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Market Wrap: Bitcoin Stalls Near $50K Ahead of Options Expiration Date

Bitcoin slipped below $50K and will likely consolidate this week, analysts say.

Aug 23, 2021 at 8:30 p.m. UTC
Updated Sep 14, 2021 at 1:43 p.m. UTC

Bitcoin stalled after approaching the $50,000 resistance level on Monday. The cryptocurrency was trading at about $49,500 at press time and is up about 8% over the past week. Analysts expect a period of consolidation ahead of Friday’s option expiration date and news from the Federal Reserve’s annual economic policy symposium in Jackson Hole, Wyo. 

“The trend is bullish; however, caution is to be exercised at these levels due to the decline in volume as well as resistance from April and May,” Marcus Sotiriou, a trader at GlobalBlock, wrote in an email to CoinDesk.

“$51K would be a natural place for a short-term pause in the rally,” Katie Stockton, managing director of Fairlead Strategies, wrote in a Monday newsletter. 

“Long-term momentum behind bitcoin has strengthened and the 200-day (40-week) moving average is rising again, supporting a bullish long-term outlook,” she wrote.

Latest prices

Cryptocurrencies:

Traditional markets:

  • S&P 500: 4479.5, +0.85%
  • Gold: $1803, +0.57%
  • 10-year Treasury yield closed at 1.251%, compared with 1.261% on Friday

Several analysts noted that extreme overbought conditions have unwound since April, which is providing support for the crypto rally. 

“Right now, bitcoin and other cryptos have enjoyed technical support (as they were becoming mildly oversold),” Santiago Espinosa, a strategist at MRB Partners, wrote in an email to CoinDesk. “At this juncture, some cryptos can continue to do well if policymakers neglect inflationary pressures and regulatory issues don’t become a mainstream problem.”

Bitcoin options expiry

Roughly 25% of bitcoin options open interest is set to expire on Friday. The largest concentration of open interest is seen at the $50,000 strike price, which is also a key technical resistance level.

“Despite implied volatility softening over the past few weeks, $50K is a large psychological barrier and the open interest concentration could prove choppy going into expiration,” Gregoire Magadini, co-founder and CEO of Genesis Volatility, wrote in a Telegram chat. 

The bitcoin options market is placing a 45% chance of BTC trading above $50,000 by the end of September, according to options data provider, Skew

Chart shows open interest at various strike prices.

Bloomberg's McGlone still bullish on bitcoin

Bloomberg Intelligence's Mike McGlone, who won plaudits last year for being among the most prominent analysts predicting that bitcoin would go to $50,000, sees further upside now that the largest cryptocurrency has returned to the mark following a steep market correction.

"Bitcoin, gold and long bonds are top assets set to outperform" in the second half of 2021, McGlone wrote Monday in a report. "The firstborn crypto may have solved the age-old problem of a global reserve asset that's easily transportable and transactionable, has 24/7 price discovery, is relatively scarce and is nobody's liability or project."

BTC holdings rise

The percentage of bitcoin profitable addresses (BTC value above the cost basis) reached a three-month high, according to Glassnode data. 

“The decline in realized losses of late could indicate that investors have found renewed conviction to hold on, or are potentially taking exits that are closer to their original cost basis, as price recovers towards the $50K range,” Glassnode wrote in a Monday blog post

Chart shows amount of held "lost" coins with price overlay.

Crypto fund inflows

Crypto funds saw $21 million of net inflows last week as digital-asset markets rallied, pushing the total assets under management (AUM) to $57.3 billion, the highest level since May, a new report shows. 

The latest data reflected a reversal after six consecutive weeks of outflows, according to the report Monday by digital-asset manager CoinShares. 

Funds focused on Solana’s SOL token saw the largest inflow among all digital assets, at $7.1 million last week, the report shows. The token hit an all-time high of $82 on Saturday, according to Messari. 

Investors redeemed $2.8 million from bitcoin-focused funds last week, the seventh consecutive week of outflows, despite the largest cryptocurrency’s price upturn. The run matched the streak of outflows recorded in early 2018, the report noted. That was just before the “crypto winter,” when cryptocurrency prices tanked and failed to return to all-time highs for more than two years.

Crypto funds netted $21 million of inflows last week, snapping a six-week streak of outflows.

Altcoin roundup

  • Visa buys a CryptoPunk for $150K: Visa has bought CryptoPunk 7610, a female CryptoPunk character for around $150,000, taking a step into non-fungible tokens (NFTs) as it seeks to learn more about the burgeoning market. A collection of nine rare CryptoPunks that were among the first 1,000 minted fetched almost $17 million in an auction at Christie's in May. Cuy Sheffield, Visa's head of crypto, said in a blog post that the main purpose behind Visa's purchase was to learn more about the growing market. "We think NFTs will play an important role in the future of retail, social media, entertainment and commerce," Sheffield wrote. "To help our clients and partners participate, we need a firsthand understanding of the infrastructure requirements for a global brand to purchase, store and leverage an NFT."
  • Tether starts printing again: Tether, issuer of the world’s largest stablecoin, USDT, has started printing again after a roughly two-month halt that sparked investors’ concerns and speculation. Tether has minted at least 2.3 billion USDT since Aug. 1, pushing the token’s market cap to $65 billion, a Tether representative told CoinDesk via email. Demand for USDT has recently rebounded, according to Tether and industry experts, as crypto market sentiment has turned more positive. It’s possible, however, that the demand for USDT may not be driven by bitcoin but instead by some altcoins, such as solana (SOL) and terra (LUNA), whose trading volumes have surged, according to Noelle Acheson, head of market insights at crypto prime broker Genesis Global Trading, which shares common ownership with CoinDesk. 
  • USDC to change reserves: The world’s second-largest stablecoin, USDC, will be 100% backed by cash and short-term U.S. Treasurys by September, according to developer Centre, a consortium of crypto exchange Coinbase and payments technology company Circle. Circle revealed last month that only 61% of tokens were backed by "cash and cash equivalents," referring to cash and money-market funds. Centre “will ensure that the USDC investments revert back to a more conservative investment profile by the end of September,” Emilie Choi, president and chief operating officer at Coinbase, wrote in a tweet.  
  • Poly Network hacker releases private key for remaining looted $141M: The attacker who hacked more than $600 million from the China-based Poly Network platform has released the private key for the remaining $141 million of the stolen cryptocurrency. In a note to the Poly Network team, the attacker or attackers referred to the saga as "one of the most wild adventures in our lives." Poly Network subsequently tweeted its thanks to the attacker or attackers, posting a link to a transaction on the Ethereum blockchain confirming that the key worked.

Relevant news:

Other markets

Most digital assets on CoinDesk 20 ended up higher on Monday. 

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

cardano (ADA) +12.2%

filecoin (FIL) +4.71%

eos (EOS) +3.71%

Notable losers:

algorand (ALGO) -2.24%

the graph (GRT) -1.39%

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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