Market wrap: Bitcoin declines as buyers wait for lower support levels

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Cryptocurrencies were mostly down on Friday as buyers took profits after a short-lived rally. Bitcoin was trading just below the resistance level of $ 40,000 at the time of publication and has risen around 15% over the past week. Bullish sentiment returned after a sharp drop in May and two months of consolidation above the $ 30,000 support level.

Some analysts are bullish and expect buyers to remain active above the 50-day moving average, which is currently around $ 34,000.

Latest prices

S&P 500: 4,395, -0.54% Gold: $ 1,813.5, -0.8% The 10-year Treasury yield closed at 1.236%, up from 1.274% on Thursday.

We’ve been talking about the market having weaker liquidity over the summer for a few weeks now and think this helps explain the strong price action we’ve seen that triggered the nearly $ 1 billion reduction in term liquidations, David Grider, strategist at FundStrat, wrote in a Thursday newsletter.

Grider said the bitcoin spike could reflect a flight to safety from Chinese investors looking to get out of it at all costs, given the recent sell-off in Asian stocks. Bitcoin could have traded as a proxy tool for investors looking for hedge, Grider wrote.

The Fed’s next rate hike could be shallow

Federal Reserve Chairman Jerome Powell assured markets this week that the U.S. central bank is considering when to start cutting its $ 120 billion bond buying program each month, but Wall Street analysts are wondering already what will follow.

According to Bank of America, the Fed may not be able to afford to raise interest rates to levels near levels that were historically considered normal anytime soon. This implies that monetary policy could remain loose for years, even after the Fed stops actively printing money to pay for purchases of US Treasuries and mortgage bonds.

The momentum could be bullish for bitcoin as many investors view cryptocurrency as a hedge against inflation and dollar depreciation that could stem from easy money policies.

The screenshot from CME’s FedWatch tool shows how traders in traditional markets over the past month have, on average, pushed back expectations for the start of a rate hike cycle.

Source: CME Group

A similar pattern of shallow tightening was seen towards the end of 2018, when the Fed pushed the benchmark interest rate to around 2.5%, traditional financial markets collapsed, and in early 2019, the central bank had reversed course and started cutting rates. Again.

According to analysts at Bank of America, bond market investors may already be anticipating momentum, which may explain why 10-year US Treasury yields are at historically low levels of around 1.2%, although below the most recent annual inflation rate of 5.4%.

“We believe the level of rates in the United States reflects a market expectation that the Fed will only produce a shallow up cycle,” analysts wrote.

The Federal Reserve’s main interest rate remained mostly above 5% in the 1980s before the 2008 financial crisis.

Source: Federal Reserve Bank of Saint-Louis

Bitcoin active entities

Bitcoin’s active entities have surged over the past week, increasing 30% to 325,000 active entities per day, according to Glassnode. The number is down from January to mid-July.

According to Glassnode, entities refer to a group of addresses controlled by the same network entity and estimated using advanced heuristics and Glassnode’s proprietary clustering algorithms. Active entities include those active as sender or recipient.

The graph shows the active Bitcoin entities with the price.

Source: Glassnode

Ether resistance levels

Ether, the world’s second largest cryptocurrency, faces resistance near $ 2,500, where resistance is defined by the 100-day moving average. Ether has risen about 10% over the past week and is up nearly 30% after holding support at $ 1,720 on July 20. Lower support is seen at $ 2,000 which could stabilize a pullback.

The daily ether price chart shows the support and resistance levels.

Source: TradingView

Ether is consolidating against bitcoin and is on the lookout for a possible breakout by traders. The ETH / BTC ratio has initial support at 0.054, which needs to hold in order to keep ETH’s relative bullish trend intact.

The graph shows ether versus btc.

Source: TradingView

Altcoin balance sheet

Flow soars: Flow, a token powering a blockchain network focused on non-fungible tokens (NFTs), rose in price after the big cryptocurrency exchange Binance announced on Friday that it would list the project. Binance said at 7:00 am UTC (3:00 am ET) that it would list the FLOW token; since then the price has risen 61% to $ 29 from $ 18. On a 24 hour basis, the cryptocurrency is up 30%.

Crypto and Stable Regulatory Framework: Legislation before Congress to provide a comprehensive legal framework to regulate the digital asset market and potentially grant the federal government the ability to ban certain stablecoins has been presented Wednesday in the United States House of Representatives. According to the sponsor, Representative Don Beyer (D-Va.), Chairman of the Joint Economic Committee of the United States Congress, the current structure of the digital asset market and the regulatory framework are too ambiguous and dangerous for investors and consumers.

Six Dapps to Upload to SKALE: Ethereum Scaling Project Skale has announced which decentralized apps (dapps) will be uploaded to its network first. Skale Labs CEO Jack OHolleran told CoinDesk that teams will be releasing their dapps by the end of this summer. Boot.Finance, Covey, CurioDAO, Human Protocol, Ivy and Minds are the projects of the initial cohort. rm.

Relevant news:

Other markets

Most digital assets on CoinDesk 20 rose on Friday.

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

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