Market Wrap: Bitcoin Reverses Course, Pushes Higher, $21K Is ‘Point of Control’
News of an exploit on the Solana platform appears not to have affected BTC's price.
Bitcoin (BTC) rebounded on Wednesday, advancing 1.7% to above $23,300, ending a streak of five consecutive negative days.
The largest cryptocurrency by market capitalization has surpassed its 50-period exponential moving average (EMA) of $23,214.50, and is within earshot of its 10-period EMA as it crossed above the 50-period EMA as well.
This article originally appeared in Market Wrap, CoinDesk’s daily newsletter diving into what happened in today's crypto markets. Subscribe to get it in your inbox every day.
Prices going above a moving average and moving average crossovers are seen as bullish signals.
BTC prices held firm despite a bit of industry turmoil, as solana (SOL) wallets were exploited in a multimillion-dollar hack. It appears that the negativity around the exploit has been contained to just SOL, as the token’s price fell 3% on Wednesday.
In traditional markets, the S&P 500 rose 1.6%, while the Dow Jones Industrial Average and tech-heavy Nasdaq Composite Index gained 1.4% and 2.6%. Traditional markets are being pushed higher by an unexpected increase in July services PMI, as well as by a strong earnings report from vaccine marker Moderna.
On the altcoin front, avalanche (AVAX) rose by 4%, and polkadot (DOT) increased by 3%.
●Bitcoin (BTC): $23,434 +1.9%
●Ether (ETH): $1,651 +0.5%
●S&P 500 daily close: 4,162.44 +1.7%
●Gold: $1,782 per troy ounce +0.6%
●Ten-year Treasury yield daily close: 2.75% +0.007
Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.
BTC advances on increased momentum
Bitcoin pushed higher albeit on lower-than-average trading volume. Volume last exceeded its 20-period moving average on July 29. The importance of trading volume is connected to evaluating the “strength” or conviction or both behind a price move. Higher volume often indicates more confidence in what direction an asset's price is headed.
BTC appears to have entered an uptrend after it hit lows on July 13. An extension of the trendline implies a move higher to $25,000, though that shouldn’t be interpreted as a price target in isolation. As mentioned above, BTC prices have moved above both their 10- and 50-period moving averages, while the moving averages themselves appear to be poised to “cross.”
Meanwhile, the Visible Range Volume Profile tool provides insight into where volume has clustered, specific to individual price points. This tool illustrates trading activity over a period of time and across specific price levels, while highlighting “points of control.”
The point of control, which is illustrated by the red line in the chart below, represents price levels where a substantial amount of price agreement exists. That in turn is often interpreted as showing levels of support or resistance. BTC is showing the largest amount of price agreement at about $21,000, with the next high volume node at $30,000.
BTC’s relative strength index (RSI) advanced slightly to 59, and is often used as a proxy for price momentum. There is also a visible uptrend in RSI since it hit a bottom in June.
On-chain activity indicates a decline in the put/call ratio
On-chain data indicates a decline in the put-call ratio for BTC below 0. The put-call ratio shows the volume of puts divided by the volume of calls traded in options contracts over the most recent 24 hours.
Because puts represent the option to sell bitcoin, and BTC calls represent the option to buy, a decline below zero implies that more calls than puts are being purchased. More calls being purchased is viewed as a bullish sign.
Fed officials' comments indicate more inflation
Despite what appears to be growing sentiment that the Federal Reserve may slow the pace of rate increases this year, San Francisco Fed President Mary Daly stated Tuesday that inflation is “nowhere near” almost done, and that she was “puzzled” by bond market activity that implies that rates will be reduced.
Chicago Fed President Charles Evans offered similar thoughts, indicating that he would be on board for a large rate hike at the Fed's meeting in September.
Evans, however, appears to hold that view only if inflation wasn't improving. He also indicated that 50 basis points would be a “reasonable assessment.”
- Solana's SOL Token Holds Price Support Despite Hack: Early Wednesday, an unknown attacker drained at least $5 million of SOL and other tokens from Solana digital wallets. However, SOL held on to a critical support level. Read more here.
- Chileans Take Refuge in Stablecoins Amid Economic Turmoil: Residents are turning to stablecoins to protect their assets from recent record inflation and the increasing devaluation of the peso. Local crypto exchanges have seen a 50% increase in stablecoin transactions in the last three months. Read more here.
- Susan Miller Breaks Into NFTs: The astrologer’s zodiac-themed non-fungible token (NFT) collection and token-gated Discord channel is her first venture into Web3. The collection of 12,000 digital profile picture (PFP) collectibles will be released on the Polygon blockchain on Wednesday. Read more here.
- Listen 🎧 : Today’s "CoinDesk Markets Daily" podcast discusses the latest market movements.
- Hackers Return $9M to Nomad Bridge After $190M Exploit: The popular Ethereum to Moonbeam bridge is working with law enforcement and data analytics firms.
- Want to Strike Terror in Crypto Markets in 2022? Just Say You’re Suspending Withdrawals: Voyager's and Celsius’ bankruptcies were preceded by announcements that they were barring customers from getting their money.
- Riot Blockchain Mined 28% Less Bitcoin in July as Heat Wave Cut Power Supply: Lower energy consumption helped the miner generate $9.5 million in power credits.
- Goerli Is Coming: Ethereum’s Last Rehearsal Before the Merge: The Prater upgrade, the first component of the upcoming Goerli testnet merge, is happening this week.
- Binance Taps Co-Founder Yi He to Head $7.5B Venture Arm: Binance Labs announced a new $500 million fund in June to invest in Web3 and blockchain projects.
- Bank of America Says Blockchains Have Intrinsic Value, Citing Transaction Fees: The bank's report, however, noted that the fees on the Bitcoin and Ethereum chains have fallen this year.
- Alchemy Integrates Astar Network to Support Web3 Developers in Polkadot Ecosystem: The dapp-staking feature will encourage developers to build on the chain to earn rewards in its native token.
- CFTC Would Become Primary Crypto Regulator Under New Senate Committee Plan: The bill that is set to proposed would create a definition of "digital commodity."
- Banking Platform Galoy Raises $4M for Bitcoin-Backed Synthetic Dollar: Stablesats lets people use Lightning for everyday payments without exposure to short-term volatility.
- B2B Payments Startup Paystand Acquires Mexican Peer Yaydoo: While the companies will operate independently, there is hope for cross-selling opportunities.
|Polkadot||DOT||+4.7%||Smart Contract Platform|
|Polygon||MATIC||+3.3%||Smart Contract Platform|
|Cosmos||ATOM||+3.2%||Smart Contract Platform|
|Solana||SOL||−3.0%||Smart Contract Platform|
|Terra||LUNA||−2.9%||Smart Contract Platform|
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