Morning Crypto Brief: BTC Slips to Mid-$20Ks, ETH Pivots $1.1K Amid Pre-Powell Caution

Key Points 

  • Cryptocurrencies prices are lower in tandem with stocks amid a cautious tone pre-remarks from Fed Chair Powell.  
  • The Bitcoin price was last in the mid-$20,000s, while Ethereum was last trading just under $1,100.  
  • Tether on Wednesday announced it will expand its stablecoin offerings with pound sterling-backed GBPT.  

State Of The Market 

In tandem with a pre-market pullback in US equities, cryptocurrency prices fell during Wednesday’s Asia Pacific session, with total crypto market capitalization last down about 1.5% near $880 billion, down nearly 6.0% from Tuesday’s leaks close to $940 billion. But that leaves crypto markets still well within recent ranges, with total market cap still up about 15% or around $115 billion from Saturday’s 18-month lows near $760 billion.  

According to FX Empire head of crypto analysis Bob Mason, markets are feeling cautious ahead of this week’s Congressional testimony by Fed Chair Jerome Powell, which begins later on Wednesday. “Movement today will hinge on how Powell threads the needle,” Mason said, arguing that if the Fed Chair was to offer “a convincing argument that the Fed can achieve a soft landing, this would ease market angst”. But any such argument “will need to be very convincing, with US inflation at 40-year highs,” Mason added.  

Recession Worries

According to other analysts, US recession concerns have been weighing on risk assets (like stocks and crypto), with the likes of Morgan Stanley and Goldman Sachs both warning that recession risks might not be fully priced in. “The bear market will not be over until recession arrives or the risk of one is extinguished,” analysts at Morgan Stanley stated. Meanwhile, analysts at Goldman said that traders were pricing in a mild recession, “leaving them exposed to a further deterioration in expectations”. Elsewhere, major US consumer bank Citibank said it saw the probability of a recession in the near-term as close to 50%, citing risks associated with central banks tightening monetary policy and a weakening of demand for goods. 

A slightly more optimistic take came from Bloomberg’s senior commodity strategist Mike McGlone. The recent and ongoing drop in risk assets “are taking away inflation at a breakneck pace, which may translate into pre-pandemic deflationary forces resurfacing in H2 2022”, he said in a thread on Twitter. McGlone said the primary beneficiaries of this scenario may be Bitcoin, gold and US government bonds.  

Bitcoin Slips Back to Mid-$20,000s, Ethereum Pivots $1,100 

Bitcoin, the world’s largest cryptocurrency with a market cap of around $390 billion as of Wednesday, was last changing hands in the mid-$20,000s, down about 4% over the last 24 hours according to CoinMarketCap data. BTC/USD is down nearly 6.0% versus its Tuesday peaks above $21,700 but continues to trade about 16% up from Saturday’s sub-$18,000 lows as it consolidates within recent ranges pre-remarks from Fed Chair Powell.  

Similarly, Ethereum, the world’s second-largest cryptocurrency with a market cap of just above $130 billion as o Wednesday, was last trading down by about 6% in the last 24 hours just below the $1,100 level according to CoinMarketCap data. That marks a more than 8.0% pullback from Tuesday peaks close to $1,200 per token but leaves ETH/USD still trading an impressive 25% above sub-$900 weekend lows.  

Major altcoins are trading in line with the two major cryptocurrencies and are lower by similar margins as of Wednesday morning. Cardano doesn’t seem to have been impacted too much by a one-month delay to its Vasil hardfork upgrade which was supposed to go ahead later this month. Shiba Inu’s SHIB token and the Bitfinex crypto exchange parent company’s LEO token are the standout performers of the top 20 cryptos, with both trading more than 5.0% higher over the past 24 hours. 

Tether Announces GBPT, It’s Latest Pound Sterling-Backed Stablecoin 

Tether, the British Virgin Island-based issuer of what is currently the largest US dollar-backed/pegged “stablecoin” USDT announced plans on Wednesday to expand its stablecoin offerings with the introduction of GBPT. A stablecoin is a cryptocurrency running on the blockchain that maintains a stable value (normally 1:1) to a fiat currency, such as the US dollar or pound sterling.   

Like USDT, Tether says GBPT will be backed 1:1 by cash or liquid cash equivalents (such as short-term government paper). GBPT will be the fifth stablecoin to be offered by Tether, with the company having already issued USDT, EURT, CNHT and MXNT.   

“We believe that the United Kingdom is the next frontier for blockchain innovation and the wider implementation of cryptocurrency for financial markets,” Tether Chief Technology Officer Paolo Ardoino said in a statement as it announced the introduction of GBPT. Tether said it would work closely with UK regulators.  

In April, the UK government announced plans to introduce legislation that would see stablecoins recognized as a valid form of payment, as part of wider plans to make the country a global hub for crypto-asset technology and investment.  

GBPT’s introduction by Tether comes against the backdrop of persistent fears that USDT might lose its 1:1 peg to the US dollar. These fears have seen outflows of over $16 billion from USDT since early May and seen USDT trade around 0.1% below the $1.0 level, despite Tether fulfilling all USDT redemptions thus far.  

Solana NFT Platform Magic Eden Raises $130M, Valued At $1.6B 

Magic Eden, the most popular Non-Fungible Token (NFT) trading platform running on the Solana blockchain recently closed a Series B funding round which saw it raise $130 million. That put the platform’s value at $1.6 billion, with the company saying its newly raised capital will be used to expand its primary and secondary NFT marketplaces, as well as explore multi-chain expansion possibilities and research and development. According to analysts, 40,000 NFTs are traded on Magic Eden’s per day, amounting to 92% of all NFT volume on the Solana blockchain.  

Magic Eden’s impressive funding round and hefty valuation comes despite the broader bear market in the NFT and crypto/digital asset space. According to NFT data analytics website NFT Price Floor, the minimum cost to get hold of a Bored Ape Yacht Club (BAYC) NFT was around $95,000 on Wednesday, down four-fold from the record high hit just over two months ago above $400,000. The BAYC collection of 10,000 original NFTs is currently the most valuable NFT collection, with a price floor cap of nearly $1 billion.  

Regulatory Landscape: SEC’s Pierce Opposes Crypto Bailouts

US Securities and Exchange Commission (SEC) commissioner Hester Pierce, often referred to by members of the crypto community as the SEC’s “crypto mom” given her pro-crypto stance, spoke out against bailouts for struggling crypto companies like Celsius Network earlier this week. “When things are a bit harder in the market, you discover who’s actually building something that might last for the long, longer-term and what is going to pass away,” Pierce said. It’s better to “let these things play out,” she added.  

Separately, the launch of the first inverse Bitcoin Exchange Traded Fund (ETF) on Tuesday in the US is a positive sign for the crypto industry, argued grayscale CEO Michael Sonnenshein, given it shows the US SEC is becoming more comfortable with Bitcoin. The ProShares Short Bitcoin Strategy (BITI) began trading on the New York Stock Exchange (NYSE) on Tuesday. Crypto investors are pining for the SEC to approve a spot Bitcoin ETF, as this is expected to bring significant sums of institutional money in from the sidelines. Grayscale has applied for its Bitcoin Trust to be converted into a spot Bitcoin ETF, with an SEC decision on the matter due in July. 

Elsewhere, European Central Bank President Christine Lagarde on Tuesday said that cryptocurrencies and Decentralised Finance (DeFi) pose a real risk to financial stability, especially if crypto starts playing a bigger role in the economy. Right now, the links between crypto and the legacy financial services industry remain small, but the ECB nonetheless supports the EU’s proposed Markets in Crypto-Asset (MiCA) regulatory framework. MiCA is in the final stage of approval within the EU’s legislative process and is expected to come into force in 2024.

BIS Criticises Crypto Again

90% of global central banks are looking into the feasibility of introducing their own digital currencies, a new report from the Bank of International Settlements (BIS) said on Tuesday. The report criticized what it referred to as crypto’s “inability to perform “basic fundamental functions of money”, as well as its “opacity”. The report also highlighted recent adverse developments in the DeFi space, with the likes of Celsius Network having recently halted investor withdrawals and risks related to stablecoins in wake of Terra UST’s collapse. The BIS also highlighted the limited scalability of popular blockchains like Ethereum, which have in the past seen significant congestion and a sharp rise in transaction fees (I.e. gas fees).  

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.  

Morning Crypto Briefing: Bitcoin (BTC) Recovers $20K Handle Following Weekend Turmoil

Key Points 

  • Bitcoin is back in the mid-$20,000s and Ethereum around $1,100, with both have recovered well from the weekend’s downside.  
  • But many analysts suspect the worst may be yet to come for crypto against a still unfavorable macro backdrop.  
  • Solana has shrugged off a Solend governance debacle and is eyeing a test of key technical resistance.

Bitcoin Price Recovers Back Into Mid-$20,000s, Ethereum To $1,100

It’s been a tumultuous few days in cryptocurrency markets. On Saturday, Bitcoin led a market-wide sell-off as it cratered from highs in the upper $20,000s to lows under $18,000, its worst levels since December 2020. However, the world’s largest cryptocurrency by market capitalization swiftly recovered on Sunday amid apparent dip-buying and is on Monday changing hands in the mid-$20,000s once again, in line with its pre-weekend sell-off levels once again. At current levels, BTC/USD is up an impressive 15% versus weekend lows.  

Volatility in Bitcoin that was seemingly a function of thin weekend liquidity, a stop-run and technical selling/buying dragged the world’s second-largest cryptocurrency by market cap Ethereum along for the ride. ETH/USD on Saturday briefly fell below the $900 per token level for the first time since January, but as of Monday is back to trading just above $1,100, a stunning 25% up from weekend lows.  

The rapid recovery after key levels of support was broken over the weekend in major cryptocurrencies will come as a relief to investors, but analysts continue to argue that risks remain tilted towards further losses given the unfavorable macro backdrop. Fed Chair Jerome Powell will be testifying before Congress this week and will elaborate on last week’s hyper-hawkish Fed policy shift, which saw the bank accelerate the pace of rate hikes to 75bps from 50bps and signal an intent to take interest rates well into so-called “restrictive” territory in the coming years to deal with inflation. 

Powell was keen last week to emphasize that the Fed will do whatever it takes to bring inflation in the US back under control, even if that means tolerating a higher unemployment rate (which would typically come about as a result of a recession). While the Fed signaled in its latest dot-plot last week that it doesn’t see rates moving above 4.0% in 2023, crypto investors should brace for the risk that inflation remains elevated and the Fed eventually has to raise interest rates to the 5-6% region. 

This would be catastrophic for risk assets like US stocks and crypto, which perform best when monetary conditions are accommodative as opposed to restrictive. US Purchasing Manager Index survey data on Thursday will give a timely update as to the health of the US economy as concerns about a US recession rise and could also impact stock/crypto risk appetite. Trade will be quiet this Monday with US markets shut for the Juneteenth public holiday. 

SOL Bounces To Test 21DMA, Key Downtrend Despite Solend Governance Debacle 

Turning now to some of the major stablecoins. Solana’s SOL has recovered back towards last week’s highs near $36 per token in tandem with the broader market bounce. SOL/USD doesn’t seem to have been much impacted by a governance debacle at Solend, the largest Decentralised Lending (DeFi) platform running on the Solana blockchain.  

On Sunday, a Solend governance proposal proposing to create “emergency powers” that would give Solend Labs the power to access a major whale’s wallet to mitigate the risk of a large liquidation. However, after a massive social media backlash, with Solend accused of going against the values that underpin crypto in creating powers to hack into a wallet, a new governance proposal that would rescind these “emergency powers” passed.  

SOL/USD is eyeing a test of its 21-Day Moving Average just above $36.00 and a test of a key downtrend that has been capping the price action since mid-May. A break above these levels could open the door to an extension of recent upside towards the next key areas of resistance around $45 and $48.  

Elsewhere, Cardano’s ADA was last trading near $0.50, up about 18% versus weekend lows. Binance’s BNB was last changing hands near $215, up 17% versus weekend lows. Dogecoin, meanwhile, was doing a little better and up over 20% versus sub-$0.05 weekend lows near $0.06 after Tesla CEO and precocious billionaire Elon Musk doubled down on his support for the coin via Twitter. Ripple’s XRP was last trading around $0.32 with focus as ever on the ongoing Ripple vs SEC lawsuit.  

Algorithmic Stablecoin Trouble Continues 

The Tron blockchain’s algorithmic stablecoin Decentralised USD (USDD), which many in the crypto space see as a copy and paste of Terra’s ill-fated UST stablecoin, continues its slow decline. USDD was last trading below $0.95, having fallen to as low as $0.92 on Sunday, despite claims by Tron founder Justin Sun that the stablecoin is substantially over-collateralized.  

Elsewhere, Magic Internet Money (MIM), another USD-pegged algorithmic stablecoin, has also lost its 1:1 peg to the buck in recent days. According to CoinGecko, MIM/USD fell as low as $0.975 on Sunday before rebounding to current levels around $0.99, with the token’s platform Abracadabra facing accusations on social media of having accrued $12 million in “bad debt”.  

Cryptocurrency markets will be watching a hearing in the US Congress this week on the topic of stablecoins, with the Fed having recently made a few criticisms about them in a recent monetary policy report.  

FTX Expands Canadian Presence, Binance Suspends Withdrawals/Deposits Through Brazil’s Pix App 

FTX, one of the fastest-growing cryptocurrency exchanges in the world, this weekend entered into an agreement to purchase Canadian platform Bitvo. The acquisition comes as FTX looks to expand its presence in Canada, with the purchase expected to complete sometime in Q3 2022, subject to regulatory approval. “We are delighted to enter the Canadian marketplace and continue to expand FTX’s global reach,” FTX CEO Sam Bankman-Fried said in a statement. “Our expansion into Canada is another step in proactively working with cryptocurrency regulators in different geographies across the globe,” he added.  

Elsewhere, the world’s largest cryptocurrency exchange Binance suspended deposits and withdrawals through the Brazilian government’s online payment platform Pix last Friday. The split with Pix comes after the end of a deadline set by the Brazilian Central Bank (BCB) for all Pix providers to implement new Know Your Customer (KYC) requirements. But Binance deposits and withdrawals via Pix could soon return, with the exchange in the process of buying Brazilian securities brokerage firm Sim;paul Investimentos, which has already secured approval from the BCB and Brazil’s Securities and Exchange Commission.  

Number of NFT Platforms in China Increases 5x Since February 

According to a report published this weekend by local Chinese press, the number of Non-fungible Token (NFT) platforms operating in the country has increased five-fold since February 2022 to over 500. The report noted that the rise in the number of platforms operating in the country comes as the popularity of digital collectibles rises, with Chinese tech giants Tencent and Alibaba also showing interest in the space and filing multiple trademarks. According to the Chinese press, the government continues to view the NFT market unfavorably, believing it to be filled with speculation that poses risks to investors.  

Regulatory Landscape 

In a semi-annual monetary policy report released last Friday, the Fed noted that “recent strains experienced in markets for stablecoins… and other digital assets have highlighted the structural fragilities in that rapidly growing sector”. “Generally, stablecoins that are not backed by safe and sufficiently liquid assets and are not subject to appropriate regulatory standards create risks to investors and potentially to the financial system, including susceptibility to potentially destabilizing runs,” the Fed’s report continued.  

The report criticized the “concentrated nature” of the current stablecoin market, pointing out that total stablecoin market cap is currently concentrated in the USDT, USDC and BUSD coins. Stablecoin “vulnerabilities may be exacerbated by a lack of transparency regarding the riskiness and liquidity of assets backing stablecoins,” the report added. Fed Chair Jerome Powell will deliver a two-day testimony this week before the US Senate and House of Representatives where he will discuss the monetary policy report. He may comment on stablecoins.  

Separately, a group of 14 US Senators signed a letter addressed to the US Environmental Protection Agency arguing the benefits of crypto mining, which can have a “substantial stabilizing effect on energy grids”. The letter argued that mining can utilize flared gas and renewable energy sources and that “digital assets, and their related mining activities, are essential to the economic future of the United States.” 

Meanwhile, over in Russia, state-owned Gazprom Neft has entered into a partnership with BitRiver, Russia’s largest crypto mining hosting service provider. Under the new agreement, Gazprom Neft will provide BitRiver mining centers with electricity generated from petroleum gas. BitRiver will also develop the necessary digital infrastructure to utilize energy from Gazprom flare gas.

GBTC Premium Hits all-time low as Bitcoin Price Lingers Around $20K

Key Insights:

  • Bitcoin’s price is down by more than 70% from its all-time high of $69,000.
  • The largest bitcoin investment vehicle – GBTC, also traded at its biggest ever discount to the spot market.
  • The recent price downturn has affected mining profits as well as miners’ sentiments.

2022 has been quite a rough year for the cryptocurrency market, with the top crypto assets oscillating over 50% lower than their all-time high prices. Bitcoin’s price plunged by more than 70% since its all-time highs and is currently trading at $20,623.

With the fall in BTC’s price, the largest bitcoin investment vehicle – the Grayscale Bitcoin Trust (GBTC), also traded at its biggest ever discount to the spot market.

GBTC at a Heavy Discount

On-chain analytics site Coinglass shows that GBTC shares are down 34% versus BTC/USD on major exchanges as of June 17. The numbers for GBTC show that not just smaller investors but institutions have also failed to avoid the BTC downswing.

As the already underperforming GBTC hits new lows, bigger investors’ market sentiment comes out as heavily bearish. Amid the current market collapse, economist Peter Schiff compared BTC to Gold, pointing out that in May 2019 Grayscale launched its ‘drop gold campaign,’ pumping bitcoin’s price and the price of GBTC up to $17.40 at that time.

On June 16, GBTC hit $12.60 – 79% below its high, at a 34% discount to NAV. Schiff further added that ‘over the same three years while GBTC is down, gold is up by over 30%.’

At press time, GBTC premium traded at 34.26% cheaper than the Bitcoin spot price, also known as net asset value, or NAV. The drastic price loss accompanied a similar dip on spot markets as BTC/USD tested the lower $20,000 support twice.

FXempire, BTC, Crypto, GBTC, Bitcoin price, bitcoin
Source: CoinGlass

GBTC is a financial vehicle that allows investors to invest in trusts that, in turn, hold large amounts of Bitcoin. While GBTC doesn’t mean BTC itself, as the price of bitcoin rises or falls, shares in these trusts tracking the value of the cryptocurrency are also affected.

Analyst Dylan LeClair commented on the discounted GBTC price, saying that ‘the lower the discount, the more GBTC siphons potential institutional demand away from the spot market.’

Many investors prefer investing in GBTC for several reasons, such as the fact that the Securities and Exchange Commission regulates investments in the asset.

Bitcoin Whales Activated

The largest cryptocurrency in the market has shed more than 70% of its value since hitting its all-time highs. With the total crypto market cap below the $1 trillion mark, it can only be imagined where the larger crypto market will be headed over the coming weeks.

Notably, the recent price downturn has severely affected mining profits as well as miners’ sentiments; however, one cohort is undeterred by the current market collapse – BTC whales.
According to data from the cryptocurrency analytics platform CryptoRank, mining Bitcoin is no longer profitable for miners.

CryptoRank data stated,

“Due to a significant drop in BTC price over the past months, mining has become less profitable. It might even be unprofitable for some bitcoin miners at the moment.”

As recessionary fears loom and organizations undergo operational problems and insolvencies, the larger market continues to move southward.

Nonetheless, data reveals that crypto whales have taken advantage of the chance to acquire bitcoin at a discounted price. Notably, when the top crypto asset came close to plunging below the critical support level of $20,000, BTC whales saw increased activity.

Crypto analyst by the name of Crypto Rover tweeted on June 15, ‘Bitcoin whales sell into strength and buy into weakness.’

Morning Crypto Briefing: Bitcoin Price Consolidates Near $21,000 Amid Further Signs of DeFi Stress

Key Points 

  • Cryptocurrencies have stabilized on Friday, after tumbling in tandem with stocks a day earlier.  
  • Bitcoin is trading near $21,000 and eyeing a move below $20,000 as traders digest this week’s hawkish Fed.  
  • Signs of stress in DeFi continue, with Finblox and Babel the latest lending/borrowing platforms to halt/limit withdrawals.  

Bitcoin Price Consolidates Near $21,000 As Cryptos Track Stocks 

Cryptocurrency markets continue to track the price action in US equities closely as the weekend approaches. After Thursday’s tumble to fresh annual lows as investors digested Wednesday’s hawkish Fed meeting, S&P 500 index futures are trading with gains of slightly under 1.0% in pre-US open trade on Friday. That is helping to give some modest intra-day support to cryptocurrency prices, which also tumbled on Thursday, with total crypto market capitalization up about 3.0% on the day near $890 billion, having probed weekly lows around $850 billion on Thursday.  

After the big moves seen last weekend following last Friday’s “game-changing” US inflation data (which pushed the Fed into hiking 75 bps this week rather than 50 and being even more hawkish), cryptocurrency markets are likely to enter a period of comparative consolidation. Fed Chair Jerome Powell will be speaking from 1345BST on Friday but is unlikely to add anything to the lengthy remarks he gave in wake of the Fed meeting on Wednesday.  

Traders should prepare for rangebound trading conditions, with total crypto market cap likely to remain within the $840-960ish billion ranges established in recent days. The Fed is set to be in focus once again next week as various policymakers come out of the woodworks to give their views in wake of the latest meeting. Meanwhile, traders will get a timely update on the health of the US economy so far this month with the release of the preliminary version of IHS Markit’s Purchasing Manager Index survey data on Thursday.  

Looking at some of the major coins, Bitcoin continues to stabilize in the $21,000 level, leaving it well within recent $20,000-$23,000 ranges. Investors continue to fret about the potential for a break under the key $20,000 level, which could open the door to a cascade of further selling/capitulation that could send BTC/USD to its 2019 highs under $14,000.  

Ethereum, meanwhile, is consolidating in the $1,100 area, with bears also eyeing a potential drop under $1,000 that could open the door to a drop towards support in the $800s. Binance’s BNB continues to hold above the $200 level and, like other major coins, is on course for steep weekly losses. Ripple’s XRP continues to range within this week’s $0.30-$0.34 ranges as eyes remain on the lawsuit with the SEC.

Cardano’s ADA, meanwhile, is trading close to $0.50, with the 21-Day Moving Average acting now as resistance. Solana’s SOL has recovered from earlier weekly lows in the $26 per token area to around $31.50, but resistance around $35.50 and 21DMA near $38 is notable.  

DeFi Trouble: Finblox & Babel Limit Withdrawals, 3AC Reportedly Misses Margin Calls 

A staked ether (stETH) liquidity pool on the Decentralised Exchange (DEX) Curve has nearly been emptied as struggling crypto hedge funds including Alameda and Three Arrows Capital dump their holdings of the ETH derivative, various crypto media reported on Friday. One market commentator said this might force future stETH sellers into entering less transparent over-the-counter (OTC) trades where the stETH discount to ETH might be even higher. This discount reached record highs above 8.0% as of Monday this week, a sign of the stress in the Decentralised Finance (DeFi) space.  

Meanwhile, news broke on Friday that the issuer of USD-pegged stablecoin DAI MakerDAO has cut off staking/lending DeFi platform Aave’s ability to generate DAI for its platform without collateral. Analysts said MakerDAO took this decision in order to reduce exposure to the wider DeFi space, amid the risk that beleaguered lending/borrowing platform Celsius Network implodes and causes further contagion across the space.  

Crypto staking and yield generating platform Finblox, a rival in many ways to Celsius Network, announced on Friday that it would be limiting investor withdrawals to $1,500 per month. The platform cited uncertainty supporting the now rumored to be insolvent crypto hedge fund Three Arrows Capital, which had invested $3.6 million in Finblox back in December.  

Meanwhile, news also broke on Friday that Hong Kong-based crypto lending platform Babel Finance had suspended withdrawals given “unusual liquidity pressures”. The withdrawal suspension comes just a month after Babel raised $80 million in a funding round that valued the company at $2.0 billion.  

Back to Three Arrows Capital, reports have been doing the rounds on Friday that the hedge fund has failed to meet margin calls this week, raising the insolvency risk. A report in the Financial Times said that crypto lender BlockFi liquidated some of the hedgefund’s Bitcoin positions this week.  

Crypto Adoption: Metaverse Could Reach $5T by 2030, Digital Payments On Twitter “Make Sense” Says Musk 

According to a new report published by multi-national consulting firm McKinsey & Co on Thursday, spending within the metaverse could hit $5 trillion by 2030. The 77-page report, which drew its findings from two global surveys, found that e-commerce and advertising will dominate payments in the metaverse.  

Elsewhere, Tesla and SpaceX CEO and billionaire Elon Musk, who is currently attempting to buy Twitter, said in a meeting with Twitter employees earlier in the week that it “makes sense” to integrate digital payments into the social media platform so as to make it “easy to send money back and forth”. Dogecoin HOLDers will be hoping that DOGE can play some sort of role in this. Tesla and SpaceX already accept the dog-inspired memecoin that Musk is a big fan of as payment methods for merchandise. Speaking of Dogecoin and Musk, the Tesla CEO has been hit with a widely derided lawsuit, where he is being sued for $258 billion for essentially misleading investors into investing in DOGE.  

Back to crypto adoption; Latin American crypto exchange Bitso announced on Thursday that it had handled more than $1 billion in remittance payments from the US to Mexico so far in 2022, more than fourfold the amount handled over the same period in 2021. The company said it hopes to handle $2 billion in global remittances to Mexico in the full year of 2022. 4% of the remittances sent to Mexico in Q1 2022 went through Bitso, the company added, before stating that it hopes for this percentage to reach 10% in 2023.  

Regulatory Landscape: SEC’s Crypto Mom Peirce Criticises Agency’s “Refusal To Engage”, US States Investigate Celsius 

US Securities and Exchange (SEC) Commissioner Hester Peirce, who is referred to as many within the crypt industry as “crypto mom” given her pro-crypto stance, criticized the SEC’s approach to crypto in a speech given earlier in the week. Peirce accused the SEC of refusing to engage with the industry, citing the agency’s failure to approve a spot Bitcoin ETF as evidence it is determined to hold crypto to a higher standard than other products that it regulates.  

Elsewhere, US Treasury Secretary Janet Yellen reportedly met with numerous Wall Street bank CEOs on Thursday to discuss the economy, while she also allegedly raised the issue of “responsible innovation in digital assets”, said a US Treasury Department official. The official added that the Treasury Department is closely watching cryptocurrency markets and recent turmoil underlines the need to establish regulations in the industry.  

Elsewhere, a number of US states have reportedly opened investigations into the recent decision of the Celsius Network to halt customer withdrawals. Director of enforcement at the Texas State Securities Board Joe Rotunda said in an interview with Reuters that “I am very concerned that clients – including many retail investors – may need to immediately access their assets yet are unable to withdraw from their accounts”. “The inability to access their investment may result in significant financial consequences,” he continued.  

Over in Europe, the EU is being urged by a lobbying group to consider whether introducing a digital euro is actually a good idea, rather than implicitly assuming that this is the case. The Institute of International Finance (IIF) urged the EU to consider its assumptions in a response to a European Commission consultation on the matter that closed on Thursday.  

As USD-pegged stablecoins gain global traction, their proponents have played down the need for a Fed-issued digital USD in the US. The issuer of the second-largest US dollar-pegged stablecoin Circle Internet Financial, whose USDC has a market cap of just shy of $55 billion, has in the past called the idea of a Fed-issued dollar “preposterous”. Circle Internet Financial announced on Thursday that they would be launching a full-backed euro equivalent of USDC, which would be called EUROC.  

EUROC will join a few other pre-existing euro-backed stablecoins, including Tether’s EURt and Stasis’ EURS. If these stablecoins can gain traction in the coming years, they may preclude the need for an ECB-issued euro.  

Morning Crypto Briefing: Bitcoin Price Back In $21K Area As Cryptos Fade Post-Fed Gains

Key Points 

  • Cryptocurrencies rallied initially on Wednesday despite a hawkish 75bps Fed rate hike, though this upside has since faded.  
  • The market continues to struggle “with a marked shift in central bank monetary policy”, said FX Empire’s Bob Mason.  
  • Bitcoin was back near $21K and Ethereum back in the low $1,100s, down over 6.0% and 10% on Thursday.  

State Of The Market 

Cryptocurrency prices spiked in tandem with upside in US stocks and downside in US bond yields in the immediate reaction to Wednesday’s Fed policy announcement, despite the bank living up to the hype and delivering a widely expected 75 bps rate hike, the largest hike in 28 years. Having lifted the target interest rate range to 1.50-1.75%, the Fed’s new dot-plot signaled it expected rates to hit 3.4% by the end of the year and go as high as 3.8% in 2023 before rates could be reduced back to 3.4% again in 2024.  

In other words, the Fed is signaling its intent to take interest rates well into so-called “restrictive” territory by the end of the year, meaning Fed policy should weigh heavily on US growth by the end of the year and in 2023. Very hawkish stuff, most agreed, leaving analysts perplexed as to why crypto and risk assets saw an initial rally on the announcement. For reference, total cryptocurrency market cap recovered as much as $100 billion from its pre-Fed announcement levels to as high as $960 billion on Wednesday. 

Perhaps the Fed’s espoused view in its latest economic forecasts that robust economic growth in the US is set to continue this year and next (which some called wishful thinking) pushed back against recently growing US recession fears, offering some support to risk assets. But the bounce in sentiment didn’t last long, with total cryptocurrency market cap now having fallen back below $900 billion once again and down about 6.0% already on Thursday.  

“Hopes of an extended breakout from Wednesday’s rebound have subsided,” said FX Empire’s head of crypto market analysis Bob Mason, adding that “risk aversion has spread from the European and US equity markets to cryptos”. As to why risk appetite has once again soured on Thursday, Mason explained that “reality has bitten as free money gets taken off the table”, with the market “struggling with a marked shift in central bank monetary policy”.  

Indeed, it’s not just the Fed to have hiked interest rates this week. Within the last 24 hours, the Brazilian central bank has lifted rates by 50 bps and the Swiss National Bank, for a long-time seen as a stalwart of dovish central bank policy, on Thursday surprised markets with a 50 bps rate hike (taking rates to -0.25% from –0.75%). Meanwhile, the Bank of England also just lifted interest rates by 25 bps to 1.25%, with a few rate-setters having favored a bigger 50 bps move.  

Looking ahead to the rest of Thursday’s session, a dump of US Housing, US jobless claims and regional US manufacturing survey data will provide some insight into the health of various sectors of the US economy (i.e. the housing and labor market plus industrial sector). Investors will be keen to assess whether the data supports the Fed’s still fairly optimistic view on the economy.  

BTC Back To $21K, ETH Back In Low $1,100s as Post-Fed Rally Fades 

Any build-up of recession fears risks sending crypto to fresh weekly lows, which for total crypto market cap could mean a push lower towards $800 billion. FX Empire’s Bob Mason warns that “cryptos may stand ahead of equities in terms of being dropped first to preserve capital” and that “a bitcoin fall to sub-$20,000 would really test investor resilience through the afternoon session”. 

For reference, BTC/USD was last trading back close to the $21,000 level on Thursday, down over 6.0% on the day and down about 8.0% versus its post-Fed peaks. That gives the world’s largest cryptocurrency a market cap of around $400 billion. Elsewhere, Ethereum was last back to trading in the low $1,100s, down over 10% from its post-Fed highs in the mid-$1,200s, giving it a market cap of around $135 billion.  

The world’s second-largest cryptocurrency is currently eyeing a test of weekly (and annual) lows just above $1,000, a break below which could open the door to a run towards the next area of support (the May 2018 highs) in the mid-$800s. In terms of the major altcoins, BNB was last down about 7.0%, SOL about 9.0% and ADA and XRP about 8.0% on Thursday, with each having significantly pared post-Fed gains in tandem with the major cryptocurrencies. 

Has Bitcoin Bottomed? 

According to the widely followed Director of Global Macro Strategy at Fidelity Investments Jurrien Timmer, one metric to assess the valuation of Bitcoin suggests the cryptocurrency may currently be “cheaper” than it looks. Bitcoin’s price/network ratio has fallen back to its 2017 and 2013 levels, Timmer stated, even though its price has only fallen back to late 2020 levels.  

However, according to analysis from Philip Swift, the creator of on-chain analytics firm LookIntoBitcoin, more Bitcoin capitulation may be coming. According to Swift, the ratio between short and long-term holders of Bitcoin has been more in favor of the long-term holders when the cryptocurrency has bottomed in the past.  

Swift cites LookIntoBitcoin’s RHODL Ratio, which assesses and takes a ratio between the wallet activity of one week and one-two year Bitcoin holders. The RHODL Ratio is yet to hit a so-called “green zone” that LookIntoBitcoin says suggests capitulation has peaked and that price bottoming is imminent.  

In further bitcoin-related commentary, crypto billionaire and Galaxy Digital founder and CEO Mike Novogratz said on Wednesday that he expects Bitcoin to lead a market recovery once the Fed pauses/reverses rate hikes. “Bitcoin will lead the markets back out of this Fed hike,” Novogratz stated, adding that “the moment the Fed flinches, the moment (Fed Chair Jerome) Powell pauses because the economy’s really starting to roll over, you’re going to see Bitcoin explode north”.  

Novogratz cited anecdotal evidence as supporting this conviction. “Lots of guys I talk to are seeing the next time they’re going to get engaged is when they start sensing Fed’s going to pause,” he noted. Meanwhile, the Galaxy Digital CEO argued that Bitcoin could start its recovery even if equities continue to decline. “If you look at the 1970s, gold led the market back not stocks”, he pointed out, alluding to how the same could happen for Bitcoin in the 2020s.

Crypto Exchanges: Kraken Continues To Hire For 500 Positions Despite Crypto Winter 

Following an announcement earlier in the week that it would be laying off nearly 20% of its staff, amounting to around 1,000 employees, Coinbase has announced that it will be letting go of 8% of its Indian workforce, various crypto media outlets reported on Thursday. Amid the ongoing downturn in crypto prices (referred to as the “crypto winter” within the industry), other crypto exchanges are also suffering.  

Crypto exchange and payments service provider Crypto.com announced on Tuesday that it will be letting go of 260 employees or around 5% of company staff, while crypto lending/borrowing service provider BlockFi also announced this week that it will let go of around 20% of its employees due to current difficult market conditions.  

But it’s not all bad for crypto exchanges. Kraken announced on Wednesday that it would continue to hire for over 500 positions, despite the crypto winter. “We have not adjusted our hiring plan, and we do not intend to make any layoffs,” the crypto exchange said in a statement on Wednesday. “We have over 500 roles to fill during the remainder of the year and believe bear markets are fantastic at weeding out the applicants chasing hype from the true believers in our mission”.  

Ultra-rich Have Already Embraced Crypto, Capgemini Survey Finds 

Global technology consulting giant Capgemini on Tuesday released its annual World Wealth Report, which revealed that, according to a survey of 2,973 high-net-worth individuals, some 71% have already invested in digital assets. Of these individuals, 54% had a net worth of between $1 million and $30 million, while 46% had a net worth of above $30 million. More than nine in ten of the high-net-worth individuals aged below 40 years old held digital asset investments.  

Capgemini’s survey, which suggests the rich have already embraced crypto to a large extent, comes after a Bank of America survey released on Monday showed that in a survey of 1,000 existing and potential crypto users, 91% plan to invest in crypto within the next six months. The BoA survey revealed that the average transaction size was about $25 with PayPal and Coinbase the most frequent platforms used, indicating it’s not just the super-rich getting into crypto.  

Bitcoin’s adoption by the global population could hit 10% as soon as 2030, a new report by Blockware last week claimed. 

Regulatory Landscape: Former CFTC Chair Calls For Stronger Oversight Following Celsius Debacle 

There should be stronger regulatory oversight of crypto lending platforms operating in the US in light of the recent freezing of withdrawals from crypto trading/lending platform Celsius, former US Commodity Futures Trading Commission (CFTC) Chair Timothy Massad said in an interview with CoinDesk earlier this week. Meanwhile, Chair of the US House of Representatives Ways and Means Committee Richard Neal asked the Government Accountability Office (GAO) to weigh in on the move by some major US pension plan providers (like Fidelity Investments) to allow savers to add cryptocurrencies into their retirement portfolios. The GAO is a legislative watchdog that is tasked with publishing policy analysis and recommendations. 

Turning now to Europe, European Central Bank executive board member Fabio Panetta said on Wednesday that if the central bank issues its own digital currency, it should cap the number of tokens to between one and one and a half trillion. “Our preliminary analyses indicate that… (this) would avoid negative effects for the financial system and monetary policy,” said Panetta. “This amount would be comparable with the current holdings of banknotes in circulation,” he added. The idea of the proposed limit is to disincentivize HODLing, as some investors do with crypto assets.  

Meanwhile, over in Russia, a bill that would ban the use of crypto as a form of payment in the country has passed its first reading in the State Duma, Russia’s lower house of parliament.  

5 Most Popular Cryptos of the Week: XTZ, SOL, ADA, DOGE, SHIB

Key Points

  • Hotter than expected US CPI on Friday saw markets up Fed tightening bets and cryptocurrencies end the week under pressure.
  • Bitcoin fell back to the low-$29,000s and ethereum to fresh more than one-year lows in the $1,600s.
  • Five of the most popular non-bitcoin/ethereum altcoins were XTZ, SOL, ADA, DOGE and SHIB.

Cryptocurrency markets fell back to two-week lows on Friday in wake of US inflation data that surprised to the upside and was interpreted by market participants as raising the likelihood that the Fed continues with aggressive rate hikes all the way through September. Total cryptocurrency market capitalization was last around $1.175 on Saturday, having fallen over 4.0% from closer to $1.23 trillion on Friday, and eyeing a test of late May lows just under $1.15 trillion.

The headline pace of annual inflation in the US according to the Consumer Price Index (CPI) unexpectedly rose to a fresh four-decade high at 8.6% in May, data revealed on Friday, versus expectations for it to remain unchanged 8.3%. Meanwhile, the YoY measure of core price pressures fell, but not as much as market participants had expected. Traders reacted to the data by upping their bets that the Fed will hike rates by a further 50 bps in September, after two widely expected 50 bps rate hikes in June (at next week’s meeting) and July.

When markets up their Fed tightening bets, this tends to put upwards pressure on US government bond yields, which was the case on Friday, with the US 10-year yield jumping over 11 bps to close to multi-year peaks around 3.20%. Cryptocurrencies tend to have a negative correlation to US bond yields, given that a rise in yields represents a rise in the “risk-free” interest rate or “opportunity cost” of holding non-yielding assets (such as crypto or commodities like gold).

Meanwhile, the US dollar rallied hard on Friday against most of its major G10 peers, another side effect of markets expecting a more hawkish Fed. This makes USD-denominated cryptocurrencies more expensive for international buyers, thus reducing demand slightly. As a result, cryptocurrencies also tend to have a negative relationship to the buck.

Finally, expectations for more aggressive Fed tightening put US equities, with which cryptocurrencies have had a close positive correlation in recent months, under pressure as 1) a hawkish Fed increases downside risks to US economic growth (as tighter monetary conditions slow growth), increasing downside risks to company earnings and 2) the associated rise in interest rates increases the opportunity cost of holding companies (like big tech/many other so-called growth stocks) who have a low or non-existent dividend yield. The big tech/growth stock heavy Nasdaq 100 fell over 3.5% on Friday, to end the week around 5.7% lower.

The world’s largest cryptocurrency by market cap bitcoin was subsequently last trading in the low-$29,000s on Saturday, having slipped back below its 21-Day Moving Average on Friday near the $30,000 level, and is now eyeing a test of late May lows in the $28,000 region. At current levels around $29,300, bitcoin’s market cap is around $560 billion.

BTC/USD
BTC/USD falls to low $29,000s. Source: FX Empire

The world’s second-largest cryptocurrency by market cap ethereum was last trading in the mid-$1,600s, having on Friday fallen to fresh lows for the year and, indeed, going all the way back to March 2021. From a technical perspective, the latest break lower is crucial. Support in the form of a May/June/July 2021 triple bottom in the $1,700s, which had been offering support over the last few weeks, is now gone, opening the door to significant further downside. Many ethereum bears might now be targetting a test of the 2018 highs around $1,400. At current levels just above $1,650, ethereum has a market cap of close to $200 billion.

ETH/USD
ETH/USD falls to its lowest levels since March 2021, eyes support at 2018 highs. Source: FX Empire

Outside of the big two, five of the most popular altcoins of the week were…

Tezos (XTZ)

According to cryptocurrency social intelligence analytics website Lunarcrush, Tezos’ social dominance score jumped to 3.7% as of Saturday from closer to 2.0% earlier in the week. The jump in interest came after Tether announced that it had launched its USD-pegged, fully backed stablecoin USDT on the Tezos blockchain, a move that crypto market commentators said would unlock new Decentralised Finance (DeFi) opportunities within the Tezos ecosystem.

While XTZ/USD saw a more than 10% slump on Friday in tandem with the broader crypto sell-off, the cryptocurrency remains on course to close out the week in the green and with gains of close to 5.0%. XTZ/USD is currently changing hands around $2.04.

Solana (SOL)

Having started the week with a social dominance score of around 1.7% on Lunarcrush, Solana looks set to end the week with a score closer to 7.5%. Solana’s developers announced a $100 million fund this week to support South Korean crypto projects.

In terms of price action, SOL/USD was last trading around $37.50 on Saturday, having fallen on Friday in tandem with broader markets, though having for now avoided testing last week’s lows in the $35s. SOL/USD nonetheless looks on course to post a WoW loss of just over 2.0%.

Cardano (ADA)

Cardano looks set to end the week with a social dominance score on Lunarcrush of around 2.7%, up from around 1.6% this time last week. Despite difficult broader macro/crypto market conditions, ADA/USD’s price has pumped for a second successive week as of Saturday. The cryptocurrency was last trading around the $0.60 mark, up around 6.5% on the week following last week’s near 18% gain.

Crypto traders have attributed the recent upside as down to Fear Of Missing Out (FOMO) ahead of the Cardano blockchain’s much anticipated Vasil hardfork later this month that should deliver some significant upgrades.

Dogecoin (DOGE)

The ever-beloved dog-inspired memecoin had a social dominance score of around 2.5% on Saturday, little changed from this time last week. But that wasn’t enough to shield DOGE/USD from further downside, with the cryptocurrency dropping a further 5.8% on the week as of Saturday, putting it on course for a sixth successive weekly loss. Dogecoin bears are eyeing a test of earlier annual lows in the 0.065 area, with the cryptocurrency currently changing hands around $0.076.

Shiba Inu (SHIB)

Not to be outdone by its “older brother” (Dogecoin), fellow dog-inspired memecoin Shiba Inu, which describes itself as the “Dogecoin killer”, saw its social dominance score on Lunarcrush rise to around 2.0% as of Saturday from around 1.3% this time last week. But like its older brother, SHIB/USD had a tough week, dropping more than 5.0% to just above $0.000010 per token, putting it on course for an eigth successive week in the red. Shiba Inu bears will be eyeing a test of annual lows in the $0.0000087 area should broader cryptocurrency market conditions fail to improve.

How Can Inflation Affect Cryptocurrencies like Bitcoin and Ethereum?

Key Insights:

  • Cryptocurrencies like bitcoin have often been called an excellent inflation hedge.
  •  However, USD’s purchase power against BTC has been in an uptrend for the most part of this year.
  • Over the last two quarters, amid largely bearish market conditions, socio-political issues have played a key role in establishing BTC’s price trajectory. 

    Cryptocurrencies as investments are attractive for several reasons. For some, cryptocurrencies are a quick way to earn money as they chant ‘wen Lambo,’ while for others, it’s the trust in blockchain technology or a certain project. For some, getting into cryptos could be as basic as jumping on the hype train, primarily due to FOMO.

    All that aside, cryptocurrencies like Bitcoin have often been called an excellent inflation hedge and a store of value. So, as inflation continues to rise, where do cryptocurrencies and inflation cross paths?

    What is Inflation?

    Inflation is when the decreasing value of a currency, like the US dollar, increases the price of goods and services over time, thus helping the economy grow. However, unlike fiat currencies, cryptos can’t be manipulated to the same extent by changing interest rates, or so they said.

    In early May, bitcoin (BTC) and ether (ETH) rallied on the news of interest hike by FEDs, rising about 3.5% and 1.2%, respectively. Soaring inflation has been one driver of broad losses across the crypto markets. The United States Federal Reserve announced a 0.5% hike in interest rates, the highest hike ever in interest rates in the last two decades.

    While cryptocurrencies saw short-term price spikes after the news of the interest hike, the price gains couldn’t sustain. Many analysts, however, still believe that cryptocurrencies have been behaving in line with equities, similar to a big tech stock.

    Bitcoin – an inflation hedge?

    In the post-pandemic era, USD’s buying power against BTC fell further, taking a significant dip in March 2020, followed by another drop towards the end of 2020, as seen above. Additionally, the USD’s value has further dipped due to the government’s continuous money printing.

    FXempire, BTC, Crypto, bitcoin
    United States Dollar purchase power against BTC | Source: Google

    Over the last 50 years, inflation has already reduced the value of the USD by 85%, which strengthened BTC’s narrative as an excellent alternative to fiat money. However, in November 2021, after making an all-time high of $69,000, bitcoin’s price began its downtrend. Around the same time, USD purchase power against BTC started to rise, appreciating in November-end 2021 and then again in March 2022.

    Notably, USD’s purchase power against BTC has been in an uptrend for the most part of this year. The same puts bitcoin’s inflation hedge narrative at risk. Additionally, constant issues surrounding market volatility and the high price of a single BTC unit pose friction to investors, especially newcomers.

    While investment alternatives like bitcoin mining-backed ETFs and BTC ETPs have offered decent exposure to investors of all sorts, the constant volatility continues to haunt BTC traders and investors and newcomers in the market.

    Cryptocurrencies and inflation

    For the most part of bitcoin’s existence, BTC prices haven’t reacted negatively to policy uncertainty shocks, partly consistent with the notion of Bitcoin’s independence from government authorities. However, amid largely bearish market conditions, socio-political issues have played a key role in establishing BTC’s price trajectory over the last two quarters.

    Furthermore, BTC’s rising correlation with the two major indices—the S&P 500 and Nasdaq- could play a S&P 500 and Nasdaq could play spoilsport in the coin’s inflation hedge narrative as the market matures.

    Bitcoin’s price was down 57.02% from its all-time high price of $69,000, which also hampered the top coin’s narrative as a store of value. At the time of writing, BTC traded at $29,504.67, close to the $30,000 psychological support/resistance level.

    The coin has maintained a rangebound trajectory between the $31,500 and $28,380 mark since May 10.

    FXempire, bitcoin, Crypto, BTC
    BTC Price | Source: FXEmpire

    For now, with the larger market tilting more towards bearish, whether BTC could outperform traditional assets and fiat currency still remains a crucial question. Many analysts are of the opinion that the maturing bitcoin and cryptocurrency market has given way to diminishing ROIs over the years.

Daily Crypto Brew: Bitcoin Consolidates, Pivots $30K As Traders Digest Hawkish Powell Commentary

Key Points

  • Crypto markets are a tad weaker on Wednesday but within recent ranges, as markets digest Fed Chair Powell’s hawkish commentary.
  • The Fed won’t hesitate to take rates above neutral, said Powell, deterring crypto bulls from chasing prices higher.
  • Total crypto market cap was last around $1.27 trillion with bitcoin last trading just under $30,000.

State Of The Market

While constructive updates out of China regarding a potential easing of Shanghai lockdowns and of the ongoing big tech crackdown got a rally in US and global equities started on Tuesday, the gains accelerated in US trade following robust US Retail Sales and Industrial Production data. In the end, the S&P 500 and Nasdaq 100 indices ended the day higher by 2.0% and 2.6% respectively, with traders shrugging off the hawkish tone to US Federal Reserve Chair Jerome Powell’s remarks towards the end of the day.

This unsurprisingly helped give risk-sensitive cryptocurrency markets a boost at the time, with the total crypto market capitalization rising to close Tuesday trade higher by about 2.5% and back above the $1.3 trillion mark.

However, as US equity index futures hand back some gains in pre-market trade, crypto markets have also come under some modest pressure. Total market cap has now more or less already given up all of Tuesday’s gains and is back to trading just above $1.27 trillion.

The more time markets have had to digest Powell’s remarks, the more the crypto bulls seem deterred from chasing prices higher. To recap, the main message from the Fed Chair was that the central bank remains hyper-focused on tackling sky-high inflation and will not hesitate to move rates above so-called neutral (i.e. the 2.5% area) if required.

For now, markets do not seem to be betting on interest rates moving well beyond neutral, which has facilitated stabilization in equities and crypto, and explains why bonds are consolidating below recent highs (10-year yields are still below 3.0%). Hence, the total crypto market cap continues to trade within the $1.25-35 trillion range established over the past four sessions.

But should the inflation figures fail to moderate as much as hoped for in the next few months, recent trends (weaker equities and crypto plus higher yields) could return as markets up their Fed tightening bets. In this bearish scenario, a break lower to annual sub-$1.1 trillion lows and perhaps below $1.0 trillion would very likely be on the table.

Looking ahead, it should be a quiet day on the economic calendar with no notable US data aside from some US housing data, which shouldn’t impact crypto. Any further Fed speak would be notable, as ever.

Price Action

In fitting with the broader stabilization of crypto markets, bitcoin continues to pivot on either side of the $30,000 per token mark, with its market cap near $570 billion, giving it a market dominance of still close to 44.5%. BTC/USD was last down about 1.5% on Wednesday.

Ethereum, meanwhile, continues to consolidate just above the $2,000 per token mark, giving it a market cap of around $250 billion and a dominance of around 19.2%. ETH/USD was last down about 2.6% on Wednesday.

In terms of some of the other major altcoins, Ripple’s XRP was last down around 2.0% but remained within recent ranges in the low-$0.40s per token. Likewise, Binance’s BNB was down about 1.4% but stable within recent intra-day ranges in the $300 per token area.

Solana’s SOL was last down closer to 5.0% on the day, but also within recent ranges around the mid-$50s per token, while Cardano’s ADA was last down about 2.5% in the mid-$0.50s, also within recent ranges.

DeFi, NFT Update

The chilling impact of the collapse of Terra’s ecosystem remains apparent across the Decentralised Finance (DeFi) space. Trade value locked (TVL) across all major chains was around $170 billion at the start of the month, but is now at around $100 billion, where it has remained for the last few days.

Prior to that, attractive yields on many assets including stablecoins across the DeFi space had supported TVL despite a broader downturn in cryptocurrency prices since the start of the year. But UST’s woes have hit confidence badly. A sustained upturn in crypto prices is likely going to be required for TVL to recover back to $200 billion once again, a prospect that doesn’t seem likely any time soon.

In tandem with the recent stabilization of the TVL across DeFi, the market cap of major DeFi governance and stablecoin tokens has remained stable in the mid-$50 billions area on Wednesday, according to CoinGecko data.

In terms of DeFi news, the Terra community has rejected a proposal from founder Do Kwon to revive the ecosystem with a blockchain fork. The community instead seems to favor an aggressive burn mechanism to address the flood of LUNA supply. As of Wednesday, LUNA’s market cap was just above $1.1 billion, making it the 12th largest of the major DeFi tokens.

Meanwhile, the UST token was last trading just under 10 cents on the dollar and had a market cap of around $1.4 billion.

Turning to the non-fungible token (NFT) market, in fitting with the broader crypto theme this week, the price floor of major NFT collections have been stabilizing. The price floor to bag one of Yuga Labs’ Bored Ape Yacht Club NFTs, having reached above $400,000 in late April, has stabilized around the $200,000 mark in recent days.

Meanwhile, after trading around $200,000 for most of 2022 but then falling towards $100,000 in early May, the price floor to own a Crypto Punk NFT has stabilized near the $110,000 mark in recent days.

In terms of NFT news, Spotify is reportedly testing the addition of NFT galleries on artist profiles, as the company explores ways to “improve artist and fan experiences”. Meanwhile, Robinhood is reportedly on the cusp of launching a new self-custody crypto wallet that will support NFTs, a move hailed as a significant stride in the right direction by Web3 advocates.

Crypto Flows

Glassnode data showed that, as of Wednesday morning, there had been modest outflows of $38.7 million worth of bitcoin and $64.5 million worth of ethereum from exchange wallets to private wallets over the last 24 hours, in fitting with the broader theme of continued stabilization.

According to blockchain transaction tracker Whale Alerts, a massive 2,447 bitcoins worth over $70 million at the time were transferred into a private wallet from a Coinbase wallet on Wednesday, indicative of Whale dip-buying.

Data from Glassnode on Wednesday also highlighted a shift in flows in the stablecoin market, with money leaving USDT (USDT tokens being redeemed for their cash equivalent) and going into the likes of USDC and BUSD. Since the collapse of algorithmic stablecoin TerraUST, around $7.5 billion in USDT tokens have been redeemed, taking the coin’s market capitalization to around $74 billion.

Meanwhile, close to $4.0 billion in USDC has been issued, taking the second largest stablecoin to a market cap of around $52 billion, making it the fourth-largest cryptocurrency by market cap. Similarly, BUSD’s market cap has risen from under $17 billion to around $18.2 billion over the same time period.

“What we are potentially watching is a changing preference for which stablecoins the market prefers,” said James Check, an analyst at Glassnode. Check speculated that a large trader or group of traders attempted to utilize heightened concerns after UST’s collapse to exert pressure on the USDT and perhaps trigger a similar de-pegging event last week.

Traders will recall that USDT did briefly come under pressure, though has maintained its peg well. Nonetheless, amid the heightened focus on USDT losing its peg, investors have been redeeming their USDT tokens and allocating towards other potentially “safer” stablecoins.

Regulatory Landscape

South Korea has reportedly launched an emergency investigation into the collapse of the Terra ecosystem and the downfall of its native governance token LUNA and algorithmic stablecoin UST. The country is reportedly considering implementing a licensing system for coin issuers and crypto exchanges, which it thinks might be able to mitigate investor losses from bad actors.

Meanwhile, the South Korean government reportedly wants to summon Terra founder Do Kwon to a hearing before parliament over Terra’s recent crash. Yoon Chang-Hyeon, a representative of the ruling People Power Party, said that “we should bring related exchange officials, including CEO Do Kwon of Terra, which has become a recent problem, to the national assembly to hold a hearing on the cause of the situation and measures to protect investors”.

Ahead of the meeting of G7 finance ministers later this week, Bank of France head and European Central Bank governing council member Francois Villeroy de Galhau has issued fresh calls for more crypto regulation. “What happened in the recent past is a wake-up call for the urgent need for global regulation… Europe paved the way with MICA (regulatory framework for crypto-assets), we will probably… discuss these issues among many others at the G7 meeting in Germany this week”, he said on Tuesday.

Meanwhile, over in the US, the Congressional Research Service, a legislative research agency that supports Congress, described the recent downfall of UST and the broader LUNA ecosystem as like a bank run.

Daily Crypto Brew: Global Equity Rebound Lifts Crypto Ahead Of US Retail Data, Fed Speak

Key Points

  • A rebound in global equity markets is helping lift crypto markets from Monday’s lows.
  • But cryptocurrencies are still mostly lower on the week as focus shifts to US retail data and Fed speak.
  • Bitcoin has rebounded to the mid-$30,000s from Monday’s lows around $29,000.

State Of The Market

Global equities are on the front foot following a strong Asia Pacific session, where sentiment was boosted amid positive reporting on a decline in Covid-19 cases and easing restrictions in Shanghai and on the possibility that China might soon ease its crackdown on big tech, thus (modestly) easing fears about the current slowdown in global growth.

S&P 500 index futures are currently trading about 1.75% higher in pre-market trade, while Nasdaq 100 futures are more than 2.0% higher. This is giving a lift to cryptocurrency markets, which have shown to be tightly correlated to US equities in particular as of late.

The total market capitalization of cryptocurrencies was last up about 2.5% in the $1.3 trillion area, up around 5.0% from Monday’s dip to $1.24 trillion. But that still leaves total market capitalization lower by around 2.5% on the week and around 56% below last November’s record highs above $3.0 trillion.

Concerns about aggressive monetary policy tightening from major central banks (most notably from the US Federal Reserve) continue to dampen the prospect of a more meaningful crypto (and equity) market rebound.

NY Fed President and influential FOMC member John Williams gave no indications that the Fed is looking to slow the pace of monetary tightening in the month ahead, instead emphasizing the Fed’s stance that controlling rampant inflation remains its number 1 priority.

Plenty more Fed policymakers will be speaking on Tuesday, most notable of which is remarks from Fed Chair Jerome Powell from 1800GMT. Markets currently expect the Fed to hike rates by 50 bps at its next three meetings in a bid to get interest rates to around 2.5% by the end of the year.

While there is room for more of a relief rally in crypto if equities continue recent positive momentum, traders should be cautious about assuming the bottom is in. For the bottom to truly be in, we will likely need to see inflation in the US (and elsewhere) moderate, the Fed soften its rhetoric on the need for tightening and global growth fears abate somewhat.

US retail giant Walmart will both be posting their Q1 earnings results, whilst US Retail Sales data for April is also out at 1230GMT, meaning there will be a lot of focus on the underlying strength of the US consumer. Given consumption is the major growth engine of the US economy, this data could impact broader macro and crypto market sentiment, so will be worth monitoring.

Bitcoin, Ethereum, Altcoins

In tandem with the broader improvement in macro and crypto risk appetite, bitcoin is trading higher by about 2.5% on Tuesday just above the $30,500 level per token, taking its gains versus Monday’s lows around $29,000 to around 5.0%.

That gives the cryptocurrency a market cap of around $580 billion, while its crypto market dominance is stable at around 45%. Nonetheless, BTC/USD is still trading lower on the week by about 2.0%, meaning it is currently on course for a record eighth successive weekly decline.

Eight weeks ago (i.e. the end of March/the start of April), bitcoin went as high as $48,000, and so has dropped by more than 35% during this time.

Ethereum, meanwhile, is trading higher by about 3.5% near the $2,100 level, up around 6.0% versus Monday’s sub-$2,000 per token lows, but still down by about 2.2% on the week. That puts ethereum on course for a seventh successive weekly loss, during which time it has dropped roughly 40% back from the $3,500 area.

According to Bloomberg commodity strategist Mike McGlone, bitcoin and ethereum will outperform equities in the future as their volatility continues to decline. Referring to bitcoin in an interview with Yahoo Finance, McGlone said “asset that went up the most in the last 5-10 years is going to come back as the Fed hammers down.”

Elsewhere, traders in Brazil will be able to trade bitcoin and ethereum futures in the next three to six months on the B3 stock exchange.

Brazilian Stock Exchange B3 will offer Bitcoin and Ethereum futures in three to six months. The exchange is also planning to offer studies for asset tokenization and crypto trading, among others.

In other news, China was still the second-largest bitcoin hash rate providing country in the world in January despite banning cryptocurrency mining last year, according to data released by the Cambridge Bitcoin Electricity Consumption Index (CBECI) on Tuesday. Bitcoin miners in China still accounted for about 21.1% of the network’s global hash rate, while the US accounted for 37.8% of the global hash rate.

An index of the top ten altcoins was up more than 3.0% on Tuesday in tandem with the broader uptick in crypto market sentiment. Top ten non-stablecoin cryptocurrencies including Solana’s SOL (+5.3%) and Cardano’s ADA (+5.5%) for the most part outperformed the likes of bitcoin.

DeFi Markets

The market cap of the major DeFi tokens fell to around $53.7 billion as of the early hours of Tuesday trade, CoinGecko data showed. It has been relatively stable in the $50-60 billion area over the past few days after dropping back from above $100 billion at the start of the month following the collapse of Terra’s LUNA and UST tokens.

As of Tuesday, the total value locked in the entire DeFi space remained close to $100 billion, data from DeFi Llama showed. It has been stable at around $100 billion in recent days after collapsing lower from above $180 billion in wake of Terra’s downfall.

There has been a lot of focus on the outperformance of MakerDAO’s governance token MKR as of late. MakerDAO is the creator of US dollar-pegged stablecoin DAI which has held up well despite turbulence across stablecoin markets.

MKR/USD is up more than 75% from a brief dip below $1,000 per token in the immediate aftermath of TerraUST’s initial de-pegging from the US dollar.

The token currently trades in the upper $1600s, giving it a market cap of around $1.64 billion, making it the seventh-largest of the major DeFi tokens. MKR’s recent strong performance comes despite investors pulling money out of DAI in recent weeks.

At the start of May and prior to UST’s crash, DAI had a market cap of around $8.7 billion, compared to now being around $6.5 billion. DAI still has the second-largest market cap of the major DeFi tokens.

In terms of notable news stories related to the DeFi space, Coinbase is reportedly testing a new in-app browser that will allow users to access ethereum-based decentralized Apps (or dApps).  Users will be able to exchange funds into these dApps through a new co-custodial hot wallet.

Terra Founder Do Kwon proposed on Monday proposed forking Terra onto a new chain that gets rid of its failed UST algorithmic stablecoin, with the new chain to instead be focused on the development of DeFi applications.

Kwon said the current chain would continue and be called Terra “Classic”. LUNA holders on the current and soon-to-be “Classic” Terra chain will receive a token airdrop on the new chain. The proposal is at the moment just that, but Kwon said that, if approved by Terra’s network validators and community, the fork could take place as soon as 27 May.

Exchange Flows

As of 0500GMT on Tuesday, exchanges had seen a net outflow of $326.5 worth of bitcoin in the last 24 hours, a sign of improving investor confidence, Glassnode data showed. Ethereum, meanwhile, saw an even heftier net outflow from exchange wallets worth around $977.7 million. USDT saw a net inflow to exchange wallets of around $430 million, a sign confidence in stablecoins is yet to fully recover.

Regulatory Landscape

US Securities and Exchange Commission Chair Gary Gensler took aim at cryptocurrency markets once again on Monday, saying that investors need to be provided with more protections. According to Gensler, those who invest in cryptocurrencies don’t normally get the same disclosures about their investment that come with investments in other asset classes.

Elsewhere, the US launched its first case involving the use of bitcoin to evade sanctions. The defendant in the case stands accused of creating a payments platform that moved approximately $10 million worth of bitcoin through it, with the defendant allegedly boasting that the service could be used to evade sanctions.

Meanwhile, European Central Bank officials are calling for regulation in wake of Terra’s collapse last week. According to Bank of France Governor Francois Villeroy de Galhau, “crypto-assets could disrupt the international financial system if they are not regulated, overseen and inter-operable in a consistent and appropriate manner across jurisdictions”. Separately, ECB executive board member Fabio Panettarecently warned that “stablecoins are vulnerable to runs”.

Portuguese Finance Minister Fernando Medina stated that Portugal is building a framework that tees up the taxation of cryptocurrency income gains. Portugal has up until now been seen as something of a European crypto tax haven given its lack of crypto-related taxation.

Meanwhile, over in Australia, the Australian Taxation Office (ATO) has warned cryptocurrency investors that they must report capital gains/losses from digital assets, including non-fungible tokens (NFTs), in an announcement on Sunday. Australia’s next tax season begins on 1 July.

Bitcoin Holds Support, Will the Levy Break?

Bitcoin Price Action Comparison With Last Year

The Price of BTC moved back above the critical support level of $29,000 last Friday (May 13th) after dipping as low as $25,500 on the previous day. While BTC has yet to show signs that a recovery is on its way, the pause in the major selling pressure after an extended low seems to mirror the action seen exactly one year ago.

Last year in mid-May, Bitcoin fell roughly $30,000 in just two weeks, losing about 50% of its value in that short, brutal time frame. What followed two months of loose consolidation at prices comparable to the current market print before rallying to a new ATH. While it is indeed much too early to say that a base has formed at the $29,000 – $30,000 level, the price action is shockingly similar to what we saw precisely one year ago.

What Is Different Now?

The big difference between then and now is that the underlying macro fundamentals in markets with a strong correlation have changed. As such, those markets, mainly big tech which can be viewed through the Nasdaq Composite, have an uphill battle with the Fed’s monetary tightening already straining the industry.

This is happening when the Fed funds rate still remains historically low. The effective Fed funds rate currently at 0.83% is still lower than any other time than the recent pandemic over the last 64 years, matching the lowest rate pre-pandemic on record from May 1958.

If we look back over the past 70 years and compare what the Fed funds rate climbed to in order to battle the many rises in inflation, you will notice that nearly every period of rampant inflation required a Fed funds rate that was equal to or greater than the year over the year inflation rate. We are a very long way away from reaching that threshold. In fact, over the past seventy-plus years, has the difference between those two metrics been farther apart. Inflation on a yearly basis still outweighs the Fed funds rate by nearly 7%.

What Does This Mean for BTC?

Unfortunately, it is this fundamental difference that will likely be the cement shoes that drag Bitcoin down to the depths of the economic ocean. The Nasdaq will likely only continue to fall, and with it a lot of institutional investment dollars will be moved out of Bitcoin and big tech or simply mass liquidated by institutional investors.

The same investors that we all praised for helping Bitcoin’s previous rallies are the same investors who will bring about a new extended bear market. So unlike the previous two times bitcoin was trading at this price level (January and Summer of 2021) Bitcoin will likely not have a major rally from this point, but instead this is likely a stopping point on the way down.

BTC Technical Analysis and Price Forecast

For now, Bitcoin is holding on precariously above $29,000 support but with the equities sell-off likely just beginning how long will it last? Bellow $29k, the next support level is $24,500, below that major support lies at $18k, which is where I believe this correction could lead us to over the next six to twelve months. Current resistance is at $32k and above that major resistance at $37,500.

For anyone interested in viewing more articles on Bitcoin, simply click this link.

Your Crypto Brew: Bitcoin Dips Back Under $30,000 Amid China Growth Fears

Key Takeaways

  • After a positive weekend, cryptocurrency markets are giving back some gains on Monday, with BTC/USD back under $30,000. 
  • Weak Chinese data over the weekend have put fears about slowing global growth in the limelight.
  • US Retail Sales data and Fed Chair Powell’s speech, both Tuesday, will be key events for crypto markets this week.

State Of The Market

Cryptocurrency markets are seeing broad weakness at the start of the week following a weekend of stabilization. The total market capitalization of cryptocurrencies rallied to as much as $1.344 trillion on Sunday, up nearly 25% at the time from last Thursday’s multi-month lows under $1.1 trillion.

After closing out Sunday trade in the green for a third successive session, the longest positive run since March, the total market capitalization of cryptocurrencies has fallen a little more than 5.0% on Monday to around $1.26 trillion.

Data released out of China over the weekend showed steep declines in the YoY growth rates of both the nation’s Industrial Output and Retail Sales in April. Recent economic weakness in China comes as the country implements harsh lockdowns across major cities including financial hub Shanghai and the capital Beijing in order to contain the spread of Covid-19.

The latest data out of China, the world’s second-largest economy, highlights increased concerns investors have been having about slowing global growth as of late. These concerns, alongside concerns about central bank tightening, have weighed heavily on risk-sensitive assets such as equities and crypto in recent weeks.

Growth worries and central bank tightening fears will remain in focus this week with the release of April US Retail Sales figures followed by remarks from US Federal Reserve Chair Jerome Powell on Tuesday.

Markets expect the Fed to implement further 50 bps rate hikes at its next few meetings as it seeks to bring rates to a more neutral level amid persistently elevated US inflation. Against the backdrop of concerns about growth and tighter monetary policy, rallies in cryptocurrency markets may remain subject to being sold.

Bitcoin, Ethereum, Altcoins

In tandem with the recent swing in cryptocurrency market sentiment, bitcoin is back to trading just below $30,000 on Monday, down nearly 5.0% on the day, having rallied as high as $31,400 on Sunday. At current levels of around $29,000 per token, bitcoin’s market cap is around $570 billion, and its crypto market dominance is around 44.5%.

Similarly, ethereum is back to trading near the $2,000 per token level having gone as high as the upper $2,100s over the weekend. At current levels, its market cap is around $245 billion, and its crypto market dominance is around 19.3%.

Price action across most of the rest of the other non-stable coin cryptocurrencies in the top ten has been similar to that of bitcoin and ethereum over the past few days. On Monday, Ripple’s XRP was last trading lower by about 6.0% around $0.40 per token, and Binance’s BNB was last down around 5% and back to just below $300 per token.

Cardano’s ADA was last down about 4.5% to around $0.57 per token and Solana’s SOL was down just under 8.0% to around $54 per token. Popular meme coin DOGE was last down about 6.0% to just under $0.09 per token.

DeFi, NFTs

After last week’s LUNA-led rout that saw the market of major DeFi tokens collapse from near $100 billion to lows around $50 billion, sentiment has stabilized since the weekend. The market cap of major DeFi tokens is currently around $56 billion, little changed since Sunday.

In terms of the latest news regarding Terra’s LUNA, the market cap of the token native to Terra’s blockchain went as high as $3.0 billion over the weekend but has since dropped back to around $1.4 billion.

Ethereum founder Vitalik Buterin said he strongly supports a plan that would deliver “coordinated sympathy and relief for the average UST smallholder who got told something dumb about “20% interest rates on the US dollar” by an influencer, personal responsibility and SFYL for the wealthy”.

Meanwhile, questions have been rising about what happened to the Luna Foundation Guard’s (LFG) bitcoin reserves, with $1.2 billion reportedly still unaccounted for. The LFG is a non-profit set up to support the development of the Terra ecosystem and had been building a large bitcoin reserve to help back UST.

Separately, over the weekend a Bored Ape Yacht Club non-fungible token (NFT) worth over $200,000 was mistakenly sold for $200. Some speculated the sale could actually have been for tax evasion/avoidance.

Exchange Flows

According to Glassnode data, last week saw $19.4 billion worth of bitcoin flow into cryptocurrency exchange wallets versus $17.9 billion flow out. The net inflow to exchanges was thus around $1.5 billion worth of bitcoin, which isn’t too surprising given last week’s volatile/bearish conditions.

In times of crypto market stress, it’s not unusual to see investors moving their crypto into their exchange wallets so they can sell.

Last week also saw a net inflow of around $979.5 million ethereum and $3.8 billion USDT (Tether USD) into exchange wallets.

In terms of exchange flows on Sunday, bitcoin saw a net outflow of just under $70 million, ethereum saw a net inflow of just under $50 million and USDT saw a net inflow of just over $70 million.

Crypto Adoption

Major global investment banks Goldman Sachs and Barclays invested in a $70 million funding round for Elwood Technologies, a crypto trading/portfolio management software company, marking a new bet on the longevity of the crypto space.

Meanwhile, reports over the weekend suggest that Japanese bank SIB Holdings will buy a 51% stake in crypto trading platform BITpoint Japan.

Grayscale Investments just listed its first exchange-traded fund (ETF) in Europe. The Future of Finance UCITS ETF will list on the London Stock Exchange, German Börse, and Italian Borsa Italiana and will offer investors exposure to companies including PayPal, Coinbase Global, Block, Robinhood Markets, and Argo Blockchain.

Finally, the CEO of major crypto exchange FTX Sam Bankman-Fried said that he doesn’t think bitcoin has a future as a payments system, but that it does have potential as a store of value.

Regulatory Landscape

The UK government on Monday confirmed that they will regulate stablecoins following the LUNA and UST collapse. They reportedly do not have any problem with stablecoins, so long as they aren’t algorithmic (like UST was).

Reports over the weekend suggest that South Korea is to launch an emergency review of cryptocurrencies in wake of the LUNA and UST crashes.

“32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the #Bitcoin rollout and its benefits in our country”, El Salvador President Nayib Bukele tweeted on Monday. The meeting will take place on Tuesday.

Officials at India’s central bank warned a key parliamentary finance panel that the adoption of crypto in the country could result in the “dollarization” of the Indian economy and reiterated their recommendation for a complete ban. India may also soon ban crypto celebrity endorsements.

Finally, the Securities and Exchange Commission of Nigeria said in a new rulebook published over the weekend that all digital assets represent either an asset such as a debt or equity claim on the issuer, thus by default fall under their regulatory purview.

Bitcoin: The dreaded C-wave Is Here

Bitcoin Elliot Wave Analysis

Two weeks ago, I shared that Bitcoin (BTC) had essentially flatlined and how, from an Elliott Wave Principle (EWP) perspective, this sideways price action could become an elaborate triangle (see here). Or it could turn into “a more immediate downside setup to ~$25K … to complete the enormous 4th wave it is carving out before it is ready to rally to $100K+ for its next more significant 5th wave.” (See here and here). And I presented a three-step process :

  1. “Stay below last week’s high ($42997) and especially the late-March high ($48208).
  2. Close below the February low ($34350). That opens up the potential to target $28-30K.
  3. Close below the January low to confirm the impulse pattern’s ideal downside target of $25-27.5K.

Thus one had clear if/then parameters in place, which could be used as stops, as over the last two weeks, BTC did all of these three items and reached the 3rd wave target zone: it bottomed at $25838 today. See Figure 1 below.

Figure 1. Bitcoin Weekly chart with detailed EWP count and technical indicators.

The more straightforward 4th wave potential materialized.

As stated in my previous update, “BTC is now at the stage where we can start to minimize our options and focus on two. The triangle … and … the completion of a simple zig-zag: a-b-c; 5-3-5. From its November 2021 all-time-high into the mid-January low, BTC completed wave-a. The subsequent multi-week bounce was wave-b. Now the cryptocurrency should be completing the 5-wave c-wave. Last week it already topped right in the ideal (red, intermediate) wave-ii target zone and is currently trading below the tentative but preferred wave-i low. Thus wave-iii should now be underway, followed by iv and v, as shown in Figure 1.

All of this has come to pass, except for the wave-iv and v. Shorter-term, i.e., over the next few days, BTC can still wrap up some smaller 4th and 5th waves (of the minute and minor degree) to complete the higher-degree (red) intermediate-iii wave, but technically wave-iii has done enough. Thus, it is time to start looking for that wave-iv bounce to ~$34+/-1K, which should be a multi-day event.

Because of the EWP, we know waves four and five come after the third wave. Thus, when wave-iv is complete, BTC should do one last stab lower for wave-v to ideally ~$24+/-1K. That will then have washed out even the most stubborn Bulls and allow BTC to get ready for its next Bull run.

Bottom Line and Bitcoin Price Forecast

Two weeks ago, I concluded, “Thus the stage has been set. The conditions are in place for a more direct route to the downside. All BTC must do is provide the triggers according to the aforementioned “three-step program.” BTC complied and triggered each step, which for traders can be used as binary if/then parameters, e.g., stop (loss) levels, and the forecasted $25-27.5K region has been reached.

So far, so good, no surprises. I, therefore, prefer to look for a multi-day bounce back to ~$34+/-1K soon, with the lower end preferred, followed by a final stab lower to ~$24+/-1K. That should then complete a much larger-degree 4th wave correction and allow BTC to start its rally to $100K.

Your Crypto Brew: Stablecoin Woes, Unfavorable Macro Flows Weigh on Crypto

Key Points

  • Reports were doing the rounds on Thursday that Grayscale has met with the US SEC privately.
  • The crypto market decline has continued on Thursday as stablecoin woes and macro worries weigh on sentiment.
  • Bitcoin (BTC) hit its lowest level since December 2020, while stablecoin troubles seem to have spread to USDT.

Today’s daily Crypto Brew takes a deep dive into the latest news, themes, and developments driving crypto markets.

The total market capitalization of cryptocurrencies continued to fall on Thursday, at one point falling below $1.1 trillion for the first time since February 2021, but more recently stabilizing above $1.2 trillion. That still leaves losses at about 3% (over $40 billion) on the day and close to 21% (around $330 billion) on the week, at the time of writing.

According to CoinGlass, cryptocurrency future positions worth $1.26 billion were liquidated in the last 24 hours. Most of these liquidations continue to be of long positions as the crypto market declines.

Long liquidations on Wednesday were just shy of $700 million, not far below Monday’s more than three-month high of nearly $800 million.

State of the market

Cryptocurrency markets have continued to reel on Thursday as the collapse of Terra’s stablecoin UST triggers contagion across other stablecoin markets, with Tether’s USDT now looking to be in trouble. Stablecoin woes come against a still very unfavorable macro backdrop for the crypto market, with US stocks down sharply in wake of hotter than expected US inflation data.

April US Consumer Price Inflation (CPI) data released on Wednesday revealed a smaller than expected drop in the YoY rate of headline inflation (to 8.3% from 8.5% in March rather than the expected drop to 8.1%). Meanwhile, core price pressures were also hotter than expected, with the MoM jump in core prices exceeding expectations at 0.6% versus an expected rise to 0.4% from 0.3% in March.

Heading into the data release, traders had been hoping that signs of easing price pressures would facilitate a winding down of hawkish Fed bets. This could have given stocks and crypto a short-term boost.

But as it played out, the opposite happened and the Fed will look upon the latest CPI data with concern.

The latest data likely reaffirms their conviction to tighten monetary policy “expeditiously” back to so-called “neutral” (rates around 2.5%) by the end of the year and perhaps much higher in 2023, despite a slowing global growth impulse, which has been exacerbated in recent weeks by lockdowns in China and the Russo-Ukraine war.

It was thus not surprising to see US equities extend their recent run of losses on Wednesday, led unsurprisingly by the high-interest rate-allergic tech sector. The Nasdaq 100, with which the cryptocurrency market has had a close correlation in recent months fell 3.0% to below the 12,000 for the first time since November 2020.

Nasdaq 100 index future suggests the index is set to open Thursday’s session a further more than 1.0% lower in the 11,800s, meaning it is now down roughly 30% versus its record highs back in November 2021.

Bitcoin

Bitcoin was last trading down about 2% in the $28,500 area, having recovered from an earlier dip as lower as the mid-$25,000s, giving it a market cap of just over $540 billion, near its lowest since early 2021.

On the week, BTC/USD is down about 16.5% and, at current levels, the cryptocurrency trades lower by about 60% versus its all-time high printed last November just above $69,000.

The percentage of bitcoin addresses in-profit dropped to a two-year low of 60.4% on Thursday, Glassnode data showed.

Alternative.me’s Fear & Greed Index for BTC showed that markets remain in a state of extreme fear with a score of 12. The index hit 10 earlier in the week, not far above the all-time worst score of 5 hit back in August 2019.

fear and greed index
Source: Alternative.me

Altcoins

Turning to etheruem (ETH), ETH/USD was last trading lower by close to 5.5% in the mid-$1,900s. The cryptocurrency has recovered from an earlier crash as low as the $1,700s for the first time since June 2021, where it tested a triple bottom in the $1,750 area from the middle quarters of 2021.

At current levels just under $2,000, the market cap of the world’s second-largest cryptocurrency stands at just above $230 billion and, like bitcoin, is around 60% down versus its record highs from last November.

Other notable layer-1 blockchain tokens in the top ten cryptocurrencies by market cap took a beating on Thursday.

  • Binance’s BNB is down around 10.4% in the last 24 hours, according to CoinMarketCap, at the time of writing.
  • Ripple’s XRP last down about 24% in the last 24 hours.
  • Cardano’s ADA is around 25% lower in the last 24 hours, whilst Solana’s SOL has shed about 28% of its value over the same time period.
  • Popular meme tokens Dogecoin (DOGE) and Shiba Inu (SHIB) were both down in the region of 30% over the last 24 hours. DOGE’s market cap fell under $10 billion for the first time since April 2021.
  • LUNA, the native token on the Terra blockchain, was last changing hands on exchanges for under 5 cents, meaning it has lost about 99.9% of its value from its record highs printed at the beginning of April near $120 per token since the de-pegging of Terra’s flagship stablecoin UST.

Stablecoins

Stablecoin trouble that originated over the weekend just gone with the de-pegging and subsequent collapse of Terra’s algorithmic stablecoin UST (which has resulted in the collapse of the Terra blockchain’s native LUNA token) has spread to Tether’s stablecoin USDT.

USDT/USD went as low as $0.94 on Thursday, according to Coinbase data cited on TradingView. It now trades closer to $0.99 again.

USDT is allegedly backed 1:1 with actual US dollars of liquid equivalents (short-term US debt instruments), according to Tether. But Tether has come under scrutiny and criticism in the past amid claims that USDT isn’t actually backed 1:1.

UST, meanwhile, continues to trade like an illiquid altcoin and continues to swing all over the place. It was last trading around $0.50, despite Terraform Labs announcing further measures to save the peg on Twitter.

Citadel Securities, BlackRock, and Gemini have all criticized social media-based conspiracy theories alleging that they played some part in the UST collapse.

For now, USD Coin (USDC), Binance USD (BUSD,) and Dai (DAI), the next major USD stablecoins, all continue to trade comfortably in line with their 1:1 pegs to the US dollar.

Flows, deals, and transactions

According to Glassnode, $3.3 billion in bitcoin was sent to exchange wallets on Wednesday versus $3.2 billion out, amounting to a net inflow of around $49.9 million.

That coincided with the 7-day moving average of Exchange Inflow Volume reaching an 11-month high of 3,372.517 bitcoins (per day) and bitcoin Balance on Exchanges reaching a 1-month high of 2,542,255.466 bitcoins on Thursday, according to Glassnode.

Traders moving bitcoin to exchanges in a higher number is usually a sign of an elevated intent to sell in the market.

Meanwhile, crypto investors reportedly moved $1.6 billion into exchanges on Wednesday versus $1.6 billion out, resulting in a net inflow to exchanges of just over $30 million.

DeFi tokens

According to CoinGecko, the market cap of DeFi tokens fell to $48.6 billion on Thursday. That marks a more than 57.5% collapse in just seven days and is mostly due to the demise of LUNA, the former largest of the DeFi tokens.

The total value locked (TVL) on all DeFi platforms continued its recent collapse and was last at just over $100 billion, down over 25% in the last 24 hours alone, data on DeFi Llama showed. Much of the recent collapse has been driven by the downfall of the Terra ecosystem, which now has a TVL of only about $2.0 billion versus close to $22.0 billion just one week ago.

  • Of the largest ten DeFi tokens, Lido Staked ether’s STETH (around -20% in the last 24 hours)
  • Chainlink’s LINK (around -25%)
  • Uniswap’s UNI (around -23%)
  • PankcakeSwap’s CAKE (around -27%)
  • Maker’s MKR (around -30%)

They are all performing poorly in tandem with the broader crypto market drop, at the time of writing.

DeFi stablecoins including Dai’s DAI, Frax’s FRAX, and Magic Internet Money’s MIM are all remaining broadly stable close to $1.0, as is their intended purpose.

Crypto regulation landscape

Australia’s first-ever bitcoin and ethereum Exchange Traded Funds (ETF) went live on Thursday, launched by ETF Securities and Cosmos Asset Management. Trading surpassed A$ 1 million in the first two hours, which market commentators said marked a strong start given broader market turmoil.

“ETF Securities and Cosmos Asset Management’s cryptocurrency launch may go down in history books and put Australia’s ETF market in the running,” analysts at Bloomberg Intelligence wrote. Australia’s crypto market could hit $1 billion by the end of the year, with the country potentially acting as the Asia-Pacific’s gateway to crypto ETFs, they noted.

With Australia joining ranks with Canada as one of the few major developed economies where cryptocurrency ETFs have received approval, pressure on the US Securities & Exchange Commission to allow a US-based crypto ETF builds further.

Reports were doing the rounds on Thursday that Grayscale has met with the US SEC privately as it pushes for regulator approval of its plan to convert its Bitcoin Trust into an ETF.

Speaking of the SEC, two former SEC lawyers told The Block on Wednesday that the US regulator is likely already investigating what happened to UST over the weekend.

The SEC had already taken an interest in the Terra ecosystem, one of the lawyers said, noting the Mirror protocol that enabled crypto investors to buy digital assets whose value remains closely linked to traditional financial assets, though remains outside the regulatory purview.

Elsewhere, the High People’s Court in Shanghai declared bitcoin to be a legal form of virtual property that will be protected under Chinese law. This is despite the fact that cryptocurrency trading is banned in China.

Bitcoin Stabilised but Has Trouble to Reverse Strongly

Bitcoin Price Action and Indicators

Bitcoin added a symbolic 0.1% on Tuesday, ending the day around $31K and adding another $500 this morning. Ethereum has been adding 0.2% in the past 24 hours. Other leading altcoins from the top 10 showed mixed dynamics, ranging from a 10.8% decline (Avalanche) to a 0.2% gain (Binance Coin). The total capitalisation of the crypto market, according to CoinMarketCap, declined 1.6% overnight to $1.42 trillion. The Bitcoin Dominance Index rose 0.4% to 42.2%. The Cryptocurrency Fear and Greed Index added 2 points to 12 by Wednesday, starting recovery from an area where it rarely lingered.

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BTC Price Forecast

Although Bitcoin managed to close Tuesday’s trading with a proper strengthening, a powerful offensive did not happen, as bull buying was choked again by stock market pessimism. It remains a situation where the stock or debt markets will determine whether we see another rebound from the critical $30K level or a failure of support and a complete surrender of the buyers. Cardano creator Charles Hoskinson has announced the beginning of new crypto winter. However, he does not see any factors that could trigger the market to rebound soon.

Crypto News

Cryptocurrency investment company Galaxy Digital reported a net loss of $111.7 million for the first quarter of this year. Galaxy Digital founder Mike Novogratz allowed bitcoin to decline further in the coming quarters due to the negativity on Wall Street. Meanwhile, last week saw an influx of institutional investors into crypto funds after four weeks of capital withdrawals.

MicroStrategy chief executive Michael Saylor said it has no plans to sell its cryptocurrency reserves. He said bitcoin would have to fall below $3562 for the firm to have insufficient assets to secure loans. El Salvador has bought another 500 bitcoins at an average of $30,744 amid a fall in the crypto market. Last autumn, the country’s recognition of BTC as legal tender was a landmark event for the global economy.

by FxPro’s Senior Market Analyst Alex Kuptsikevich

Bitcoin Needs to Hold Support to Avoid Severe Sell-off

Bitcoin Spot vs Futures Pricing

As of 4:45 EST, Bitcoin is trading up by roughly 3% on the day at $31,030 (Coinbase). Confirming the bearish market sentiment BTC futures are trading lower than their spot counterparts at $30,990. When future pricing of a commodity or asset is below the spot or live pricing, it is signaling that market participants believe overall that the asset or commodity is likely to decrease in price in the future.

Bitcoin 1h chart

BTC Technical Analyisis

If we do a Fibonacci retracement from pricing a week ago at around $40,000 to the lows of yesterday at around $30,000, it is clear that Bitcoin failed to move past the 23% retracement level, at roughly $32,130 on its bounce higher today. This is indicating lower prices are likely still.

If Bitcoin fails to hold support at $29,000, then $20,000 is certainly on the table. I believe that Bitcoin will hold $10,000 even in the worst-case scenario, but if we were to get that low, that would entail a further decline of over 60%. That is why Bitcoin needs to hold onto current support to avoid a further bloodbath, opening up to prices not seen since 2020.

For anyone interested in viewing more articles on Bitcoin, simply click this link.

Crypto Update – Bitcoin and Ethereum Nearing Crash Status

The selloff that started after last week’s Fed announcement is continuing. I see the potential for a flash crash in May.

Bitcoin and Ethereum are below critical support levels and could drop further and faster. The price action over the next few days is key.

Bitcoin Technical Analysis and Price Forecast

BTC/USD Daily chart: A potential breakdown below the neckline of a skewed head and shoulder top. I think the left shoulder is higher than it would have been otherwise if we didn’t get so much free covid money in 2020 & 2021.

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Ethereum Technical Analysis and Price Forecast

ETHEREUM Daily chart: Prices are breaking critical trendline support. I see the potential for a sharp move lower.

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AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For regular updates, please visit here.

Crypto Markets Shed Over $280Bn in Five Days, Bitcoin Hits Lowest Since July 2021

Key Points

  • Cryptocurrency markets have shed more than $280 billion in value since last Wednesday.
  • Bitcoin fell to its lowest levels since July 2021 under $33,000 per token.
  • Losses come against the backdrop of falling global equities/rising bond yields on central bank tightening expectations.

The total cryptocurrency market capitalization looks on the verge of falling to its lowest level of the year after falling below $1.5 trillion this Monday.

Since last Wednesday, when the cryptocurrency’s market cap was just under $1.8 trillion, nearly $280 billion in value has been wiped out of existence.

The ugly start to May, which has already seen the cryptocurrency market shed over 10% of its value, comes after an even uglier April, during which time the market dropped nearly 20%.

Compared to early April highs just over one month ago, the total market cap of the crypto market cap has fallen by about $670 billion.

Unfavorable macro backdrop hurting crypto markets

An unfavorable macro backdrop characterized by volatile, bearish conditions in global equity markets, as well as a sharp upside in global bond yields, has been the primary factor weighing on crypto markets, in recent months.

Sky-high inflation in the US and other major economies as a result of the over-the-top fiscal and monetary response to the pandemic which, at the time, also disrupted global supply chains, and which has also been recently worsened as a result of the disruptive impact on the global economy from the Russo-Ukraine war, is driving major central banks (like the Fed) to quickly remove monetary accommodation.

In recent months, it has begun to dawn on markets just how high-interest rates in the US (and elsewhere) may have to rise in order to bring inflation under control.

That dawning realization seemed to go into overdrive following last week’s hawkish Fed meeting. Since that meeting, the US ten-year yield has jumped more than 20 bps to its highest level since December 2018 near 3.20%, taking its rise since the start of the year to about 170 bps.

Concerns about the rapid withdrawal of monetary accommodation (i.e. low-interest rates), coupled with increasing concerns in recent weeks about slowing global growth have weighed heavily on global equities.

High price/earnings ratio stocks have been particularly hard hit, with the rise in bond yields increasing the opportunity cost of holding stocks which yields relatively less.

Cryptocurrency markets have a close positive correlation to equities, particularly US tech, and so the recent downside has weighed heavily. Meanwhile, given their status as non-yielding assets, the rise in yields (which represents a rising opportunity cost) has also weighed heavily.

Bitcoin on the verge of major bearish breakout

Bitcoin (BTC) just hit its lowest level since July 2021 below the $33,000 mark. The cryptocurrency is already down over 12% on the month, over 30% versus its annual highs printed back in March, and is now down about 52% versus the record highs it printed last December in the $69,000 area.

Bitcoin bears are eyeing a breakout lower towards the 2021 lows in the $28,000s.

Technical momentum certainly seems to be pointing that way, with the 21, 50, and 200-Day Moving Averages all pointing lower and no further substantial levels of support after $33,000 all the way to the 2021 lows.

BTC/USD
BTC/USD Chart. Source FX Empire

The price action in the second-largest major cryptocurrency Ethereum (ETH) is also looking ugly, with the cryptocurrency breaking below the $2,400 level per token, on Monday, for the first time since February.

ETH/USD does still remain some way (about 10%) above the annual lows it printed back in January in the mid-$2,100s, however, this will most certainly be a level the bears will be targeting.

ETH/USD
ETH/USD Chart. Source: FX Empire

Bitcoin Hits New Two-month Lows, Actually Closer to 10-month Lows

Currently as of 4:20 PM EDT, Bitcoin is trading at $35,880 a decline of 1.8% on the day in the spot markets.

Bitcoin Long Term Chart Analysis

This marks the sixth consecutive weekly decline for the cryptocurrency, and the largest weekly decline since the first week of April. Since the first week of April Bitcoin has shed well over $10,000 in value.

While on an intra-day basis we are only at a two-month low, on a closing basis if we close anywhere at or below current prices, we have only one day of pricing lower than current market print between now and July 25, 2021. That means that we are really closer to a 10-month low than a two-month low as we only have one closing price lower between the current market print and the lows of summer 2021 that reached as low as $29,000.

BTC Forecast and Technical Levels

We are predicting lower prices ahead, with support levels at $33,000, and below that at $29,000. Resistance is being marked at $37,500, our old level of support, and $40,000 above that.

For anyone interested in viewing more articles on Bitcoin, simply click this link.

Bitcoin Relief Rally Fails to Close Above $40,000

FOMC’s Rate Hike Impact on US Stock Markets

With the Biggest rate hike in twenty years happening today, with the Fed announcing a 0.5% rate hike today, the broader markets were relieved that Powell did not initiate a larger hike and pretty much alleviated the possibility of a .75% rate hike in the near future. This was perceived as less hawkish and sent the equities markets into a rally. At the time of writing, the S&P 500 is trading up by nearly 3%, and the Nasdaq Composite surpassed 3% gains on the day. These single-day gains in U.S. equities are some of the largest witnessed in some time.

S&P 500 daily chart
NASDAQ 100 daily chart

Bitcoin Correlation with Nasdaq

Naturally, with the correlation between the Nasdaq and Bitcoin being as high as it is, one would expect the rise in the Nasdaq Composite would bring about a rise in Bitcoin. However, Bitcoin’s rally began many hours before the rise in equities or the Fed’s announcement. By the time of the Fed announcement, Bitcoin had already rallied from just below $38,000 to above $39,000. The hour of the announcement brought Bitcoin above $40,000 but only briefly. However, the gains after the Fed’s announcement occurred with a much higher trading volume than last night and early morning’s moves.

Has The Bear Market Ended for Bitcoin?

Today’s gain in Bitcoin of over 5% failed to break out of the broader trading range of $40,000 – $37,500, so today’s move, while welcomed by the bulls, was not successful in signaling that the bear market has ended.

For anyone interested in viewing more articles on Bitcoin, simply click this link.