Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

Frances Yue is a reporter on CoinDesk's Markets team.

Cryptocurrencies were mostly lower on Thursday as bullish sentiment wanes. Stocks were also lower as Federal Reserve Bank of Dallas President Robert Kaplan mentioned during an interview on CNBC that he would like to see tapering of bond purchases announced in September.

Bitcoin was trading around $46,000 at press time and is down about 4% over the past 24 hours. Technical charts suggest the pullback could stabilize between the $42,000-$45,000 support zone.

Traders will be monitoring Friday’s month-end option expiration, which could be a source of volatility. “The moderate volatility in BTC price this morning is likely due to an estimated $1.8 billion of monthly BTC options set to expire tomorrow,” wrote FundStrat in a newsletter on Thursday.

“The current max pain level, according to the derivatives exchange Derebit, is at $44,000,” FundStrat wrote.

For now, digital asset manager StackFunds wrote in a Thursday report that further consolidation is expected around current levels before the next upside push.

Latest Prices

Traditional markets:

  • S&P 500: 4470, -0.58%
  • Gold: $1,793, +0.11%
  • 10-year Treasury yield closed at 1.35%, compared with 1.347% on Wednesday

Bitcoin whales selling

Large bitcoin holders, often referred to as whales (addresses with 1,000-10,000 BTC), have been distributing their holdings, according to blockchain data. Smaller bitcoin holders (addresses with 1-1,000 BTC), however, have been adding to positions, which could mean that retail investors have fueled the recent bitcoin rally.

The fact that large holders are in profit taking mode is an “unfavorable situation and leans bearish,” crypto research firm Delphi Digital wrote in a blog post.

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Chart shows holdings of large bitcoin whales and smaller traders. Source: Delphi Digital

Higher volatility expected

“There has been a clear decoupling between short-term and long-term volatility since August 9,” options data provider Skew tweeted on Thursday. “Traders are expecting bitcoin volatility to ramp up in the later part of the year.”

The options market has also flipped bearish for the short term, with the one-week put-call skew reporting positive values at press time. That’s a sign of short-term puts, or bearish bets, drawing higher demand than calls, wrote CoinDesk’s Omkar Godbole.

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Chart shows bitcoin at-the-money implied volatilities. Source: Skew

Bitcoin miner positioning

Bitcoin miners are back in accumulation mode after the sharp sell-off earlier this year. The miners’ positioning index (MPI), which tracks the ratio of BTC leaving all miner wallets, stabilized around negative levels.

“In every bitcoin bull run, miners sell before the final cycle top,” CryptoQuant wrote in a blog post. “This occurred in 2013, 2017 and now in 2021 (as shown in the yellow boxes below).”

“Recently we have entered a short-term bear market, also considered a correction,” CryptoQuant wrote. It is possible that miners are waiting for higher prices to sell their BTC holdings.

Meanwhile, Bitcoin’s mining difficulty – a measure of the amount of computing resources required to mine bitcoin – has increased for the third time in a row in yet another sign of the network’s staying power following a crackdown on the industry earlier this year by authorities in China.

On Wednesday, the blockchain’s mining difficulty increased by 13.2% at block 697,536, according to several mining sites.

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Chart shows bitcoin miners' positioning index (MPI) with price.

Altcoin roundup:

  • Can Avalanche Keep It Up? In an explosive move reminiscent of the growth of Binance Smart Chain (BSC) and Polygon earlier this year, the Avalanche blockchain is attracting a flood of new deposits into its decentralized finance (DeFi) ecosystem. Despite the signs of strength, however, not all analysts are convinced the Ethereum competitor has staying power, CoinDesk’s Andrew Thurman reports.
  • What Binance Smart Chain’s Lagging Performance Means for Layer 1 Blockchains: It was not long ago when Binance Smart Chain (BSC) was beating Ethereum by several blockchain metrics, but the former Ethereum alternative darling has seen its growth slow amid intensified layer 1 blockchain competition. A growing number of “rug pulls,” or exploits on BSC, meanwhile, has also raised questions about BSC’s security after some users have left the platform fearing for the safety of their funds, according to analysts. BSC’s challenges show that while attracting new capital via cheaper, faster transactions is a first key step for any smart contract blockchain, security and decentralization are still essential for retaining users in the long run.
  • RLY Holders Approve Social Token Platform’s Decentralization Plan: Social token platform Rally is set to initiate a five-pronged decentralization plan after token holders voted unanimously in favor of the proposal Thursday. Rally will now branch into a venture studio, a decentralized autonomous organization (DAO), a nonprofit, an Asia-focused entity and U.S.-based Rally. Platform leads pitched the new structure as a “major step” toward full decentralization – a common goal in the crypto sector. The proposal was submitted last week.

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Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

CoinDesk - Unknown

Frances Yue is a reporter on CoinDesk's Markets team.

CoinDesk - Unknown

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

CoinDesk - Unknown

Frances Yue is a reporter on CoinDesk's Markets team.

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