A Possible Crypto Recovery Moving into New Year, Risk-on Sentiments Send Stock Market to Record Highs

Bitcoin and Ether continue to struggle as they trade around $48k and $3,800 respectively on Friday.

The leading cryptocurrency is now testing a key technical level that has been acting as a floor for Bitcoin over the past two years.

The latest drop in the largest crypto asset’s price has taken it to its 55-week moving average, a decisive break below which would take it to as low as $40,000.

According to Katie Stockton of Fairlead Strategies, a research firm focused on technical analysis, Bitcoin has notched a new short-term buy signal and suggests a two-week rebound. However, it is “low-conviction” due to another measure as per which conditions aren’t oversold, she said.

While crypto is struggling at the end of the year, the stock market hit a new all-time high driven by improved sentiments as governments resist imposing new, widespread lockdowns, even as the new coronavirus variant, Omicron, surges.

The risk-mood sent Wall Street’s main indexes to end the year with their sharpest three-year surge since 1999. The S&P 500 had its 69th record close of the year as it made a new high and is up 28.8% in 2021.

The Dow Jones Industrial Average also closed at all-time highs, rising for a sixth session and up 19% in 2021. The tech-heavy Nasdaq is also up 23% this year and recorded 98 new highs.

As a result, the dollar has also fallen at the low end of its recent ranges as investors favor riskier assets. The benchmark 10-year yields meanwhile reached 1.56%, the highest since late last month after the Treasury sold $56 billion in seven-year notes to weak demand. All eyes are now on the impending US interest rate hikes.

The stock market is currently enjoying the “Santa Claus Rally” that typically occurs in the last five trading days of the year and the first two of the new year. As the crypto market failed to have a “Santa Claus Rally,” investors and traders are now waiting for the rally that comes in the first ten days of a year.

This year “has seen crypto and blockchain mass adoption increase significantly with a large influx of institutional investments that has renewed confidence in this sector,” said Walid Koudmani, an analyst at XTB Market. That “could ultimately lead to significant price gains and increased volatility as retail investors attempt to catch up,” he added.

The crypto market is currently expecting 2022 to be a positive year for Bitcoin and the majority is further not expecting a repeat of the 2018 bear market.

“We can expect relief moving into the new year and a possible recovery drive,” said Joe DiPasquale, CEO of BitBull Capital. “$100,000 is definitely on the charts, but the timing can vary, especially as macro economic policy shifts and regulations start to emerge in the year,” he added.

While the major crypto assets, Bitcoin and Ether, are struggling to rally, altcoins have shone brightly this year with massive gains. Retail investors are likely distracted by these rallies in alternative coins.

“That puts some pressure on Bitcoin as well,” said Rosh Singh, CEO, and founder of Quadency, in an interview. Still, “a lot of people in crypto are pretty optimistic about the next year and think we should see a rally with the way that things have been going,” he added.

Despite the ongoing weakness in the price action, MicroStrategy purchased another $94 million worth of Bitcoin in December. The coin is down 17.5% in the last month of 2021 but still up 62% this year.

The business intelligence company bought 1,914 BTC this time and now owns a total of 124,000 Bitcoin, acquired at an aggregate price of $3.75 billion.

This month, CEO Michael Saylor said on the company’s investor day call with shareholders that they are now looking for ways to generate yields on its Bitcoin stash by either “putting a lien on it” or a “mortgage against it.”

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Author: AnTy

Are Bitcoin Bulls Dead? BTC Funding Rate Remains Low to No Avail

Bitcoin price is struggling, currently trading around $46,000, down 33.5% from its all-time high.

Ever since hitting its ATH at $69,000 early last month, BTC has been on a constant decline. This month, every attempt of the leading cryptocurrency to rise has only sent it lower.

With price action lacking any signs of bulls, the funding rate on bitcoin perpetual remains low at 0.01% on Binance, Huobi, and BitMEX and even lower on OKEx (0.009%), Bybit (0.008%), and FTX (0.007%).

But no one seems to care about the low funding rate, just as they didn’t in late October and early November.

According to trader CL, an investor at eGirl Capital, no one wants to long anymore because many participants of ByBit and Binance have already lost their funds during the May-July drawdown.

“The major shift in how many ppl wanna leverage long happened in May actually, but this phenomena has been proved itself thru the data we saw in sept retrace, and after this Nov/Dec nuke it should be obvious.”

Meanwhile, according to crypto personality Loomdart, who is also an investor in eGirl capital, “general hypothesis is leverage, oi and derivatives have “moved on” to the likes of Terra (LUNA) which hit a new all-time high today, Magic Internet Money (MIM), and Spell Token (SPELL).

https://twitter.com/CL207/status/1472874295055503363

But does this mean the bulls are dead? Not really, as CL explains, “the market is simply very slowly returning to more normal, after a long period of unprecedented froth.”

Some are very bullish still, most notably trader Light, who was bearish at the end of November and before that in April ahead of Coinbase’s public listing and has now taken to bullish posting on Crypto Twitter (CT) since the end of the first week of December. Light tweeted over the weekend,

“Think cardinal sin people are making is conflating price weakness driven by structurally bearish EoY flows (that they have little visibility on and which will abate) with their own meth-trailer-concoction macro fears.”

On Monday, Light noted that on Binance, despite retail being wiped out during the recent sell-off, open interest has still recovered 50% since then. This means, while retail has not resumed its bullishness, whales are the ones who are absorbing on the long side.

“Cash bid makes path of least resistance up. makes r/r set up for a short squeeze, not a long squeeze.”

As we reported, JPMorgan head quant Marko Kolanovic is also expecting a short squeeze to happen by the year-end or the beginning of a new year.

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Author: AnTy

Accelerated Tapering Priced In, But What Does it Mean for Bitcoin Going Forward?

Bitcoin continues to trade around $48k and Ether under $4k as the market eagerly awaits the Federal Reserve’s meeting to wrap up on Wednesday.

The market is preparing for a hawkish central bank, expecting it to accelerate its tapering of asset purchases, a reduction in stimulus, that would allow the officials to begin lifting rates next year. The stimulus efforts have been underway for more than a year and are now started to get wound down as economies recover from the pandemic.

According to trader and economist Alex Kruger, there has been a major change within the Fed with their focus shifted from reducing unemployment to reducing inflation.

“This shift translates into a Fed more likely to raise interest rates sooner and faster. Financial markets have been pricing this hawkishness, with many risk assets correcting lower and the yield curve flattening.”

Now, the big question is, what will the central bank communicate today at its last FOMC meeting of 2021.

In Kruger’s view, “accelerated tapering delivered yet mostly priced in,” adding, “Tapering is secondary, what matters is expectations on the path of future rates.”

Given there has already been a sell-off going on since last week, the hawkish move is already priced in and is not likely to have a negative impact on prices.

Bitcoin is currently down about 30% from its all-time high of $69,000 last month, while Ether is 20%. Meanwhile, the overall crypto market cap is just above $2.3 trillion, down from above $3 trillion early last month.

With derisking in anticipation of the hawkish Fed also extensive, crypto having experienced a 20% to 50% crash already in December, many have already panic sold their crypto assets.

“Therefore, if the Fed were to deliver accelerated taper, signal two hikes for 2022, and nothing else, I would expect a rally across asset classes,” added Kruger.

But still, if Fed Chairman Jerome Powell goes even more hawkish than expected, the market could easily get blasted with fighting inflation, becoming the number one political priority right now.

To Cathie Wood, CEO, and co-founder of Ark Invest, the issue is deflation and not inflation, and it will be the most significant risk for the economy and financial markets in the year ahead.

“We feel like we’re experiencing the same kind of naysaying right now” as when the fund previously made large bets on Bitcoin and Tesla before their marvelous rally, Wood said. “Our confidence in our strategy has increased” despite the losses recorded for the year to date, she added.

For now, the worst-case scenario is a replay of December 2018, when the Fed crashed the market. “For BTC, that would take the price to $42K, which should be defended,” Kruger said, adding, “Whatever ends up happening, expect tomorrow’s close to determine the trend into year end.”

Galaxy Digital’s Mike Novogratz is of a similar opinion as he said $42,000 is an important level and that the low 40s should hold. But he isn’t worried about the prices in the short term. Novogratz in an interview said,

“So much money is pouring into the space, it would make no sense that the crypto prices would go much below that.”

“If you’re long, it feels painful, but it’s probably healthy.”

He further expects 2022 to be the year of DeFi which “got unloved” this year due to issues related to KYC policies that hurt its prospects for institutional adoption.

While we will see a lot of volatility in the short term, Noelle Acheson, head of market insights at Genesis Global, expects Bitcoin “to start to find its place in portfolios going forward” because the crypto asset is not linked to the economy in any way.

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Author: AnTy

“Fear” in The Crypto Market And Bitcoin’s Correlation With S&P 500 Climbs to Highest Level of 2021

Crypto assets are not really having a good time, with Bitcoin stuck around $56,500 and Ether below $4,300.

But crypto assets are not alone in that as speculative stocks aren’t any different as losses picked up in very-high-priced technology names as the bond market started to price in higher odds of rate hikes next year following President Joe Biden picking Jerome Powell for a second term as the Federal Reserve chairman.

“The big-cap tech names have become synonymous with the risk-on/risk-off trade. When the big-cap tech names move in a significant way, other risk assets move in tandem,” said Matt Maley, chief market strategist for Miller Tabak + Co.

This has the 100-day correlation coefficient of Bitcoin and the S&P 500 climbing to 0.33, which is among the highest readings of the year.

image1

A coefficient of 1 shows a strong correlation, while minus-1 would show they’re moving in opposite directions. The current figure means when stocks move up, Bitcoin is likely to do the same, and vice versa.

“The recent drawdown in Bitcoin and the rest of the cryptocurrency ecosystem has been tied to the selloff in the more risky growth names,” Art Hogan, chief market strategist at National Securities. “So you’re seeing cryptocurrencies come off, and you’re seeing the high-flying growth names come down.”

The lack of bullishness in the crypto market, except for particular crypto-assets, has the market sentiments turning to “fear,” as per Crypto Fear & Greed Index.

While some may feel this might be the end of the crypto market, others believe this could be a sign of an extended cycle.

“It’s very possible “extended cycle” could partially play out. Bitcoin could top early January or whatever. ETH a bit later on. Alts in April and maybe DeFi even separately from other alts. Not everything must converge on one top point in time,” said popular crypto investor @bitcoinpanda69.

Currently, there are a few potential factors that are playing a part in the market weakness, including a shifting macro outlook and crypto market conditions.

Within crypto, as price drops, open interest for BTC and ETH, which is a proxy for leverage, has “started to decrease as pressure is placed on existing long positions,” as per Coin Metrics.

As for Bitcoin miners, who are natural BTC sellers, their selling pressure has been minimal and is trending lower. Moreover, they use OTC desks to minimize their impact on the price. Recently, miners have started to HODL their BTC mining rewards.

image2

On a macro front, with the US bond yields, especially with shorter-duration maturities, on a sharp rise over the last few weeks, capital might be reshuffling from riskier crypto assets to a “risk-free” rate of return.

Amidst all this, JPMorgan Chase CEO Jamie Dimon couldn’t help but poke at cryptocurrencies. “It is not really a currency,” Dimon said at the Boston College series of CEO interviews.

These “crypto tokens” have no intrinsic value and have rallied on speculation fueled by government stimulus payments, he said, adding, “It is hysteria.”

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Author: AnTy

Bitcoin Reacts to Biden Picking Jerome Powell as Federal Reserve Chair For A 2nd Term

Bitcoin is currently hovering around $56k and Ether above $4,000 while funding rates normalize, indicating euphoria not high in the market.

Bitcoin jumped 5.3% to nearly $59,550 as Federal Reserve Chairman Jerome Powell got nominated for a second term. The nomination next heads to the Senate for confirmation.

Powell guided the US central bank and the nation’s economy through the Covid-19 pandemic by implementing unprecedented monetary stimulus.

President Joe Biden announced Monday following speculation that Governor Lael Brainard might get the spot who will instead be a vice-chair of the board of governors. Biden said in a statement,

“As I’ve said before, we can’t just return to where we were before the pandemic, we need to build our economy back better, and I’m confident that Chair Powell and Dr. Brainard’s focus on keeping inflation low, prices stable, and delivering full employment will make our economy stronger than ever before.”

Biden also praised the Fed for its “decisive” actions in the early days of the pandemic, which included $120 million monthly bond purchases, cutting interest rates to near zero, and an array of lending programs.

Now markets are watching closely the pace the Fed will unwind its massive policy support as officials have already said they will start tapering bond purchases that could conclude in late spring or early summer 2022 in response to rising inflation. Interest rate hikes would come after that.

According to Morgan Stanley economists, the Fed will wait until 1Q23 to make its first interest rate hike despite their projection that US unemployment will fall to 3.6% by the end-2022.

Falling core PCE inflation and rising labor force participation are two drivers for no hikes in 2022, as per the bank’s economists. According to them, central banks may ultimately prove dovish, which may not be immediately apparent, “an uncertain dynamic that could push yields and USD higher.”

Dovish and Fed is positive for Bitcoin, and so is lower yields as negative real yields (inflation-adjusted) present a challenge for long-term asset allocators which may look to diversify into riskier assets as we saw with Houston Firefighters’ Relief and Retirement Fund becoming the first U.S. public pension plan to invest directly in Bitcoin and Ether.

As of writing, Bitcoin is hovering around $56k and Ether above $4,000. However, the latest weakness in price action for the past couple of weeks has people losing confidence in the continuation of the bull market.

“I’m not short or saying mkt implode imminent, might short on derivs if time feels right, but atm feeling pretty neutral short term,” said trader CL. “This mkt is pretty fkn frothed up.”

Meanwhile, the Crypto Fear and Greed Index is currently in the neutral, giving a ‘50’ reading while last week it was at 72, indicating ‘greed.’

After last week’s drawdown, funding rates have also normalized, with the highest currently on Bybit at 0.0244% and in negative on FTX and OKEx.

“In crypto, euphoria can be appreciated in the funding rates. This is somewhat similar to credit spreads in traditional finance. If funding is not very high, there is no unsustainable euphoria,” noted trader and economist Alex Kruger.

Funding of perpetual contracts is currently at 0.01% while futures quarterly basis at 12.5%, but for these numbers to be concerned, they need to be greater than 0.05% and 18%, respectively, which hit 0.1% and 40% during April and May, Kruger said

“Can crypto still crash? Yes, most definitively. The Fed is in the process of getting hawkish and winter inflation prints can spook the market into thinking the Fed & the ECB may over react. But euphoria is most definitively not that high nor widespread.”

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Author: AnTy

Afghans Embrace Crypto as Fiat Currency Plunges and Banks Severely Limit Withdrawals

The adoption of cryptocurrencies is growing rapidly around the world, especially in developing countries.

Last month, El Salvador became the world’s first nation to adopt Bitcoin as legal tender alongside the US dollar. Following this, many other countries in the LATAM region, like Panama, also started working on adapting cryptocurrency.

As we reported, BitMEX CEO Alex Hoeptner predicts at least five countries accepting the cryptocurrency as legal tender by the end of next year, emphasizing that all of them will be developing countries that are “faced with an inherently unequal financial system” and because they have the “most to lose by continuing the status quo.”

This can already be seen happening in Afghanistan, where banks are severely limiting withdrawals while millions of Afghans currently face food insecurity and severe economic stress set off by cash shortages, rising food costs, and lost income.

“(Bitcoin) was easy to use, cheaper, and more secure than other options,” said Roya Mahboob, founder of the non-profit Digital Citizen Fund.

About a third of almost 16,000 females who learned basic computing skills at her center also learned how to set up a crypto wallet and receive funds. Some of them have left the country after Kabul was captured by the Taliban on Aug. 15, using their crypto wallets to move their money out.

Much like El Salvador, where roughly 70% of them do not have a bank account, the majority of Afghanistan’s population do not have bank accounts either, further accelerating crypto adoption.

According to El Salvador President Nayib Bukele, today, the government’s bitcoin wallet Chivo already has 3,000,000 active users, meaning 46% of the country’s population is using it.

The fiat currency of Afghanistan has also nosedived, and at the same time, Afghan banks and global financial institutions, including MoneyGram, Western Union, and the Central Bank of Afghanistan, lacks enough paper currency to cover withdrawals.

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Back in August, following the takeover by the Taliban, the New York Federal Reserve cut off the country’s Central Bank’s access to its USD assets along with the capacity to settle USD transactions with other banks. Da Afghanistan Bank further lost its ability to purchase paper dollars from the Fed for liquidity and currency stability.

Additionally, the World Bank has stopped the bank from accessing its assets held by the International Monetary Fund (IMF). Mahboob told Reuters,

“I am thinking now – why didn’t we teach about crypto more aggressively, so more Afghans could have crypto wallets and be able to access their money now.”

While regulators around the world point to crypto’s usage in illegal activities despite Chainalysis’ report that the criminal share of all crypto activity fell to a mere 0.34% in 2020, Mahboob, who was named among Time magazine’s 100 most influential people in 2013. said:

“The traffickers and kidnappers will always find a way to abuse a system. But the power of crypto is bigger – especially for women and those who don’t have bank accounts, it is very beneficial and so empowering.”

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Author: AnTy

Shift to Risk-on: Bitcoin Is Up 12% Already in Uptober Amidst Stock Market Weakness

Starting the month around $44,000, Bitcoin price went as high as $49,300 late on Sunday. As of writing, BTC/USD is trading around $47,650 with $26 billion in trading volume.

Last week Friday’s uptrend in Bitcoin’s price was the biggest daily gain since July, which was also seen in other crypto assets as well. After rising as high as $3,490, Ether is currently around $3,330.

In the past week, the biggest gainers include AXS, leading the gains with 137%, then OMG 100%, OHM 52%, QTUM 48%, XTZ 38%, OKB 38%, dYdX 37%, and LUNA 35%. Some other decent gainers in the past 24 hours include ALGO 14%, SHIB 9%, ENJ 8.5%, and HOT 7%.

The total market cap is now back around $2.2 trillion.

The fact that Bitcoin is holding on to the 12% spike in the price of the leading cryptocurrency may have significantly changed its technical setup, said Tom Lee’s Fundstrat. According to strategists at Fundstrat, the breakout “looks important technically.”

“Prices have eclipsed weekly highs as well as one-month downtrends,” they said. While trends turned negative last month, “Friday’s move is a big positive in helping to resolve this consolidation.”

So, it makes sense that Fundstrat is bullish and looking upward for its next key levels. “The first upside target lies at September highs at $52,956, then $64,895,” the strategists said.

The Micro and Macro Effect

This latest increase in Bitcoin’s price may be fueled by a short squeeze in part of the market, as per JST Capital co-founder Todd Morakis and Jonathan Cheesman, head of OTC and institutional sales at crypto derivatives exchange FTX.

According to Joseph Edwards, Enigma Securities’ head of research, the spike in volume on crypto derivatives exchange was a possible driver for the moves. In the futures market, Bitcoin had a net short position of -883, the smallest since mid-August.

After the brutal September — which has been historically expected and the value of Bitcoin dropped 7.2% — amid concern about increasing regulatory pressure in China and the U.S, October is looking more and more like Uptober.

Technically, “the rally has also preserved positive intermediate-term momentum” through the moving average convergence/divergence indicator, said Fairlead Strategies LLC’s Katie Stockton in a note. But at the same time, she sees a counter-trend signal coming from another technical framework, DeMark indicators, that could prevent follow-through on the move.

“We would feel more comfortable moving to a bullish short-term bias once this signal is invalidated — which in our work would require two closes above $48,800,” she said.

After trading sideways for weeks, the market was particularly excited last week, with Federal Reserve Jerome Powell saying they have no intention to ban cryptocurrencies.

This “combined with weakness in the stock market, and the month of October being a typically bullish time for crypto markets, could signal a shift to risk-on trading in crypto markets for the next several weeks, as investors seek returns in non-traditional assets,” said Leah Wald, chief executive of crypto asset manager Valkyrie Investments.

However, the dollar has been showing strength, hitting a new 2021 high at 94.5 on Sept 30 and currently at 93.84. USD is headed for its best week since June, which could spell some trouble for crypto prices.

Overall, seasonality and positive market fundamentals see the crypto market primed for substantial gains in Q4, which has often seen strong performances.

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Author: AnTy

Europeans Favor National Cryptocurrency Regulation: Survey

EU citizens are getting around to crypto regulation, with several respondents noting that they would prefer national regulation of the nascent industry to an EU intervention.

Free from the European Union

A recent survey has shown that more European citizens would like their countries’ financial regulators to provide more clarity on digital assets sooner rather than later.

The survey in question was conducted by Redfield & Wilton Strategies – a Market research company based in London. The company took responses from citizens in 12 European countries, including France, Germany, Greece, Estonia, Italy, and Lithuania.

The survey also sought to gauge public opinions about a possible national digital currency and the prospects of crypto regulations across the continent.

Among the countries, respondents from Italy showed the highest support for a state-backed digital currency, with 41% of respondents giving the green light. Greece followed this with 40% and Estonia with 39%.

The Netherlands had the highest number of respondents against this plan, with 37% clearly against the idea as opposed to 18% in favor.

Interestingly, the survey also showed that most respondents would prefer their countries to develop cryptocurrency regulations instead of waiting on the European Union.

Since September 2020, the European Commission has been working towards providing a uniform approach to crypto regulations across the continent. In a regulatory proposal titled “Markets in Crypto Assets,” the agency explained that it had seen the need to ensure closer crypto regulations across Europe.

The European Commission based its approach on two reasons. The first was to prevent the rise of fragmented regulations across European countries, while the second was to stem the rising tide of stablecoins.

So far, the proposal has been subject to intense debates, with several bodies raising concerns over its implications for growth in the crypto market and beyond. However, this latest poll could serve as a signal that the region is ripe for crypto regulation.

Slovenia’s New Crypto Tax Revamp

Some countries have already begun taking bold steps towards regulating the highly volatile asset class. Earlier this week, the Financial Administration of the Republic of Slovenia (FURS) reportedly began considering imposing a 10% taxable income fee on crypto earnings.

Local news sources stated that the current taxation scheme in Slovenia involves the agency analyzing citizens’ digital asset activities on a case-by-case basis, even as far as examining their transactions. But, with a proportional taxation system, the agency can now streamline the process and focus only on crypto-based purchases as well as crypto-fiat conversions. Using these parameters, individuals will have to pay a 10% tax rate on their crypto earnings.

“We would like to emphasize that it is not profit which would be taxed but rather the amount a Slovenian tax resident receives on their bank account on turning the virtual currency into cash or when buying a thing,” the report added.

While the tax rate is yet to take hold, regulators and policymakers are probably already discussing the possibility.

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Author: Jimmy Aki

Historically September Records Losses, But Will This Time Be Any Different?

August is coming to an end, and Bitcoin is trading around $48,000 and Ether around $3,200.

With just two days left in the month, the leading cryptocurrency is locking in just over 16% gains while being up 66.21% year-to-date. As for Ether, it had a 26.4% uptrend in the month, 40.60% in the quarter, and 333.50% in the year, so far.

Comparatively, gold which is traditionally a safe haven asset is barely in the green for the month while being down 4% YTD, at $1,814 per ounce. In comparison, the US dollar recorded returns of 1.65% and 2.83%, respectively.

When it comes to the stock market, the S&P 500 managed to go up 2.60% in August despite hitting a fresh all-time high at $4,513 on Friday. According to data analytics company Skew, the S&P 500 is also up roughly 5% for the quarter ending September and a mere 20% in 2021.

The summer saw a downtrend for cryptocurrency prices which fell during May, June, and most of July due to seasonal effects as investors sold in May and went away.

But since July low, crypto assets have recovered sharply, up more than 60%, with some altcoins like Solana (SOL) and Terra (LUNA) hitting new ATHs. SOL 9.35% Solana / USD SOLUSD $ 100.47
$9.399.35%
Volume 2.52 b Change $9.39 Open $100.47 Circulating 290.94 m Market Cap 29.23 b
10 h Historically September Records Losses, But Will This Time Be Any Different? 10 h Investors Turn to Ether Competitors, Solana’s SOL Hits 3-Digits to Mark A New ATH 4 d Chainlink (LINK) Blockchain Oracle Goes Live on Solana (SOL) Devnet
LUNA -0.76% Luna Coin / USD LUNAUSD $ 0.00
$0.00-0.76%
Volume 0 Change $0.00 Open $0.00 Circulating 1.71 m Market Cap 8.17 K
10 h Historically September Records Losses, But Will This Time Be Any Different? 10 h Investors Turn to Ether Competitors, Solana’s SOL Hits 3-Digits to Mark A New ATH 5 d Avalanche Captures Market’s Attention, 5x In A Month With Memes, Big Names, & A Massive Fund

Now, the market is waiting for the return of money in September, as the well-known financial-world adage goes. But according to monthly returns of Bitcoin, next month is not looking so good, with average returns showing a loss of 7.8%.

But given that June and July were down months and August has only started to recover, positive sentiments can further accelerate in September.

Not to mention, NFT mania is here with the floor price of digital art surging and bringing retail with it into the crypto sector. While NFT is driving the mainstream crypto adoption, institutions haven’t stopped coming either.

“There’s generally been pretty positive crypto sentiment recently: NFTs have helped lead the revival, and the crash from May is further in the rearview mirror,” said Sam Bankman-Fried, CEO of crypto exchange FTX.

Additionally, all the gains made in NFT and altcoins are expected to flow into the leading cryptos, sparking euphoria in the market.

According to Yoni Assia, founder and CEO of eToro, it is a “generation buying movement” and cited a confluence of events, massive fiscal stimulus, and rock-bottom interest rates worldwide. Combining this with the rising inflation as economics reopen, it’s “leading a lot of people to look for various types of investments,” Assia said.

“There’s no doubt that there’s a lot of excitement in crypto.”

“You can definitely see it within the numbers in the industry, whether it’s looking at total volumes or looking at growth of companies,” he said, adding that “we’ve seen a lot of exuberance in the market.”

A recent survey of eToro also found that about a quarter of its 6,000 investors surveyed own crypto, which rises to nearly 50% for the younger demographics. The survey further found that the average investor was also set to increase their crypto allocation with “significant” interest in altcoins in the coming months.

“With all of this money floating around, we should not be surprised that there are people paying exorbitant amounts of money” for digital assets, said Michael O’Rourke, chief market strategist at JonesTrading.

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Author: AnTy

Driven by Real Demand Bitcoin Hits Resistance but Retail and Speculator Euphoria Is Not Here Yet

Technical obstacles are here with consolidation expected around $51,000 while the possibility of Fed tapering risk has been pushed back has greenback falling and US dollar net longs declining by more than half.

Bitcoin has finally hit $50,000 after three months.

As of writing, the leading cryptocurrency is trading just under $50k, finding resistance at this psychologically important level.

“We’re seeing some very bullish signs here,” said Vijay Ayyar, head of Asia-Pacific with crypto exchange Luno in Singapore. Bitcoin could “test all-time highs again” after pushing past levels that have seen some major challenges.

The rally is now overcoming a confluence of hurdles, including a Fibonacci and Ichimoku cluster between $47k and $48k. Besides $50k being a round number, the 61.8% Fibonacci retracement of the April to June downtrend presents a potential obstacle at $51,000.

“The next major resistance, for now, is at the $50,000 zone,” said Konstantin Anissimov, executive director at CEX.IO crypto exchange.

“Should more buyers dive in to push the price above the $50,000 level, a frenzy may be ushered in to steer the price toward a medium-term target of $55,000.”

Appetite Must Remain Intact

As Bitcoin’s market cap inches closer to $1 trillion, the total cryptocurrency market capitalization is currently at $2.23 trillion, fast approaching the mid-May peak of $2.6 trillion propelled by the gains of AVAX, LUNA, RUNE, AR, SOL, and ADA in the last 30-days.

The latest uptrend is marking the end of a months-long slump after crypto-assets peaked in April and May, driven by profit-taking and China’s crackdown on cryptocurrency mining and leveraged trading.

According to Edward Moya, senior market analyst at OANDA in New York, the fears of capital gains taxation have led some traders to hold cryptocurrency as a long-term investment as well.

“New investors are the key to this latest bitcoin rally, and all signs show they are comfortable with high risk.”

“Bitcoin could see a fast appreciation here and might not hesitate making a run for $60,000 if appetite for risky assets remain intact.”

USD Giving Back Its Gains

Investors are also betting on the prospect of more US stimulus spending that would lead to further gains amidst the growing adoption of cryptocurrency among mainstream financial services firms.

With Dallas Federal Reserve President Robert Kaplan, a well-known hawk, saying he might reconsider the need for an early start to tapering as concerns over the outlook for global growth due to the Delta coronavirus variant, USD slipped on Monday.

The greenback saw some profit-taking after registering its biggest weekly rise in over two months, currently around 93 after climbing to Nov. 2020 levels on Friday.

Last week, US dollar net longs also declined to $1.06 bln, from $3.08 bln in the previous week after the USD positioning was net long for five straight weeks, which came after staying net short for 16-long months.

Markets are expected to experience some volatility in the coming days, with Fed Chair Jerome Powell to speak about the economic outlook at the central bank’s Jackson Hole Aug.26-28 conference.

Tapering Pushed Back

The possibility of Fed tapering risk pushed from Sept. to December has QCP Capital maintaining a bullish bias against the 40k support level in BTC. Also, Governor Lael Brainard’s latest dovish pivot to become Fed chair is “likely to raise enough questions within the FOMC to delay their decision by a quarter.”

Not only is headline regulatory risk exhausted in the near-term, the funding rates in perpetual swaps and premium in the futures is also low and muted, meaning “most of the rally has been driven by demand in physical spot rather than from leveraged speculators.”

With no signs of overheating or overextension, QCP is bullish but not overly so due to GBTC still trading at a discount. In the meantime, consolidation is expected at $51,110.

However, NFTs are drawing the attention of retail and institutions alike. And as retail investors return to the market, another upswing could see crypto prices rallying to new heights.

Given the fact that the last time BTC was at $50k, the Google trends for Bitcoin searches were much higher than what it is right now, “this suggests that retail euphoria hasn’t entered the market yet, and bitcoin has a long way to go in this market cycle,” said Marcus Sotiriou, a sales trader at the UK based digital asset broker GlobalBlock, in a note.

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Author: AnTy