Market Wrap: Bitcoin Struggles to Hold $20K for the Foreseeable Future

The largest cryptocurrency in market value toggled above and below the psychologically important threshold.

AccessTimeIconSep 1, 2022 at 8:53 p.m. UTC
Updated Nov 17, 2022 at 3:39 p.m. UTC

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX

Price Action

Bitcoin (BTC) and Ether (ETH) both declined on Thursday, settling into what seems likely to be a flat trading range for the foreseeable future.

  • Bitcoin (BTC) fell 1% on Thursday, temporarily falling below the psychologically important $20,000 level. The largest cryptocurrency by market cap has above and below $20K for the last six trading days.
  • Ether (ETH), the second-largest cryptocurrency by market cap after bitcoin, rose 1.5% on the day. ETH has been essentially flat over the last three trading days, with above-average volume occurring only during Monday’s decline. Since Monday’s close, ETH’s price has moved approximately 1%.

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.

Global Macro: U.S. initial jobless claims of 232,000 in August were below consensus expectations of 248,000, and down from 237,000 in July.

Continuing jobless claims for August were 1.44 million, matching the consensus, but also exceeding July’s figure of 1.41 million.

For digital assets, the better-than-expected jobs data is not likely to serve as a bullish catalyst. Given the Federal Open Market Committee’s (FOMC) resolve to slow inflation, stronger employment data is likely to lead to increased consumer demand. The result of this increase (i.e., more dollars chasing a basket of goods) is likely to push prices higher.

According to the CME FedWatch tool, the odds of a 75 basis point increase in the Fed funds rate during the FOMC’s next meeting on Sept. 21 have increased to 72%, from 69% a day earlier.

U.S. Equities: The Dow Jones Industrial Average (DJIA), tech-heavy Nasdaq composite and S&P 500 were mixed on Thursday. The Nasdaq fell .3%, while the DJIA and S&P 500 rose 0.46% and 0.30%, respectively.

Commodities: Crude oil prices fell for the third consecutive day, declining 3.7% to $86 per barrel. Natural gas finished 0.61% higher, while the price of safe-haven asset gold as well as copper fell 1% and 3%, respectively.

Altcoins were mixed. Polygon (MATIC) rose 4.5% while maker (MKR) and solana (SOL), decreased 2.8% and 2.7%, respectively.

Latest Prices

Bitcoin (BTC): $20,017 −0.9%

Ether (ETH): $1,577 +0.4%

S&P 500 daily close: 3,966.85 +0.3%

Gold: $1,707 per troy ounce −0.4%

Ten-year Treasury yield daily close: 3.26% +0.1

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.

Technical Take

Absent Near-Term Catalysts, Institutions May See Current Valuations as Attractive

Bitcoin was recently trading below $20,000 on Thursday, continuing a flat trading range that began on Aug. 27. While the price of BTC has traded above and below $20,000 in each of the last six days, in the aggregate the price has moved just 2%.

The average true range (ATR) for BTC has fallen from 2,065 in June, to a current level of 903. ATR is a technical indicator that measures the absolute value of price movement over a period of time. Increasing ATR levels signal increased volatility while a declining ATR (which we currently have) indicates the opposite.

The compression in volatility for BTC, combined with moderate to below-average volume and proximity to its $21,000 point of control (discussed in Wednesday's Market Wrap), or price level with substantial activity, signals a continuation of sideways trading behavior in the near future.

Given the oft-mentioned macroeconomic overhang, BTC doesn’t seem to have a bullish catalyst at the moment.

BTC’s low valuation, however, may be enticing institutions to start buying, particularly as the crypto landscape continues to mature. Ben McMillan, chief investment officer of investment firm IDX, called the current crypto climate a potential buying opportunity:

“With more visible development happening in the crypto ecosystem, many institutional investors are starting to view the current crypto 'winter' as similar to the period after the 'dot.com' bust which ultimately ended up being a generational buying opportunity for technology stocks,” McMillan said.

McMillan added that investors are seeing more interest in cryptos than other assets partly because of their longer-term prospects.

“Investors are still certainly focused on the near-terms risks, but we're definitely seeing a greater appreciation for the growth potential going forward which definitely isn't shared with other asset classes," he said.

A look at BTC’s “Commitment of Traders” data shows that larger speculators (i.e., institutional money) are indeed beginning to enter into long positions. The report, published by the Commodity Futures Trading Commission (CFTC) each Tuesday provides a weekly snapshot of positions held by traders in futures markets.

The positions of small speculators are denoted in blue, while positions of larger speculators (i.e., institutions) are denoted in green. A look at BTC’s weekly chart shows large speculators moving into a net long position following the 15% decline during the week ended Aug. 19.

CoinDesk - Unknown

BTC’s weekly chart (Optuma)

Altcoin Roundup

  • Potential Ethereum Hard Fork Token ETHPOW May Trade at 1.5% of Ether's Price, Futures Suggest: The proof-of-work (PoW) chain, representing a group of miners opposing the impending Ethereum's Merge and its switch to proof-of-stake (PoS), would have a new token called ETHPOW. Paradigm expects the token will open at $18 at minimum. Read more here.
  • Helium Proposes Shifting its Entire Network to Solana Blockchain Months After $200M Raise: The developers propose shifting all Helium-based tokens, governance and economics around the network’s native HNT, DC, IOT and MOBILE tokens from its own network to Solana. They cited faster transactions and “higher uptimes” among several reasons behind the proposed move. Read more here.

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Other Markets

Biggest Gainers

Asset Ticker Returns DACS Sector
Terra LUNA +13.3% Smart Contract Platform
Polygon MATIC +4.7% Smart Contract Platform
Cosmos ATOM +1.6% Smart Contract Platform

Biggest Losers

Asset Ticker Returns DACS Sector
Solana SOL −2.4% Smart Contract Platform
Avalanche AVAX −1.8% Smart Contract Platform
Loopring LRC −1.5% Smart Contract Platform

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.

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Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX

CoinDesk - Unknown

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX