Market Wrap: Bitcoin Showing Potential Signs of an Upswing

Digital asset markets are navigating a challenging environment of high inflation, inverse correlations to the U.S. dollar, increasing interest rates and higher consumer debt.

AccessTimeIconSep 29, 2022 at 8:35 p.m. UTC
Updated Nov 14, 2022 at 7:27 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 and ether declined on Wednesday as economic data confirmed that the U.S. has technically entered a recession.

Bitcoin’s (BTC) price recently fell 0.06% on moderate volume following Wednesday’s 1.8% increase. Prices fell sharply during the 12:00 UTC (8 a.m. ET) and 13:00 UTC (9 a.m. ET) time frames, coinciding with the announcement the U.S. economy contracted by 0.6% in the second quarter. Subsequent hours saw BTC regain ground.

Ether’s (ETH) price recently declined 0.28%. Its trading behavior was similar to BTC, selling off in early U.S. trading hours before reversing course slightly. The second-largest cryptocurrency by market capitalization has declined in volatility as its average true range (ATR) has contracted 13% over the last seven days. ATR reflects volatility by measuring the spread between an asset’s high, low and closing prices.

The CoinDesk Market Index (CMI), a broad-based market index that measures performance across a basket of cryptocurrencies, declined by 1.35%

Economic Calendar: U.S. economic activity contracted by 0.6% in the second quarter, confirming that, technically, the United States has entered a recession, at least by the common definition of “two consecutive quarters of negative GDP.”

The U.S. Commerce Department’s data release corroborated economic data announced on Aug. 25, so it isn’t new market information.

The U.S. gross domestic price index rose 9.1% to a record 126.31 points, which adds fuel to the inflation narrative that has largely dominated markets.

Personal consumption expenditures (PCE), an index that measures price changes in consumer goods and services, increased 7.3% against expectations of 7.1%. Real consumer spending, a measure of personal consumption, rose 2% versus estimates of a 1.5% increase.

Corporate profits rose 6.2%, rebounding from a decline of 2.5% in the prior quarter.

U.S. Equities: Traditional equities declined. The Dow Jones Industrial Average (DJIA), tech-heavy Nasdaq composite and S&P 500 fell 1.5%, 2.8% and 2%, respectively.

Commodities: In energy markets, the price of WTI crude decreased 0.74% while European Brent crude and natural gas fell 0.7% and 0.8%, respectively. In metals, safe-haven asset gold fell 0.04%, while copper futures increased 2.1%.

Latest Prices

Bitcoin (BTC): $19,435 −0.8%

Ether (ETH): $1,336 −0.9%

CoinDesk Market Index (CMI): $958 −0.3%

S&P 500 daily close: 3,640.47 −2.1%

Gold: $1,669 per troy ounce +0.5%

Ten-year Treasury yield daily close: 3.75% +0.04

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

Bitcoin showing early signs of an uptrend

Recent trading data is showing bitcoin’s price is beginning to register a series of “higher lows,” laying the groundwork for the largest cryptocurrency by market capitalization to begin rising again.

A higher low signals that the present day’s low price is higher than the previous low price for an asset. When this occurs, it signals that more buyers are willing to acquire an asset at progressively higher prices. BTC’s price is 7% higher than the low of $18,157 made on Sept. 21, and has made higher lows in six of the next nine trading days.

The other element of an emerging uptrend would be a series of “higher highs,” which has not occurred to the same degree. From the identical starting point (Sept. 21), BTC made higher highs in just three of the next nine trading days.

Bullish investors may potentially take this development with other indicators to advance their narrative. Using Sept. 21 as an anchor point shows that the relative strength index indicator over the same time period increased by 27%. RSI is a technical indicator often used as a proxy for price momentum.

Bitcoin has also been outperforming a number of its peers recently, most notably ether, whose price peaked on Sept. 8 and has declined 19% since then. BTC has recently outperformed Cardano’s ADA, XRP and Polygon’s MATIC, implying that bitcoin remains the asset of choice for investors seeking digital asset exposure.

Neutral to bearish investors are likely viewing the recent development relative to its current “point of control.” An asset’s point of control represents an area of high price activity over time. It essentially indicates where significant price agreement occurs, and is often used to indicate support or resistance.

BTC’s current point of control is approximately $20,300 when looking back to the start of 2022, just 5.4% higher than its current price.

While BTC looks poised to move higher, there also appears to be concerns that it will soon hit resistance near $20,000.

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Bitcoin/U.S. dollar daily chart (TradingView)

Altcoin Roundup

  • Binance Starts Ethereum Proof-of-Work Mining Pool, Initially With No Fee: ETHW, the forked version of Ethereum that retains the blockchain's original proof-of-work (PoW) underpinnings, initially stumbled. But mining support from Binance customers could in theory help. Read more here.
  • Meta Opens NFT Sharing on Instagram and Facebook to All US Users: Users in the U.S. can now connect their crypto wallets to Instagram as part of the app’s new digital collectible feature, which the tech giant has been testing since May. Read more here.

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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 Market Index (CMI) is a broad-based index designed to measure the market capitalization weighted performance of the digital asset market subject to minimum trading and exchange eligibility requirements.

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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