Morning Crypto Briefing: BTC Consolidates Above $21,000, ETH in Mid-$1,100s Pre-Powell Testimony

Key Points 

  • Cryptocurrency markets are on course for a third successive session in the green and about 20% up from weekend lows.  
  • But Fed Chair Powell “could put the cat amongst the pigeons tomorrow” at his Congressional testimony, warns FX Empire’s Mason.  
  • The Bitcoin price was last consolidating just above $21,000, while the Ethereum price was in the mid-$1,100s.  

State Of The Market 

Cryptocurrency markets are currently on course to print a third successive session in the green, with total cryptocurrency market capitalization recovering and holding back above $900 billion at the time of writing on Tuesday, nearly 20% above the 18-month lows reached on Saturday just above $760 billion. Macro sentiment is upbeat ahead of the reopening of US markets following a long weekend (US markets were shut on Monday for Juneteenth). Major US equity index futures are tracking between 1-2% higher ahead of the open.  

Analysts at JP Morgan said in a note on Tuesday that they think the current crypto market share of stablecoins, which as of Tuesday was around 17%, looks “excessively high”, pointing to an oversold market and a potentially significant bounce from here. Back in April, analysts at JP Morgan successfully forecasted a short-term drop in non-stablecoin cryptocurrency prices given that they deemed the market share of stablecoins at the time to have dropped excessively low 7%.  

But many analysts remain unconvinced that a sustained recovery for crypto prices in the near term is likely, given the uncertain and worrisome outlook for the US and global economies. “There has been no catalyst to change the crypto winter narrative,” said FX Empire’s lead crypto analyst Bob Mason. “Inflation is unlikely to reverse to central bank targets any time soon, leaving the threat of a global recession on the table,” he said, noting that “technical indicators and the Fear & Greed Index are also sending bearish signals despite the prospects of a third consecutive day in the green”.  

In terms of near-term risk events, Mason highlights Fed Chair Jerome Powell’s two-day testimony before Congress this week as one for crypto traders to watch. “Powell could put the cat amongst the pigeons tomorrow when he delivers testimony on Capitol Hill,” Mason warns, adding that “between now and then, there are no major economic indicators due out for investors to fret over”.   

Bitcoin Consolidates Above $21K, Ethereum in Mid-$1,100s  

The world’s largest cryptocurrency by market cap Bitcoin was last trading around 3% higher on the day just to the north of the $21,000 level, roughly 20% above sub-$18,000 weekend lows. That gives the cryptocurrency a market cap of just over $400 billion at current prices, giving the cryptocurrency a market dominance of around 44.5% according to TradingView, well below earlier monthly highs near 48.5%. Despite being 20% up versus earlier monthly lows, BTC/USD remains on course to post a monthly loss of around 33%, which would mark its worst month since May 2021.  

Turning to the world’s second-largest cryptocurrency by market cap, Ethereum was last changing hands in the mid-$1,100 area, also higher by about 3.0% on the day and up more than 30% versus the 18-month lows it hit over the weekend under $900 per token. That’s an impressive recovery in the past three days, but like Bitcoin, Ethereum is on course to post hefty monthly losses that currently stand at above 40%. This would mark the cryptocurrency’s worst month since March 2018. At current prices, its market cap is around $140 billion.  

In terms of relevant Ethereum news; the Sepolia testnet’s Beacon Chain has gone live, setting the stage for a “practice” merge of Ethereum’s current Sepolia testnet (which achieves consensus using Proof-of-Work) to the Sepolia Beacon Chain. After the trial merge, the Sepolia testnet will achieve consensus using Proof-of-Stake (PoS) and provide key insights and data to Ethereum developers ahead of the planned merge of the mainnet to PoS later this year.  

Elsewhere in other notable news relating to major cryptocurrencies, Cardano’s Vasil hardfork, a network upgrade that will significantly boost the blockchain’s scalability scheduled for later this month, may be delayed. “After some consideration, we have agreed NOT to send the hard fork update proposal to the testnet today to allow more time for testing,” Cardano’s developers at Input Output Hong Kong (IOHK) said on Tuesday.  

“This puts us behind schedule on our previously communicated target date of June 29 for a mainnet hard fork,” the developers said. Nonetheless, the development team is “is extremely close to finalizing the core work, with just seven bugs still outstanding to complete the hard fork work, with none currently ranked as ‘severe’,” IOHK said.  

Cardano’s ADA token certainly doesn’t seem fazed and was last trading slightly to the north of the $0.50 mark, well within its range over recent weeks and around 20% above weekend lows around $0.42. In terms of other major altcoins, Binance’s BNB was last trading about 3% higher on the day just above $220 per token, also around 20% higher versus weekend lows. Solana’s SOL was last up closer to 8% on Tuesday and at 10-day highs in the $37s per token. Ripple’s XRP, meanwhile, was last trading with a slight positive bias around $0.33 per token.  

Crypto Winter Update: Sports Team Marketing Deals Shelved As Crypto Firms Tighten Purses 

Major crypto exchange FTX is rethinking its marketing plan that would see its name and logo appear on Los Angeles Angels jerseys, the NY Post reported on Monday. According to the report, FTX’s cold feet come after another undisclosed crypto firm shelved plans for a deal with the Washington Wizards just a few weeks ago. The NY Post quoted Columbia University sports management professor Joe Favorito as saying “what money hasn’t been spent already you’re going to see curtailed — just like we saw during the dot-com bubble”. Crypto firms shelled out an unprecedented amount of cash on sports sponsorship deals in 2021 whilst crypto markets were booming.  

Elsewhere, troubled crypto lending firm Babel Finance has reportedly eased some of its most immediate liquidity concerns after coming to an agreement regarding debt repayments to some of its major counterparties. The firm suspended the withdrawals and redemption of crypto assets deposited on its platform last Friday, amid a spate of similar moves made by other crypto lending/yield offering platforms including Celsius Network and Finblox. As recently as May, Babel had raised $80 million in a funding round that had valued the firm at roughly $2 billion.  

Exchange Update: Huobi Secures NZ, UAE Licenses, Bitpanda Expands Into Spain 

Huobi, one of the largest cryptocurrency exchanges in the world, has secured licenses to operate in New Zealand and the United Arab Emirates. However, its license in the UAE doesn’t permit it to trade but rather permits it to incentivize local tech startups. Meanwhile, Austrian crypto exchange Bitpanda has secured a license to operate as a virtual currency exchange and digital asset service provider in Spain, having successfully secured licenses in Italy and Sweden earlier in the year and France back in 2020.  

Other News: Ukraine Raises Further $100K With CryptoPunk NFT Sale, UK Ditches Controversial Private Wallet Rules 

The Ukrainian government has sold a CryptoPunk Non-Fungible Token (NFT) that it was donated back in March in the immediate aftermath of Russia’s invasion. The NFT was sold to an anonymous buyer for 90 ETH, worth around $100,000 at the time. That’s well below the NFT’s estimated value of around $260,000 at the time of donation, with the downside mostly due to the drop in ETH’s price since March. According to analysts, Ukraine has raised more than $135 million in crypto donations since Russia’s invasion.  

Elsewhere, the UK government has shelved plans to implement a controversial ruling that would require all senders of funds to private crypto wallets to collect identification details about the recipient. The UK Treasury said in a new report that it no longer thinks this data collection rule appropriate in all cases. “Instead of requiring the collection of beneficiary and originator information for all unhosted wallet transfers, crypto-asset businesses will only be expected to collect this information for transactions identified as posing an elevated risk of illicit finance,” the Treasury said. The ability to send and receive funds anonymously is one of the key values that underpin the crypto community’s view of a better world, something the UK Treasury seems to have clocked onto.