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A string of positive news kept bitcoin buyers active on Monday as analysts looked for signs of a near-term bottom. The world’s largest cryptocurrency by market cap has grown by around 20% in the past seven days and is testing the $ 40,000 price level for the first time in two weeks.
A number of signals “all strongly point to undervalued bitcoin at current prices,” wrote Alexandra Clark, a trader at UK-based digital asset broker GlobalBlock, in an email to CoinDesk.
The buyers came in after Tesla CEO Elon Musk tweeted on Sunday that the electric car maker would re-allow bitcoin transactions “when there is confirmation of reasonable (50%) use of clean energy by miners with a positive future trend “.
Related: Bitcoin and Ether Price Indicators Support Short-Term ‘Relief Rally’
“While many analysts are still on the cusp of determining whether the digital asset is ready to continue its uptrend,” Clark wrote, “what we do know is that Musk is responsible.”
The tweet sparked an almost 6% rebound in BTC, which had traded in a narrow range between $ 30,000 and $ 40,000 over the past month.
Latest prices Buyers go all in on bitcoin
Traders also reacted to hedge fund manager Paul Tudor Jones’ assertion that he could “get into inflation trading” in an interview with CNBC on Monday. Jones said he “loves bitcoin” and wants a 5% allocation with the same percentage in gold, cash and commodities.
MicroStrategy is also in the news again, preparing to buy up to $ 488 million in bitcoin with the proceeds of a $ 500 million bond sale that closed on Monday. MicroStrategy (Nasdaq: MSTR) stock jumped about 14% on Monday and is up about 30% year-to-date, roughly in line with bitcoin price gains.
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Related: Crypto Is Not a ‘Viable Investment’, Says Goldman Sachs
Overall, sentiment appears to be turning positive after a volatile May. In fact, 87% of investors polled by cryptocurrency brokerage firm Voyager plan to increase their holdings of bitcoin or other cryptocurrencies in the next quarter.
“It is encouraging that investors remain bullish after the recent market correction as we continue to see interesting trends in our user sentiment surveys,” Voyager CEO Steve Ehrlich wrote in an email to CoinDesk .
However, uncertainty about bitcoin as an asset class persists, which could weigh on sentiment.
Goldman Sachs’ consumer and wealth management division released a report Monday saying crypto is “not a viable investment.” The bank does not recommend it for client portfolios.
Bitcoin options market shows declining demand for hedges
Investors have shown lingering fears of a further decline in bitcoin prices and continued demand for downside hedges, as evidenced by the cryptocurrency’s “options smile”.
The options smile, a U-shaped chart resembling a smiley emoticon, is created by plotting implied volatilities against options at various strike prices expiring on the same date.
The “smile” shows relatively higher implied volatility or demand for options at strike prices lower than the current market price of bitcoin than the implied volatility of higher strike options.
Bitcoin deviates from 11-year trend
Bitcoin is trading around 36% below its exponential 11-year trend, according to a report released Monday by Pantera Capital.
The recent spike leading up to the May sell-off was only a slight breach of trend value. According to Pantera, Bitcoin has only spent around 20% of its history far under trend assessment.
The deviation from trend could decline further from earlier lows seen in 2012 and 2020, although bitcoin does not appear to be overvalued from historical extremes.
Cycle check: where to go from here?
A research report released by Enigma Securities last week suggested that the price of bitcoin may move sideways for some time, but may face further decline from previous bear markets in 2013 and 2017.
“By no means do we expect a quick recovery. It is conceivable, however, that we will see a faster recovery, ”writes the report.
The bitcoin bear market in 2017 was no less severe than in 2013, but was shorter, according to Enigma.
Bitcoin on the verge of surpassing the ether
Investors could warm to the world’s number one cryptocurrency again as techniques show bitcoin begins to outperform the ether.
The BTC / ETH ratio is now above the 50-day moving average, which could indicate an improvement in the relative strength of bitcoin versus the ether, according to Katie Stockton, managing director of Fairlead Strategies.
Goldman Sachs plans to offer ether options: report
Goldman Sachs plans to offer ether options and futures to investors, according to a report released on Monday.
The investment bank plans to offer ether trading in the coming months, Mathew McDermott, head of digital assets at Goldman Sachs, told Bloomberg.
McDermott said customers see the recent rout as a good entry point, and the bank also plans to facilitate transactions with exchange-traded notes that follow the ether.
In May, CoinDesk announced that Goldman Sachs had started offering investors access to Undeliverable Futures (NDF), a derivative linked to the price of bitcoin that pays in cash.
Technical analysis
Bitcoin and Ether price charts could turn bullish after a month of market stagnation, potentially providing respite in the coming weeks, according to new analysis.
Bitcoin’s weekly stochastic oscillator has moved from an oversold level or below 20, signaling the possibility of a near-term “relief rally”, according to Katie Stockton, founder and managing partner of Fairlead Strategies.
Seasoned traders use the oscillator in conjunction with other indicators to assess oversold and overbought conditions, which act as triggers for long and short trade entries. A reading below 20 implies oversold conditions, while an impression above 80 indicates an overbought market.
Thus, bitcoin appears poised for a more substantial relief rally – a price rebound due to seller exhaustion. The cryptocurrency is currently trading at 2.5 week highs above $ 40,000, which is an 8% 24-hour gain.
According to Stockton, initial resistance for bitcoin is near $ 47,000, which if breached would open the door to further gains. However, Delta Exchange CEO Pankaj Balani expects new sellers to exceed $ 45,000.
Read more: Bitcoin and Ether Price Indicators Support Short-Term Relief Rally
What Else We Read (And Watch): Other Markets
Digital assets on CoinDesk 20 are mostly higher on Tuesday.
Notable Winners at 9:00 p.m. UTC (4:00 p.m. ET):
dotted (DOT) + 14.87%
chain link (LINK) + 8.47%
uniswap (UNI) + 6.82%
Notable losers:
stellar (XLM) -0.05%
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