pair's next support levels would appear near its 50-day simple moving average (50-day SMA; the blue wave) and the 20-day exponential moving average (20-day EMA; the green wave).

The FLOW's 50-day SMA SMA is currently around $11.78 and its 20-day EMA is near $11.22. Its head and shoulder's downside target is right in the middle of the said moving averages.

Conversely, holding $13.6682 as support would increase FLOW's potential to retest $18.42 as resistance, followed by an extended upside move towards the $22.62-26.11 range.

VORTECS™ Score flipped green 

VORTECS™ data from Cointelegraph Markets Pro meanwhile detected a healthier outlook for the FLOW market prior to the rally, with its overall trade volumes and Twitter activity up by 520% and 269%, respectively. 

FLOW VORTECS™ Score (green) vs. FLOW price (white). Source: Cointelegraph Markets Pro

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points, including market sentiment, trading volume, recent price movements, and Twitter activity.

The VORTECS™ Score is currently relatively high at 78 and previously flipped green when rising from 63 to 64 early on July 8 hours before the price spiked to over $18.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin price at risk of $30K retest following bearish triangle breakdown

An overnight crash in the Bitcoin spot market Wednesday brought prices down from $35,077 to $32,250.

Bitcoin’s (BTC) price looks poised to retest $30,000 as traders continued to pull back from upside bets on a spell of a bearish technical pattern.

Dubbed as a Symmetrical Triangle, the structure forms when an asset fluctuates between two converging trendlines.

In doing so, the asset rebounds after testing the Triangle’s lower trendline as support and pulls back upon treating the upper trendline as resistance. Eventually, it breaks out of the range, in the direction of its previous trend, and falls by as much as the maximum distance between Triangle’s upper and lower trendline.

Why $30,000?

Bitcoin was trending inside a similar Triangle-like consolidation pattern until it ultimately broke below the structure’s lower trendline. As a result, the flagship cryptocurrency’s probability of shifting its downside target near $30,000 increased. That is partly because the structure’s maximum height was shy of $2,550, and subtracting it from the point of breakout (~$33,878) lands the price objective near $31,308.

Bitcoin formed a sequence of bearish and bullish reversal structures as it consolidated between the $30,000–$40,000 price range. Source: TradingView

The bearish setup also surfaced as Bitcoin tested $32,334 as its interim support in Thursday’s early London session. A minor bounce ensued that took the price above $32,600. However, the rebound lacked additional upside conviction owing to a bearish divergence between prices and volumes, suggesting that Bitcoin might resume its trend to the downside.

Peter Brandt, chief executive of Factor LLC — a global trading firm — also suggested a decline toward $30,000, albeit using a different indicator. The veteran trader spotted BTC/USD exchange rates inside a rectangular pattern, a price block that has lately been keeping Bitcoin in a medium-term bias conflict.

Bitcoin stuck inside a rectangle. Source: Twitter/Peter Brandt

The price traded midway through the rectangle upon pulling back from its upper trendline resistance. Such a move typically prompts the spot BTC/USD rate to fall toward the lowest rectangle support level, which coincided with $30,000.

Fundamentals

Unsupportive macroeconomic fundamentals, in part, fueled the latest Bitcoin price drop.

The primary among them was the minutes from the Federal Reserve’s gathering that came out Wednesday around 14:30 EST. As expected, the United States central bank officials suggested that they might end up pulling back their support of the economy sooner than they had expected.

“Various participants mentioned that they expected the conditions for beginning to reduce the pace of asset purchases to be met somewhat earlier than they had anticipated at previous meetings in light of incoming data,” the minutes read.

The Federal Reserve's new dot plot expects rate hikes in 2023. Source: Bloomberg

Bitcoin tends to benefit from loose monetary policies.

The cryptocurrency surged from as low as $3,858 in March 2020 to as high as $65,000 in mid-April 2021 as the Fed slashed its benchmark lending rates to near zero, thus affecting the U.S. dollar’s purchasing power, and started buying government bonds and mortgage-backed securities at the rate of $120 billion per month, pushing down yields.

For clarity, central banks’ asset purchase programs cause inflationary pressures, for they expect to monetize a part of the government’s deficit spending. Such purchases tend to inflate prices of equities and fixed-income investments. Coupled with cheaper lending, the loose monetary programs increase fiat liquidity in the system, boosting Bitcoin’s “superior store of value” narrative against an unlimited dollar supply.

As a result, investors started shifting to riskier safe-haven assets, including Bitcoin, to seek better returns. But as soon as the fears of the Fed’s tapering grew over markets, Bitcoin started declining. On Wednesday, Bitcoin’s move lower from above $35,000 came right after the central bank’s minutes went public.

Bitcoin reacts negatively to the Fed's June minutes. Source: TradingView

John Miller, a financial analyst associated with Seeking Alpha, noted that the Fed’s hawkish notions offset chairman Jerome Powell’s aim to ensure strong long-term monetary accommodation. In the latest minutes as well, Powell called the U.S. economic recovery weak, citing weak job growth in June.

“The Fed’s accommodative balance sheet policy will continue to support elevated liquidity in the banking system and backstop asset prices,” Miller wrote.

“Cryptocurrencies and crypto assets with strong store of value dynamics, such as Bitcoin, will excel in this environment.”

Alexey Veledinskii, product owner at cryptocurrency spot and derivatives exchange Digitex, anticipated Bitcoin to hold $30,000 on persistent inflation concerns. He said:

“Major support at $30,000 can easily be flipped with a rebound to more ambitious price points toward $50,000 to $70,000 in the mid to longer-term.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Are KuCoin Shares overvalued after KCS price gains 100% in one month?

The 72nd-largest cryptocurrency by market cap reached its two-month high amid a rally across exchange-based digital assets but faces downside risks due to overvaluation and thin volumes.

KuCoin (KCS) prices ticked up in the early Wednesday session on July 7, in part because of an ongoing market rally across the top exchange-based utility tokens.

The 72nd-largest cryptocurrency peaked for the day at $14.847 before correcting lower on interim profit-taking sentiment. The move downside accompanied decent volumes, alerting that the sell-off momentum could continue across the European and the U.S. sessions.

The selling sentiment appeared higher around $15, a concrete resistance level from the April-May session. Source: TradingView

At the time of writing, the KCS/USDT exchange rate was approximately $14, up more than 100% on a month-to-date timeframe (MTD).

Therefore, KuCoin's bearish correction appeared as an attempt to neutralize its overextended upside momentum. The cryptocurrency's relative strength index (RSI) on one-day charts popped above 70 following its latest price spikes, a reading that technical terms the underlying asset as "overbought."

The RSI continues to float above 70, alerting about KuCoin interim downside risks before it attempts to break above the technical resistance around $15 (as shown in the chart above).

Bullish setup

Conversely, the price breaking out of a descending channel range to the upside raised its prospects of extending the bullish move further higher. As the charts below illustrate, KCS trended lower while fluctuating inside a falling range—this pattern appears like a Falling Wedge

Falling Wedges are bullish reversal patterns. They come into the picture when an asset's price action forms a conical shape while sloping down and forming at least two reaction highs and lows. Adjusting the KCS/USDT's lower trendline move makes a similar descending structure.

KuCoin Falling wedge setup. Source: TradingView.com

Falling Wedge breakouts are technically skewed to the upside. Therefore, KuCoin's latest resistance break, coupled with a spike in volumes, can be called a bullish breakout, with its profit target lurking near $19.751 (situated as far as the maximum Wedge height).

Fundamentals

KCS's upside move, on the whole, appeared as a part of an overall price rebound across the exchange token markets.

Exchange tokens rally in tandem, except SUSHI. Source: Messari

Nonetheless, KCS markets showed strikingly lesser volumes in the previous 24 hours compared to its exchange-token rivals. For instance, the second-to-worst volume logged by an exchange token was roughly $620,000 (see Unus Sed Leo in the chart above). On the other hand, KuCoin's 24-hour adjusted volume was $63,531.

Thin volumes mean that there were fewer numbers of KCS tokens trading. In turn, there was a lower KCS liquidity across the markets. As a result, an asset's price volatility rises in a low volume market and makes it susceptible to the wilder upside and downside moves.

The popular analogy serves as additional headwinds for KuCoin bulls as they attempt to claim the Falling Wedge's profit target.

KuCoin Shares, or KCS, serves as a utility token on the KuCoin exchange. The platform uses KCS to reward users for using its services, similar to how Binance deploys BNB as a measure to offer users discounts on trading fees. Holders of KCS, meanwhile, also receive a daily dividend, i.e., a KuCoin bonus, which equals 50% of the trading fees on the exchange.

As KuCoin moves to become a fully decentralized platform, it plans to use KCS for transaction fees. The exchange also intends to buy back and destroy half of KCS's 100 million supply cap. The funds to facilitate the buyback, again, comes from KuCoin's trading fees.

VORTECS™ data from Cointelegraph Markets Pro also began to detect a bullish outlook for KuCoin Shares price hours ahead of the July 7 rally.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

KuCoin Shares VORTECS™ Score (green) vs. KCS price (white). Source: Cointelegraph  Markets Pro

As seen in the chart above, the VORTECS™ Score flashed green on July 6, 21:55 UTC, with a score of 65 with the price continuing to climb higher above $11.27. KuCoin-related tweet volume queries also surged by 1,246.31% over the past 24 hours.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin analyst says ‘supply shock’ underway as BTC withdrawal rate spikes to one-year high

The supply shock is being unnoticed, similar to Q4 2020 before the price of Bitcoin skyrocketed, says Willy Woo.

As Bitcoin (BTC) continues trading sideways inside the $30,000–$40,000 range, new data is emerging about the potential for a bullish breakout.

Is Bitcoin silently readying for a breakout like in Q4 2020? 

Willy Woo, an on-chain analyst, anticipates a potential supply shock in the Bitcoin market, as long-term holders continued raking BTC supply from short-term ones. Woo stated in his Friday newsletter that the process might push more Bitcoin out of circulation.

The analyst referred to the ratio of Bitcoin held by strong hands versus weak hands — also known as Bitcoin Supply Ratio — noting that the former is actively absorbing selling pressure from whales who have been dumping their crypto holdings since February.

BTC's availability on exchanges is declining with respect to the supply (blue), leading to a supply shock (green). Source: Woobull

“It reminds me of the supply shock that went by unnoticed by the market in Q4 2020,” wrote Woo. “Pundits were debating whether BTC was an inflation hedge in a post-COVID world when the data was pointing to long term investors stacking BTC at a fast pace.”

“The price subsequently went on a tear, very quickly de-coupling from its tight correlation with stocks.”

New active users rising

Glassnode, another on-chain data analytics service, also boosted Bitcoin’s booming adoption prospects. The portal revealed that the Bitcoin network has been onboarding an average of 32,000 new users every day, which is a new high for 2021.

Bitcoin network user growth metric reflects rising adoption rate. Source: Glassnode

The Bitcoin Network User Growth metric last topped in January 2018, hitting approximately 40,000 before correcting lower alongside the prices. It showed that new users stopped coming to the Bitcoin network as its price crashed from the $20,000 top in January 2018 to as low as $3,200 in December 2020.

“This is not the structure we are experiencing right now,” explained Woo. “New users are taking this opportunity to buy the dip; they’re coming in at the highest rate seen in 2021.”

“Again, another example of on-chain data showing divergence to the price action.”

Bitcoin is currently stuck below $34,000 at publishing time, up 17.52% from its previous bottom level of $28,800 on June 22.

Meanwhile, Petr Kozyakov, co-founder and CEO of crypto-enabled payment network Mercuryo, believes that Ether (ETH) may steal the limelight from Bitcoin in the near term as the London hard fork approaches.

“The proposed launch of the London Hard Fork upgrade and the ultimate migration to Ethereum 2.0 is helping to renew investors’ confidence,” he added. “Once the hype settles, Bitcoin could move up to $50,000 in the short-to-medium term perspective.”

Bitcoin withdrawal transactions hit one-year high

Data analytics firm CryptoQuant reported earlier Tuesday that Bitcoin’s net outflow transaction count from spot exchanges crossed the 60,000-mark for the first time in a year. Meanwhile, the total number of Bitcoin deposits to spot exchanges’ wallets decreased to below 20,000.

Bitcoin spot exchange inflow and outflow transaction count. Source: CryptoQuant 

The BTC withdrawal rate jumped in the period that also saw regulators increasing their scrutiny over cryptocurrency trading platforms. For instance, the United Kingdom Financial Conduct Authority (FCA) has banned Binance — the world’s largest cryptocurrency exchange by volume — from operating regulated activity in the country “without the prior written consent.”

On Monday, Barclays notified its clients that they could no longer transfer funds to Binance, citing the FCA’s order. However, the London-based bank said clients could withdraw funds from Binance to their banking accounts.

Earlier on Tuesday, the People’s Bank of China also took action against a local company for allegedly trading cryptocurrencies on the side of their regular business activities. Beijing had effectively prohibited all kinds of cryptocurrency-related activities in May, effectively forcing the world’s largest crypto mining community in its regions to either shut down or move their operations abroad.

Generally, a run-up in Bitcoin withdrawal rates is seen as traders’ intention to hold the cryptocurrency instead of trading it for other assets, including rival cryptocurrencies and fiat money. Therefore, with overall BTC withdrawals hitting a one-year high, expectations remain higher as Bitcoin is preparing for another upside run on the so-called “hodling” sentiment.

But the total Bitcoin reserves held by exchanges have remained relatively stable since May, indicating that the latest spike in withdrawals has had little impact on the overall exchange balance as of Wednesday.

BTC balance on exchanges. Source: Bybt.com

It’s worth noting that exchanges’ BTC balances can differ greatly based on their geographical dominance.

For instance, trading platforms having association with China and Chinese traders reported declines in their Bitcoin balances. They include Binance, whose BTC reserves dropped by 7,214.97 units in the last week, and Huobi, which processed withdrawals of 4,398.63 BTC in the same timeframe. OKEx BTC balances dropped by a mere 1,357.53 BTC.

However, United States-based Kraken added 6,751.98 BTC to its vaults, the highest among the non-Chinese exchanges, in the previous seven days, while Coinbase’s reserves increased by 168.88 BTC.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

AAVE price hits 3-week high as ‘Aave Pro’ debuts for institutional lending

Aave's gains also coincide with a sharp upside momentum across the cryptocurrency market.

Aave hovered near its three-week high on Tuesday, helped by the prospects of its foray into the mainstream through the launch of an institutional lending platform.

Fundamentals

Dubbed as Aave Pro, the platform expects to become a "permissioned liquidity protocol" by offering institutions, corporates, and fintech clients access to decentralized finance (DeFi). That said, it would follow strict regulations while onboarding participants, ensuring that their Ethereum addresses are safe-listed following a thorough know-your-customer process.

“We will have different kinds of permissioned markets so that DeFi will be more layered and tailored to specific needs," Stani Kulechov, the founder of Aave, said during the online discussion event “Next Steps for Institutional DeFi.”

"The ability to whitelisting and blacklisting addresses would make it easier to scale institutions because it lowers the risk.”

Aave Pro will go live in July with liquidity pools of Bitcoin (BTC), Ether (ETH), USDC, and its own token AAVE.

Bulls responded positively to Aave's institutional adoption. As soon as the rumor went live on July 4, the AAVE/USD exchange started trending upwards, insomuch that it crossed $344 for the first time since June 14. At its second-quarter low, the pair was changing hands for approximately $165—that marks a 108% jump.

The massive upside move also took cues from a market-wide retracement trend. Bitcoin, the world's leading cryptocurrency by market cap, climbed approximately 25% after bottoming out at $28,600 on June 22. The same date saw AAVE/USD falling to $165, which later led to a 108% bullish correction.

Aave and Bitcoin prices almost moved in sync after they bottomed out on June 22. Source: TradingView.com

Bitcoin trends typically prompt alternative cryptocurrencies, including AAVE, to move in the same direction. Nevertheless, AAVE's bias in the previous five days was consistently skewed to the upside while Bitcoin struggled to maintain support above $35,000. That could have been due to Aave having better interim fundamentals than its top digital asset rival.

Scott Melker, the author of the crypto-focused Wolf Den newsletter, noted Aave attracting massive capital inflows from the Bitcoin market via liquid instrument AAVE/BTC. As a result, the pair grew 74.75% to reach 9,800 sats this Tuesday after finding support at 5,608 sats on June 27.

AAVE/BTC could hit 10,593 sats in the coming sessions. Source: Scott Melker, TradingView.com

Melker's setup envisioned AAVE/BTC above 10,000 sats.

Technicals

Technically, AAVE/USD appeared in a flying zone after breaking out of a bullish pattern.

The pair earlier fluctuated between two converging trendlines that together formed a falling wedge structure. Falling Wedges begin wide at top but contract as the price moves lower. Their bullish confirmation come only after the price breaks above the resistance trendline in a convincing fashion, with higher volumes.

In doing so, Falling Wedges' price breakouts set profit-target above by as much as the maximum height between their upper and lower trendlines.

AAVE/USD falling wedge setup. Source: TradingView.com

Aave's recent price action fits the falling wedge description so far. The cryptocurrency is now in a breakout stage while eyeing $542 as its profit target.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ethereum price can gain 40% on Bitcoin, argues analyst as London fork nears

Technical setups, coupled with optimistic fundamentals, project Ethereum, would rise sharply against Bitcoin in the coming weeks.

Ether (ETH) could rise by almost 40% against Bitcoin in the coming trading sessions, according to one analyst. 

So believes Michaël van de Poppe, an Amsterdam-based market analyst who predicts that the ETH/BTC exchange rate would climb from its current 0.05-0.06 sats range to as high as 0.07 sats soon.

The technical chartist based his bullish analogy on the pair's support level at 0.063 sats. The price floor was instrumental in maintaining ETH/BTC's bullish bias during the mid-May 2021's notorious crypto market crash. It also served as solid support during the pair's uptrend in the early May 2020's trading session. 

"Ethereum is continuing the run against the Bitcoin pair," said Van de Poppe.

"A beautiful flip of the 0.063 regions and crawling upwards at this stage. As long as 0.063 holds, I'm expecting continuation to 0.075."
Ethereum trade setup presented by Michaël van de Poppe. Source: TradingView.com

What the Fork

The bullish analogy appeared right as ETH/BTC stretched its price rebound, from its June 27 low of 0.0552 sats, by 21.28%. It showed that more traders preferred to sell their Bitcoin holdings to seek opportunities in the Ethereum market in recent days. On a year-to-date timeframe, the second-largest cryptocurrency had already surged by more than 160% against Bitcoin.

The transition took cues from the euphoria surrounding Ethereum's consensus layer's transition from its previous, energy-intensive proof-of-work to a more scalable and cheaper proof-of-stake. The project launched the first phase, called Phase 0 or Beacon Chain, in December 2020. It introduced a so-called sharded network architecture to the Ethereum blockchain.

Sharding is a scaling technique that segments the Ethereum network into various groups (called shards). It then assigns nodes to each shard. These nodes have to monitor and validate their respective shards, thereby removing the need for each node to validate every transaction, which is the case in the current proof-of-work consensus.

The next phase that brings Ethereum closer to proof-of-stake is EIP-1559, also known as the London hard fork. The upgrade proposes to replace Ethereum's "first-price auction" fee model with a base network fee, modifiable per the network's demand. It hopes to solve the blockchain's higher gas and transaction fee problem. It also aims to make ETH a deflationary token by burning the base network fee.

Therefore...

Due to impending scarcity, analysts and traders see huge upside potential in the Ethereum market. The bullish formula is simple: Ether's drying supply in circulation against rising demand would make it more valuable than it is currently. And as a result, the cryptocurrency has been rising against Bitcoin so far into 2021.

Additionally, CryptoQuant, a South Korea-based crypto analytics firm, reported a rising holding behavior among Ether traders, taking cues from their declining ETH reserves across all the cryptocurrency exchanges.

Ether prices typically move inversely to its reserves across cryptocurrency exchanges. Source: CryptoQuant

The amount of ETH held in all exchanges' wallets reached a 2.5 year low on Monday.

The reduction of Ether on exchanges is clearly a positive indication that takes backing from investor’s trust in the future of the blockchain, Yuriy Mazur, head of data analysis department at CEX.IO Broker, explained.

The executive added that investors are taking alternative means to secure their ETH holdings during its price correction instead of dumping them outright for cash. He cited ETH-based investments into the decentralized finance sector as the prime example.

"Ethereum total value locked has soared in the past year. Staking in the forthcoming Ethereum 2.0 (Proof-of-Stake consensus model) has also absorbed the ethereum leaving trading platforms," Mazur said, adding that:

"The depletion of Ether on exchanges will contribute to a circulation scarcity that can have a positive impact on price."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

SNX hits multi-week highs as total value locked on Synthetix approaches $1 billion

However, SNX withdrawals from Synthetix pools picked up momentum during the price boom.

SNX spiked to its three-week high on Monday in reaction to a market-wide upside correction led by Bitcoin (BTC) and other top-cap digital assets.

The Synthetix project's native token reached $9.59 after rising four days in a row by up to 50%. That included a sharp 18.29% upswing in the previous daily session, sparked by Bitcoin's climb above its key resistance level of $35,000. Altcoins tend to tail the flagship digital asset's price trends.

Synthetix and Bitcoin price moves in the recent sessions. Source: TradingView.com

But more factors were in play during the SNX's comparatively higher price boom. Its jump appeared as speculators returned to bet bullishly on the overall decentralized finance (DeFi) ecosystem. The seven-day adjusted timeframe saw almost every top DeFi coin posting double-digital gains, including Uniswap (~16%), Aave (~24%), Compound (39.37%), amongst many others.

SNX/USD surged about 31% in the previous seven days.

Synthetix was among the only DeFi coins in profits based on a 24-hour adjusted timeframe. Source: Messari

Ether (ETH), which hosts most DeFi projects atop its public blockchain, also saw its ETH token rising by more than 10% in the previous seven days.

VORTECS™ data turned bullish prior to new SNX price highs

Meanwhile, VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for SNX in early July, prior to the recent price rise.

The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

VORTECS™ Score (green) vs. SNX price. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score flashed green on July 4 with a score of 64 with the price continuing to climb higher above $9.

Synthetix TVL approaches $1 billion

The 50% upside move in the SNX markets also pushed the total value locked inside Synthetix pools to $11 million shy of $1 billion. Nevertheless, as the TVL reserves rallied in terms of the U.S. dollar, they declined on the SNX token basis, dropping by almost 5 million units from the July 1 high of 116.25 million units.

SNX locked in Synthetix pools decline as price rallies. Source: DeFi Pulse

In detail, Synthetix is a decentralized synthetic asset platform that provides blockchain exposure to traditional assets, including currencies, commodities, stocks, and indices. The platform requires users to lock its native token SNX as collateral into its smart contracts to back its synthetic assets (Synths). These Synths track prices of various assets, which allow crypto users to trade peer-to-contract on Synthetix Exchange.

Additionally, users have to burn the portion of their Synths as debt when they wish to unlock their SNX. At its all-time high, in December 2020, the Synthetix smart contract had 168.37mm SNX tokens. The holdings fell to as low as 96.54 SNX tokens in February 2021. Since then, the deposits have been rising, albeit not in a straight line.

Part of the reason behind rising Synthetix TVL could be higher annualized percentage yields (APY). For example, the SNX staking returned users with 39.30% APY as of Monday, using Synthetix's inflationary supply model. Thus, SNX yields come out to be much higher than a traditional yielding asset (the U.S. 10-year Treasury note returning only were limited to 0.502-1.778% in the previous 52 weeks.)

SNX staking APY (with sUSD and SNX as base unit) is at 48.64% per annum. Source: Synthetics Official Website

SNX technical outlook

The latest SNX pump has pushed its prices above a classic technical range defined by $7 support and $8.5 resistance. Historically, SNX/USD have twice tested the area as resistance but was managed to break only once in December 2020-January 2021.

The Sythentix token eyes a breakout above $10.54. Source: TradingView.com

A breakout from the range puts SNX/USD en route to the next level of resistance near $10.54, which coincides with the 23.6% Fib line of the Fibonacci retracement setup drawn from a $27.172-swing high to $5.40-swing low. The $10.54 is near the SNX's 50-day simple moving average (50-day SMA; the blue wave), creating a strong resistance confluence to cap the pair's potential upside attempts.

Conversely, a breakdown below the $7-8.5 range risks crashing SNX back to its previous sessional low of $5.40.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin fractal setup from 2019 hints BTC price can rebound back to $50K

The ongoing Bitcoin downside correction is strikingly similar to its price action in June-December 2019.

Bitcoin (BTC) faces the prospects of reaching $47,500-$50,000 based on its current trend's eerie similarity with the one in June through December 2019.

2019 Bitcoin fractal

In detail, Bitcoin topped out around $14,000 on June 26, 2019, before turning lower for the remainder of the year on profit-taking sentiment, and as well as FUD sparked by the Bitcoin Cash hardfork, Facebook's stand-off with regulators over its crypto project Libra, and then U.S. President Donald Trump and Treasury Secretary Steven Mnuchin's threatening tone on Bitcoin.

The flagship cryptocurrency crashed to near $6,500 in December 2019. In doing so, it prompted its 50-day simple moving average (SMA) to flip below its 200-day SMA, a phenomenon that technical chartists call a "death cross" and see its formation as a sign of extended sell-offs ahead.

But, at the same time, Bitcoin bulls held the price above the 50-week SMA. The cryptocurrency's one-day chart showed bears' attempts to crash the price below its 50-week SMA. But bulls bought those dips every time.

Willful buy actions near the 50-week SMA later led to a strong upside rebound towards the 61.8% Fib level that constituted a dropdown Fibonacci retracement graph, drawn from around the $14,000-swing high to approximately the$6,500-swing low.

Bitcoin 2019 price action. Source: TradingView.com

The 2019 fractal also illustrated at least two bullish divergence scenarios, wherein the Bitcoin price formed lower lows while its daily relative strength indicator, a price-momentum oscillator, made lower highs. It hinted weakness in the prevailing bearish momentum. And as it turned out, the price soared later.

2021

In 2021, Bitcoin reconstructed the 2019 scenario halfway. At first, the cryptocurrency's correction from its record high of nearly $65,000 landed BTC/USD right at the same 50-week SMA support around $30,000. At the same time, its move lower enabled a death cross setup.

Bitcoin's price action in the past week also hinted at a bullish divergence scenario, as shown in the chart below.

Bitcoin's April-June price action. Source: TradingView.com

TradingShot, a market analytics platform, noted that a bullish divergence formation, coupled with a rebound from the 50-week SMA support, could again send Bitcoin prices to the 61.8% Fib level of the current top-to-bottom Fibonacci retracement graph.

"The support of the 1W MA50 is key as it is being achieved despite Bitcoin being on Lower Lows (LL) while the 1D RSI is on Higher Lows (HL)," he explained.

"This is a Bullish Divergence and was also seen during October and late November-early Dec 2019. This divergence was enough to start the rebound to the 0.618 Fibonacci retracement level."
Bitcoin 2019 and 2021 fractal. Source: TradingShot.com

In a chart provided by TradingShot, the 61.8% Fib level appeared near $47,500. Meanwhile, the other chart above showed the profit target near $50,000.

Fundamentals

The statements appeared as Bitcoin closed its second quarter at a 41% loss, logging its worst declines since the 43% sell-off in the fourth quarter of 2018. The cryptocurrency's recent drop took cues from a flurry of negative fundamentals, including China's crackdown on the crypto industry, global regulators increasing their scrutiny, and as well as Elon Musk's anti-Bitcoin tweets.

Meanwhile, demand for Bitcoin also declined after the Federal Reserve's hawkish tone. The U.S. central bank announced that it might hike its benchmark interest rates by the end of 2023 to curb inflationary pressures, coinciding with a BTC/USD rate plunge on June 16 and afterward.

Despite strong headwinds, Bitcoin managed to float above $30,000, a psychological support level and is currently back above $35,000. However, the equally strong resistance level at $40,000 is keeping the cryptocurrency's short-term bearish bias intact.

"One expects that the longer we go without a $40,000-handle, eventually support is going to crumble and give way to a sharp move towards $20,000," Fawad Razaqzada, an analyst at ThinkMarkets, told the Wall Street Journal, noting that it leaves Bitcoin at crossroads in the third quarter.

TradingShot added:

"Have all the negative fundamentals priced in already? We can't know for sure but if they have, the Bullish Divergence on the 1D RSI definitely shows something."

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Is Bitcoin in danger of losing $30K with Grayscale’s big GBTC unlocking in two weeks?

Bitcoin prices remain under pressure in the $30,000-$40,000 zone as traders brace for the 16,000 BTC worth of GBTC shares unlocking in July.

Whether a potential sell-off of shares tied to a multi-billion dollar Bitcoin (BTC) investment fund could crash the cryptocurrency's spot prices has turned into a hotly debated topic among the analysts in the space.

Grayscale's premium remains negative for months 

The argument concerns Grayscale Bitcoin Trust, the world's largest digital assets manager that allows institutional investors to gain indirect exposure in the Bitcoin market through its product, GBTC. Investors purchase GBTC shares directly via Grayscale in daily private placements by paying in either Bitcoin or the U.S. dollar.

Nevertheless, investors can sell their GBTC shares only after a six-month lockup period in secondary markets to other parties. Therefore, they anticipate liquidating at a premium when the market price at the time of sale crosses above the native asset value (NAV).

On the other hand, liquidating GBTC shares when the market price has dipped below the NAV brings losses. So if investors decide to dump their GBTC holdings, they would have to do so for a financial casualty. That is because the share has been trading at a discount, i.e., under its NAV, since February 24, 2021.

GBTC premium has been negative for months. Source: ByBt.com

Some analysts, including strategists at JPMorgan, believe that accredited investors will sell at least a portion of their GBTC holdings after the July unlocking period, thus weighing further on the ongoing Bitcoin market downtrend.

“Despite this week’s correction, we are reluctant to abandon our negative outlook for Bitcoin and crypto markets more generally. So despite some improvement, our signals remain overall bearish," said Nikolas Panigirtzoglou, the lead strategist at JPMorgan, in a note to clients.

Nevertheless, other analysts believe that the event will flush sellers from the market in July, opening up both volatility and bullish potential to break new all-time highs.

Is Bitcoin price correlated to Grayscale unlock dates? 

It is the GBTC shares that were scooped up by investors at around 40% premium in December 2020, explained Panigirtzoglou. The month saw Grayscale Bitcoin Trust attractive inflows of $2 billion, followed by $1.7 billion in January.

That means about 140,000 Bitcoin worth of shares will get unlocked by the end of July. About 139,000 Bitcoin have already been released between mid-April to mid-June, a period that also coincided with spot BTC/USD's crash from around $65,000 to as low as $28,800.

Lyn Alden, the founder of Lyn Alden Investment Strategy, noted the correlation between the spot Bitcoin price crash and its Grayscale's GBTC unlocking periods, noting that the same could happen as more shares get unlocked in July.

Grayscale Bitcoin Trust Unlock dates. Source: Bybt.com

Alden hinted that the correlation pointed to a deceleration of Grayscale's "neutral arbitrage trade."

In arbitrage trade, institutional investors (like hedge funds) borrow Bitcoin to purchase GBTC shares. Then, after the lock-up expires, these investors sell GBTC shares to secondary markets to retail investors, typically for a premium. Then, they return the borrowed Bitcoin to their lenders and pocket the difference.

"Part of the run-up in the second half of 2020 was due to the Grayscale neutral arbitrage trade, sucking in a ton of bitcoin," Alden tweeted late Monday, adding:

"When ETFs and other new ways to access bitcoin made GBTC less unique, the premium went away, so the neutral arb trade went away."
Grayscale Investments stopped selling GBTC shares after February 2021. Source: ByBt.com

But, according to David Lifchitz of ExoAlpha, arbitrage strategy might have contributed to but did not cause the Bitcoin price plunge.

The chief investment officer noted that the real GBTC arbitrage trade strategy is for investors with deep pockets. That is because they would require to hold the short Bitcoin position during the GBTC lockup period — the overtime costs would risk offsetting the price differential that was arbitrage away.

"And for the simple buyers of GBTC shares at a discount vs. BTC who didn't sell short BTC against, their profit depends on the price at which they bought GBTC: if they bought between $40K and $60K, they are in the red today... and may not want to sell just yet and lock-in their loss," he told Cointelegraph.

Michael Sonnenshein, the chief executive of Grayscale, told Barron's that investors buy the GBTC shares with a medium- to long-term outlook. So they might not want to dump their holdings immediately upon its unlocking.

Sonnenshein added:

“I would generally say that investors certainly are going to think about where the price of the shares is, relative to net asset value or relative to Bitcoin before they would think about getting any liquidity.” 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin’s key momentum metric hints at bullish divergence as BTC clings to $33K

The RSI is seeing higher lows after rebounding from its oversold areas as Bitcoin price is forming lower lows.

A recent run-down in the Bitcoin (BTC) market faces the prospects of exhaustion before confirming a full-fledged bearish breakdown, so reflects a classic momentum-based oscillator.

RSI forming higher lows

Dubbed as Relative Strength Index, or RSI, the indicator measures the speed as well as change of directional price movements. It operates within a set range of numbers—between 0 and 100. The close is RSI to 0, the weaker is the price momentum. Conversely, an RSI reading near 100 reflects a period of strong momentum.

The range also helps determine an asset's buying and selling opportunity. In detail, an RSI reading below 30 means the asset is oversold, thus an attractive buy. Meanwhile, RSI above 70 shows an overbought asset, meaning its holders would eventually sell it to secure profits.

The RSI also enables traders to spot buying/selling opportunities based on divergences between the price and the momentum. For example, when price makes a new low but RSI makes a higher low, then it is considered a buying signal—a bullish divergence. Conversely, a Bearish RSI Divergence appears when price makes a new high but RSI makes a lower high.

So it appears, Bitcoin is confirming a bullish divergence.

Independent market analyst CryptoBirb spotted the price-momentum deviation on Bitcoin's one-day chart. In there, the pseudonymous entity noted BTC/USD forming a sequence of lower lows around the same period its RSI climbed while forming higher lows.

Bitcoin price dips against a rising RSI. Source: TradingView.com, CryptoBirb

The statement appeared as the BTC/USD exchange rate corrected lower after forming a local top at $36,675 on June 29. However, as of the Friday London session, the pair was trading below $33,000. The RSI fell in tandem with the latest downside move and was near 42 at press time, a neutral-to-bullish area.

Numerous headwinds for Bitcoin

Downside sentiment in the Bitcoin market persisted due to a flurry of pessimistic events. That included a global crypto crackdown that started with a ban in China in May and spread to the UK, India, South Africa, and the United States.

For instance, the Financial Conduct Authority banned the world's leading crypto exchange Binance from undertaking regulated activities in the U.K. Additionally, in India, Enforcement Directorate issued a show-cause notice to Binance's subsidiary exchange, WazirX, for facilitating money laundering.  

More headwinds appeared from hints of hawkishness from the Federal Reserve. The U.S. central bank surprised Bitcoin investors with its sudden intention to control inflationary pressures with eventual interest rate hikes in 2023. BTC/USD dropped by more than 28% after the Fed's big reveal but later recovered after finding credible support near $30,000.

Nonetheless, bulls kept failing at sustaining Bitcoin price uptrends above the $40,000-level. As a result, the cryptocurrency remains stuck inside the $30K-$40K range, showing no clear directional bias in the short term.

Bitcoin anticipates to retest its prevailing channel's support trendline following recent pullback. Source: TradingView.com

Konstantin Anissimov, executive director at CEX.IO, also noted that accredited investors have started maintaining distance from Bitcoin over its concerning environmental impacts. He added that mainstream interest in the cryptocurrency will return once miners switch to alternative sustainable energy options.

"When the environmental concerns are no longer a worry, many institutional investors are likely to trust the digital currency again, and as such buy more," Anissimov told Cointelegraph, adding:

Bitcoin has a near-term projection of $50,000 and a longer-term projection of $75,000.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Elon Musk’s latest attempt to pump Dogecoin fails miserably

Baby Doge, doo, doo, doo, doo, doo, Baby Doge, doo, doo, doo, doo, doo, Baby Doge, doo, doo, doo, doo, doo, Baby Doge.

Dogecoin (DOGE) prices surged but did not skyrocket after receiving another endorsement from Tesla CEO Elon Musk on Twitter on July 1.

The billionaire entrepreneur published a tweet at around 8:43 am UTC — a Godfather-themed meme that shows Marlon Brando's iconic character, Don Vito Corleone, with the text "YOU COME TO ME AT RUNTIME TO TELL ME THE CODE YOU ARE RUNNING DOES NOT COMPILE."

Meanwhile, Musk captioned the tweet "Release the Doge!"

Seconds after the tweet was posted, the DOGE/USD exchange rate surged from $0.24 to $0.261 — about 8.42%. A sell-off followed suit, which took the pair as low as $0.247. Just then, at 9:24 am UTC, Musk tweeted another gibbering message that read "Baby Doge, doo, doo, doo, doo, doo, Baby Doge, doo, doo, doo, doo, doo, Baby Doge, doo, doo, doo, doo, doo, Baby Doge."

DOGE/USD rose 5.22% to $0.260 after the second tweet.

DOGE price 1-minute candle chart. Source: TradingView

In the next couple of hours, DOGE/USD attempted to reclaim the intraday high of $0.261 on the Musk factor, but profit-takers kept offsetting their upside bias, as shown via the large minute-candle bullish wicks in the chart above.

Nevertheless, Dogecoin was still down by almost 0.5% around 12:00 pm UTC, hinting that Musk's influence on the cryptocurrency market is in decline.

Earlier this year, the Tesla CEO's whole-hearted endorsement of Dogecoin caused massive retail-led price spikes, so much so that the cryptocurrency's market cap peaked at almost $100 billion in early May.

At the time, the DOGE/USD exchange rate surged to its record high of $0.76.

The pair is now worth half of its value two months ago, primarily due to a significant crypto market correction that saw almost all the top-cap assets — including Bitcoin (BTC), Ether (ETH) and XRP — crash by more than 50% as well. Altcoins such as Dogecoin typically trade in sync with Bitcoin.

Baby Doge booms, meanwhile

While Dogecoin logged brief upside pumps, one of its copycat memecoins, Baby Doge Coin (BABYDOGE), climbed sharply after Musk's 9:24 am UTC tweet.

Baby Doge Coin's price is too low to calculate

Baby Doge Coin was worth around $0.00000001 before Musk's tweet but surged by more than 35% later. Nevertheless, the memecoin's value remained too low for even CoinMarketCap to calculate. Its market cap was also zero as of the time of publication.

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