Market Wrap: Bitcoin Rallies Above $42K as Bull Market Continues

Bitcoin (BTC) rallied near $43,000 on Friday as short positions continue to unwind from the second quarter sell-off. The world’s largest cryptocurrency by market value is up about 1% over the past week compared to a 17% gain in ether (ETH) over the same period. 

Some analysts are optimistic about the broad crypto rally and see further upside, especially for ETH. On Thursday, the native currency of the Ethereum blockchain rallied past $2,600 as the network's latest hard fork upgrade, dubbed “London,” officially went live.

“A mood of optimism appears to have returned to cryptocurrency markets,” wrote Paolo Ardoino, CTO of Bitfinex, in an email to CoinDesk. “Still, the turbulence that we’ve seen in crypto markets over recent weeks is unlikely to subside.”

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“BTC is also showing strength, which is expected to carry on next week, as it broke out of a downtrend today which dated all the way back to the previous all-time highs in April,” wrote Marcus Sotiriou, trader at the U.K.-based digital asset broker GlobalBlock, in an email to CoinDesk.

From a technical perspective, bitcoin’s rally above $42,000 is an encouraging sign. Friday’s strong price action is an attempt to break above the intermediate-term downtrend, which, if confirmed, could yield further upside towards $50,000 to $55,000 resistance. 

“The market has been oversold for quite some time,” said Kevin Kang, founding principal of crypto hedge fund BKCoin Capital, in an interview with CoinDesk. “I think we are resuming the bull market in the coming months.”

The bulk of ether options activity has been concentrated in the higher strike, longer duration calls, or bullish bets.

Data provided by Switzerland-based Laevitas shows ether volumes on Deribit, the largest crypto options exchange, have increased by more than 50,000 ETH to 153,000 ETH ($424 million) in the past 24 hours. That takes it to the highest level since the end of May. On Deribit, one ether options contract represents 1 ETH.

Overall, call options have registered higher activity than puts, and the most popular options have been calls expiring March 2022 with strike prices of $50,000 and $40,000, wrote CoinDesk’s Omkar Godbole.

Recent bullish activity surrounding the Ethereum network upgrade contributed to ether’s outperformance relative to bitcoin, albeit with greater volatility. The chart below shows that ether tends to be more volatile than bitcoin.

Bitcoin’s total transfer volume (entity-adjusted) has grown to $7.48 billion a day over the past 14 days, indicating greater activity on the blockchain as the cryptocurrency’s price rises, according to Glassnode. 

Transactions over $1 million in size, which represent roughly 46.5% of total transaction volume, were rising, Glassnode noted.

“Entity-adjustment” is a methodology Glassnode developed to measure on-chain volume that actually changed hands. “Entities are defined as a cluster of addresses that are controlled by the same network entity and are estimated through advanced heuristics and Glassnode's proprietary clustering algorithms,” Glassnode wrote. (Read more here.)

There has been a steady increase in LINK’s volume on Coinbase, according to the exchange. The number has grown by 35% since the protocol released its smart contract kit v0.10.10 on July 25, which includes full support for Optimism. The volume in MATIC declined this week. 

Meanwhile, on Aug. 4, one day ahead of EIP 1559, ether’s volume outpaced that of bitcoin by 61%.  

Most digital assets on CoinDesk 20 ended higher on Friday. In fact, everything was in the green except for dollar-linked stablecoins.

Notable winners of 21:00 UTC (4:00 p.m. ET):

filecoin (FIL) +8.88%

polkadot (DOT) +8.12%

uniswap (UNI) +6.32%