Market Wrap: Bitcoin Spike Indicates Potential Trend Reversal

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Bitcoin is in rally mode, posting its biggest daily gain in six weeks as short positions covered positions over the weekend. The cryptocurrency was trading around $ 38,874 at the time of publication and has risen 14.5% in the past 24 hours. Sentiment went from an extreme decline after a sharp correction in May and two months of consolidation between $ 30,000 and $ 40,000.

Some analysts expect further upside and view the recent rebound as a trend reversal.

We turned bullish last Wednesday, but we didn’t expect the tightening to happen so soon, QCP Capital wrote in a Telegram conversation. We were pleasantly surprised by the market’s support after Wednesday and sentiment turned decidedly bullish over the weekend.

Latest prices

S&P 500: 4,422.3, + 0.24% Gold: $ 1976.8, -0.31% The 10-year Treasury yield closed at 1.293%, down from 1.281% on Friday.

This higher move is more like a return to neutral after being stretched lower below $ 30,000, QCP wrote. The real pain may lie in short gamma positions above the $ 40,000 level.

The Bitcoin momentum is back, and gradual approvals on Wall Street could easily be the catalyst to help prices climb back to the $ 45,000 level, Oanda strategist Edward Moya wrote in an email to CoinDesk. .

Blockchain metrics are also showing positive signs for bitcoin.

Bitcoin has slowly returned to longer-term holders in these months after the dramatic selloff from all-time highs in May, wrote Sean Rooney, head of research at crypto asset manager Valkyrie Investments, in an email to CoinDesk.

Historically, this trend of entities holding long-term has not reversed quickly, which will likely cause prices to rise further as we head into the fourth quarter, Rooney wrote.

Short press confirmed

Bitcoin’s strong rebound over the weekend occurred as short positions covered positions. About 2,000 short positions were liquidated over a two-hour period, according to data from CryptoQuant.

The near-term rally occurred despite regulatory pressure surrounding stablecoins.

The amount of short-term order clearance over the past hour reached $ 640 million, which is the largest single-day clearance volume in over two months, WuBlockchain wrote in a tweet on Monday.

The chart shows the recent spike in short bitcoin liquidations.

Source: CryptoQuant

Bitcoin options expiration

A strike price of $ 40,000 represents the biggest source of open interest for the upcoming bitcoin options expiration on Friday, which could be a source of volatility.

BTC has been between $ 28,000 and $ 43,000 and most expect upward pressure to occur on a breakout above $ 40,000, Coinbase wrote in a newsletter to institutional clients on Saturday.

But with crush strategies forced to settle on lower strikes ($ 35,000- $ 38,000), a strong near-term recovery will likely start from lower levels, Coinbase wrote.

The chart shows the open interest in bitcoin by strike price.

Source: bias

Weekly cash flow

Investors withdrew money from digital asset funds as bitcoin fell below $ 30,000 last week, according to a report released Monday by CoinShares. The releases coincided with negative sentiment that preceded a nearly 24% rise in the price of bitcoin over the past seven days.

On Monday’s crypto price rally, bitcoin jumped above $ 38,000, which could encourage digital asset inflows as many investors have been sidelined since the May sell-off.

The chart shows the weekly digital asset fund flows.

Source: CoinShares

Altcoin balance sheet

USDT maintains its peg to the dollar: The USDT has largely maintained its peg to the dollar since Bloomberg announced on Monday that the U.S. Department of Justice was investigating Tether, the issuer of the largest stablecoin, for possible bank fraud. The token, which serves as crucial plumbing for the $ 1.6 trillion crypto market, has traded at $ 1 for most of its history, but past fears have caused it to temporarily lose parity with the greenback. In 2018, for example, the USDT fell to 92 cents amid concerns over its collateral and Bitfinex, the crypto exchange that shares owners and managers with Tether. The reaction to the latest news is mild in comparison. Altcoin rally: The surge in Bitcoin prices early Monday led to a rally in so-called altcoins, with aave (AAVE), chainlink (LINK) and bitcoin cash (BCH) registering double-digit percentage gains. Aave, an open-source, non-custodial protocol that runs on the Ethereum blockchain that allows users to lend and borrow a range of crypto assets, has climbed 18% in the past 24 hours, according to data from CoinDesk 20. Chainlink, a decentralized oracle network, was trading at $ 19.17, up 14% over the past 24 hours. Bitcoin Cash, the blockchain that derived from Bitcoin in 2017, rose 13%. Uniswap Labs restricts access to certain tokens: Uniswap Labs restricts access to certain tokens, including tokenized actions and derivatives on the protocol interface it supports, the software development said in a blog post on Friday. The news comes days after U.S. regulators announced they would increasingly scrutinize these types of decentralized finance (DeFi) products. Uniswap cited a changing regulatory landscape to explain its decision.

Relevant news

Other markets

Most digital assets on CoinDesk 20 ended up increasing on Monday.

Notable Winners at 9:00 p.m. UTC (4:00 p.m. ET):

bitcoin cash (BCH) + 15.4%

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