Market Wrap: Bitcoin Breaks Above $23K as Investor Fears Recede

Hi, I'm Jimmy He, here to take you through the day's crypto market highlights and news.

Bitcoin (BTC) broke above $23,000 in Tuesday afternoon trading and was changing hands at around $23,350.

In two days, the largest cryptocurrency by market capitalization has climbed by more than 12% and pushed the price to its highest point since bitcoin collapsed on June 13.

The Crypto Greed & Fear Index, which tracks investors’ cryptocurrency sentiments, moved from “extreme fear” to “fear” and rose 10 points to 30, the highest since April.

Most altcoins gained, with FLOW leading the charts, up 16% over the past 24 hours.

Ether (ETH) also climbed, by 6.9% to around $1,560. The second-largest cryptocurrency has been consistently outperforming bitcoin and hit a high of $1,500 on Monday, breaching its 50-day simple moving average (SMA).

Today’s edition of "Market Wrap" was produced by Sage D. Young.

By Glenn Williams Jr.

Macroeconomic headwinds continue to be the order of the day for BTC’s price or, more directly, inflation expectations and the Federal Reserve’s response. An item for investors to keep an eye on is a recent shift in target rate probabilities for the July 27 Federal Open Market Committee (FOMC) meeting.

Per the CME Group’s FedWatch tool (which calculates rate level probabilities for a specific point in time), markets are predicting a 66.8% chance that the FOMC raises interest rates by 0.75% (75 basis points) on July 27. Of note is that seven days prior, that probability stood at 92.4%. Moreover, the probability of a 100 basis point increase in rates moved from 7.6%, to 33.2%. An increase of 100 basis points would likely be received as bearish for crypto prices.

At the moment, bitcoin traders appear to be taking the shift lightly, as BTC prices are up 3.93% intraday. In our view, few U.S. data points exist between now and the July 27 meeting that are likely to affect probabilities. Investors, however, are likely to monitor Thursday’s Initial Jobless Claims data. The current consensus estimate for initial claims is 240,000 versus actual claims of 244,000 for the prior week. We expect that higher-than-expected jobless claims will deter the Federal Reserve from increasing rates more than 0.75%.

From a technical vantage point today’s increase represents the second consecutive day of higher prices, and the sixth day of higher prices over the last seven. Of note is that both today and Monday’s price increases occurred on higher than average volume (when looking at average volume over the most recent 20 trading days).

BTC prices appear to have found support at $20,500 as evidenced by the “high volume node” displayed on the “Visible Range Volume Profile” tool. The VRVP tool displays trading activity at specific price levels over a distinct time period. High volume nodes display price levels where above-average trading volume has occurred, and can serve as indications of support and/or resistance. As implied below, the VRVP shows a visible decline in volume between $25,500 (which we would view as support), and $30,000 (which we would view as resistance).

Also of note is the increase in the Relative Strength Index (RSI), which is often used as both a proxy for momentum, and an indication of overbought and/or oversold levels. Traditionally, a level of 30 or below implies oversold conditions, while levels of 70 or above indicate overbought conditions. During the last 30 days, the RSI for bitcoin has increased to 61.58 from a level of 20.36. Prices over that identical time period have increased by 23.5%.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.