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| Everything you need to make sense of the crypto markets and beyond By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets August 23, 2021 Sponsored by Bitcoin (BTC) -1.8% $49,333 Ether (ETH) -0.5% $3,312 (Price data as of August 24 @ 11:00 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.
Good morning, and welcome to First Mover. Here's what's happening this morning: Technician's Take: Bitcoin Struggles at Resistance; Support Near $48K
And check out the CoinDesk TV show "First Mover," hosted by Emily Parker and me at 9:00 a.m. U.S. Eastern time. Today the show will feature guests: Tyrone Ross, Onramp Invest Jake Dwyer, GSR– Lawrence Lewitinn
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Market Moves by Omkar Godbole The 3 Reasons Why Bitcoin’s Ascent May Slow Bitcoin has risen 70% in the past four weeks, topping the $50,000 mark for the first time in three months. While the ascent appears to have revived the broader bullish bias, further gains toward record highs may be slow to come, blockchain metrics and chart factors indicate.
Pick up in exchange inflows
The number of bitcoins held in exchange wallets is rising, departing from the recent trend of outflows and a signal of renewed investor intention to sell.
Data tracked by Glassnode show crypto exchanges received 16,606.80 BTC on Monday, the highest daily net inflow in over a month. Over the past week more than 29,000 BTC have been moved to exchanges. “[It’s] not a trend we want to see continue,” William Clemente, lead insights analyst at Blockware Solutions, tweeted. BItcoin net exchange flows (Source: Glassnode) Investors typically move coins from their wallets to exchanges when they plan to sell. Assuming demand-side pressures remain unchanged, the increase in the exchange balance may put the brakes on the price rally, if only temporarily.
The exchange balance declined by more than 100,000 BTC in the three weeks to Aug. 19, reflecting a largely bullish market sentiment. Bitcoin bottomed out near $30,000 and recovered to $45,000 during that period.
Whale accumulation halts
Whales, or large investors with an ability to make or break market trends, who accumulated coins after the mid-May price crash, have begun running down their inventory.
The supply held by entities with a balance of 1,000 BTC to 10,000 BTC has declined by nearly 75,000 BTC over the past three weeks, diverging from the rising price. Bitcoin balance held by whale entities (Source: Glassnode) Entities refer to clusters of addresses held by a single network participant. These large investors began accumulating coins after bitcoin’s slide to $30,000 in mid-May, signaling a price bottom. Bitcoin held on to the support in subsequent weeks and bounced this month.
The recent price action is also reflective of weakening on the buy side. “The failure to close the day above $50,000 shows some weakness in demand,” QCP Capital noted in its Telegram channel. Bitcoin printed a high of $50,496 on Monday but closed the day (UTC) below $50,000. At press time, the cryptocurrency was changing hands near $49,400.
QCP Capital doesn’t foresee exponential upside breakouts like those at the end of 2020. The firm also mentioned the continued calmness in implied volatility, or investors’ expectation for price turbulence, and the Grayscale Bitcoin Trust discount as reasons for moderation in the bullish outlook.
The annualized one-month implied volatility is hovering near the recent low of 82% even though bitcoin rose above $50,000 on Monday. Meanwhile, GBTC shares traded at a discount of 14% to net asset value on Monday, according to data provided by Skew. “As a proxy for U.S. interest, GBTC should at least trade at par if we are to expect any strong follow-through in spot,” QCP Capital said.
“The clear trade for us here is short vols [sell call/put options] as we expect the spot to be sticky around the $48,000-$51,000 level,” the firm added.
Chart barriers
Technical studies indicate the cryptocurrency may consolidate before scaling the critical resistance at $51,110, which is the 61.8% Fibonacci retracement of the mid-April to July sell-off.
The 14-day relative strength index (RSI) is now sidelined and not showing a clear directional bias. “A consolidation triangle in the RSI also reflects the hesitancy in the market despite the positive price action,” QCP Capital said. Bitcoin daily chart (Source: TradingView) The DeMARK indicators are signaling short-term upside exhaustion, according to Fairlead Strategies’ weekly research note published on Monday. The weekly stochastic indicator is also signaling overbought conditions.
“Bitcoin is coming into resistance at a 61.8% Fibonacci retracement level near $51,000, which would be a natural place for a short-term pause in the rally,” Katie Stockton, founder and managing partner of Fairlead Strategies, said in the weekly research note.
Stockton, however, added that the long-term momentum has strengthened, with the 200-day moving average (MA) rising again. As such, the cryptocurrency would eventually topple resistance at $51,110.
Read the original story here: The 3 Reasons Why Bitcoin’s Ascent May Slow
Technician's Take by Damanick Dantes, CMT Bitcoin Struggles at Resistance; Support Near $48K Bitcoin (BTC) sellers returned at the $50,000 resistance level on Monday and remained active during Asia hours. The cryptocurrency was trading around $49,300 at press time and is up about 11% over the past week. Initial support is seen around $48,000, which could stabilize the pullback. Bitcoin hourly price chart shows short-term support and resistance levels with RSI. (Source: TradingView) Bitcoin is currently testing the 100-period moving average on the hourly chart, although the relative strength index (RSI) is not yet oversold.Selling pressure could subside at lower support levels between $45,000 and $48,000. The August 6 breakout above $42,000 is encouraging, especially given the return of upside momentum. Buyers will need to defend support to yield the next upside target towards $55,000.
Read the original story here: Bitcoin Struggles at Resistance; Support Near $48K
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
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