Market wrap: ‘extreme greed’ drives bitcoin prices down

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Cryptocurrencies were mostly down on Tuesday after a period of extreme bullish sentiment started to fade. After surpassing $ 50,000 earlier this week for the first time in three months, bitcoin has fallen below $ 48,000 at the time of publication and is down about 3% in the past 24 hours. Technical charts suggest support is near which could stabilize the pullback and hold the breakout above $ 45,000.

Some analysts expressed caution after bitcoin failed to break above the resistance level of $ 50,000.

With our optimism comes some moderation, and we don’t expect more exponential bullish breaks like what we saw from late 2020 to 2021, crypto trading firm QCP Capital wrote in a Telegram chat. .

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S&P 500: 4,486.2, + 0.15% Gold: $ 1,803.2, -0.14% The 10-year Treasury yield closed at 1.289%, up from 1.251% on Monday

‘Extreme greed’ comes, then goes

The fear is gone for now and the market is bullish, Arcane Research wrote in a Tuesday newsletter. Bitcoin’s surge towards $ 50,000 pushed the Fear and Greed Crypto Index into “extreme greed” territory this week, ahead of the most recent drop.

Arcane noted that other indicators suggest neutral sentiment. For example, relatively low funding rates in the bitcoin futures market indicate less exuberance among investors.

Funding rates and future premiums in BTC and ETH actually remain relatively low and muted, QCP Capital wrote in a Telegram chat. This means that most of the rally was driven by spot demand rather than leveraged speculators.

A euphoric market could indicate a local high and a signal for traders looking to take chips off the table, Arcane wrote.

The chart shows the Crypto Fear and Greed Indicator.

Source: Arcane Research

End of bitcoin capitulation?

Bitcoins ‘spent exit profit ratio’ (SOPR), the price at the time the cryptocurrency was sold divided by the price when it was originally purchased has turned positive after a sharp decline since January. The rise in the SOPR could be a sign that the sell-off period is over and the market is back on solid footing, Coin Metrics wrote in a Tuesday newsletter.

SOPR is a profit and loss proxy for all coins moved on the blockchain. The SOPR was negative for most of June, meaning investors were selling bitcoin at a loss. Now positive, the SOPR currently suggests that, overall, cardholders are sitting on profit over their cost base.

The graph shows bitcoin’s production-spent profitability ratio (SOPR)

Source: coin metrics

Divergent blockchain activity

Blockchain data has not (yet) responded to the rise in bitcoin prices, which could indicate a limited rise. The number of transactions is at historically low levels, similar to previous periods when investor interest in bitcoin has waned, according to Glassnode.

The Bitcoin network establishes a daily volume of around $ 18.8 billion, Glassnode wrote in a blog post. That’s 37% below the peak of the 2017 bubble, and a whopping 57.6% below the peak set during the May capitulation event.

The graph shows Bitcoin’s blockchain transaction activity with price overlay.

Source: Glassnode

Bitcoin hashrate recovery

The Bitcoin hashrate recovered from a local low in late June and early July, after China began cracking down on crypto mining in the country, according to Coin Metrics.

The seven-day moving average bitcoin hashrate stood at 127.5 exahashs per second on Monday, August 23, up from a local low of 84.3 exahashs per second on July 2, according to Glassnode data.

The recovery of the hashrate is a signal that some mining operations are starting to come back online in new locations and the worst of the crackdown is likely over, Coin Metrics wrote in the notes.

Source: coin metrics

Altcoin balance sheet

DeFi Exchange SushiSwap Builds on Avalanche: The Popular Decentralized Exchange (DEX) SushiSwap is the latest decentralized finance (DeFi) project to join the $ 180 million Avalanches incentive program, reports CoinDesks Muyao Shen. Avalanche Rush has already attracted the Aave Lending Protocol and the Curve Automated Market Maker (AMM). As a proof of stake blockchain built by Ava Labs, Avalanche claims to process 4,500 transactions per second without the security compromises typically associated with low latency blockchains. Avalanche Rush has undoubtedly boosted investor confidence in the Layer 1 blockchain that launched its mainnet last September: prices of AVax, the native Avalanches token, have risen by over 300% over the course of Last week, according to data from Messari, Paxos Renames Standard Stablecoin as Pax Dollar: Blockchain infrastructure company Paxos renames its standard Paxos stablecoin to Pax dollar with the ticker USDP. Paxos believes the USDP ticker more easily identifies stablecoin as a US dollar-backed token, chief strategy officer Walter Hessert said in a blog post on Tuesday. “USDP reserves are 100% held in cash and cash equivalents. … This name makes it clear to everyone that USDP is a dollar, ”Hessert wrote. The protocols remain at an early stage relative to the crypto industry as a whole, according to a Chainalysis report released on Tuesday. In its Global DeFi Adoption Index, the blockchain data company found that while DeFi adoption has increased significantly over the past 18 months in emerging and developed markets, most of that growth has occurred in countries and regions with higher incomes and more professional investors and traders. .CryptoPunk NFT Breaks Sales Record As Visa Sparks Buying Frenzy: Sales of non-fungible CryptoPunk (NFT) tokens hit record highs, another sign of market frenzy as credit card giant Visa jumped into the fray. On Monday, CryptoPunks sales volumes topped $ 86 million, a daily record, according to data from industry monitoring website CryptoSlam. And sales so far in August have already reached $ 332 million. Prior to August, the top monthly sales total was $ 135.2 million in July. The average price of a CryptoPunk this month is $ 199,069, more than double the average for last month.

Relevant news:

Other markets

Most digital assets on CoinDesk 20 ended lower on Tuesday. In fact, everything was in the red with the exception of the dollar-linked stablecoins.

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

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