Market Wrap: Bitcoin Hits $9.6K as Bullish Crypto Sentiment Returns
Bitcoin is back in bullish territory but can the buying last?
Bitcoin’s price is rallying and traders also increasingly see investment opportunities on the Ethereum network.
Bitcoin (BTC) was trading around $9,563 as of 20:00 UTC (4 p.m. ET), gaining 2.5% over the previous 24 hours.
At 00:00 UTC on Monday (8:00 p.m. Sunday ET), bitcoin was changing hands around $9,298 on spot exchanges such as Coinbase. It began making gains around that time, appreciating 3% to over $9,600. The price is now well above its 10-day and 50-day moving averages, a bullish signal for market technicians.
A jump in the bitcoin market Monday after days in the doldrums mirrors the longer-term outlook of Fairlead Strategies’ Katie Stockton, who sees an upward trend for the world’s largest cryptocurrency by market capitalization. “Bitcoin remains wound up in its consolidation phase, a reminder why it’s a good idea to await breakouts [and] breakdowns,” Stockton told CoinDesk. “A breakout continues to appear more likely than a breakdown from an intermediate-term momentum perspective and would occur above $10,055 in our work.”
A “consolidation phase” is a term used by technical analysts to mark a period of indecision by traders overall. In fact, according to data from aggregator Kaiko, volatility of the top free-floating cryptocurrencies bitcoin, ether and XRP has trended down since June 7.
“Volume has been muted and volatility is getting coiled,” said Neil Van Huis, director of institutional trading at liquidity provider Blockfills.
Despite the pop Monday, Van Huis continues to expect selling pressure to affect the bitcoin market due to competition in the mining sector. “If we start to make a move up, it could really be interesting as the race for mining equipment comes into focus. This will play into access to financing or sale of bitcoin to cover new costs,” he said.
“This also could bring some altcoins into focus if bitcoin is battling mining woes,” Van Huis added.
Interestingly enough, bitcoin dominance is down from its 70.5% high in January 2020 and has flattened during June. This suggests Van Huis’ thesis that alternatives, such as assets on the Ethereum network, might be of greater interest to traders in June.
Ethereum network gas prices up
Ether, the second-largest cryptocurrency by market capitalization and which powers the Ethereum network, is also jumping today. Ether was trading around $242 and climbed 5.7% in 24 hours as of 20:00 UTC (4:00 p.m. ET).
Decentralized lender Compound and the appreciation of its COMP token is fueling speculative interest, and may be stretching the Ethereum network to its limits and increasing gas prices. On Jan. 1 of this year, the average Ethereum network gas price for running smart contract code was 11.6 gwei [each gwei is worth 0.000000001 ETH). By June 22 that number jumped 157% to 29.9 gwei, with decentralized finance (DeFi) attracting the interest of many traders.
“The Compound coin hype lately is pushing the on-chain gas price,” said Peter Chen, a trader at Hong Kong-based OneBit Quant.
Chan says the demographics of traders on DeFi is shifting and the increase in tether stablecoin usage is a big factor pointing to the change. “We’ve seen a significant increase of USDT trading volume,” he told CoinDesk. “It’s suggesting Asian traders are now pouring into the DeFi market; the majority was U.S. and Europe before.”
Digital assets on CoinDesk’s big board are all in the green Monday. The cryptocurrency winners on the day include iota (IOTA) up 4.1%, bitcoin sv (BSV) climbing 3.8% and qtum (QTUM) jumping 3.6%. All price changes were as of 20:00 UTC (4:00 p.m. ET).
In commodities, oil is jumping Monday, up 3.1% with a barrel of crude priced at $40.60 at press time.
Gold is trading positively, up 0.71% at around $1,755 for the day.
In Asia, the Nikkei 225 of publicly traded companies in Japan slipped 0.18%. Transportation and real estate stocks left the index in the red.
In Europe the FTSE 100 index slipped 0.76%. Increases in coronavirus cases led to shares in travel stocks lower Monday.
The U.S. S&P 500 index gained 0.60%. Shares in tech and retail were higher while travel stocks fell.
U.S. Treasury bonds climbed Monday. Yields, which move in the opposite direction as price, were up most on the two-year bond, in the green 2.2%.
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