Market wrap: Bitcoin pushes higher as shorts unfold

[ad_1]

Bitcoin traded higher on Tuesday, rising about 6% in the past 24 hours. Cryptocurrencies are in relief mode as the selling pressure from May stabilizes in a narrow range between $ 30,000 and $ 40,000. Traders are watching for signs of capitulation as bitcoin appears to be oversold and shorts unwind positions.

Crypto markets have held up despite regulatory crackdowns in China and the UK. On Monday, Reuters reported that several companies had abandoned their efforts to register with the UK’s Financial Conduct Authority amid increasing regulatory oversight of the industry.

Rising prices in the face of bad news may be a sign of seller exhaustion that we need to increase, David Grider, strategist at FundStrat, wrote in a newsletter on Monday.

Latest prices

S&P 500: 4,291.67, + 0.025% Gold: $ 1,761.22, -0.97% The 10-year Treasury yield closed at 1.475%, up from 1.472% on Monday

Where from here

We think this could continue to be a choppy market for a while as prices reestablish their trend, and we might even retest the $ 31,000 level, but overall we stay in the bull camp for the rest. of the year, Grider wrote.

From a technical standpoint, the long-term trend for bitcoin remains intact despite the loss of medium-term momentum. The $ 34,000 price point prevented the nearly $ 27,000 secondary support from becoming relevant, according to Katie Stockton, managing partner at Fairlead Strategies.

We would see a break above the 50 day moving average [around $38,000] as a positive catalyst supporting a secondary stress test near $ 44,000, Stockton wrote in a report released Monday.

Big economic data analysts this week await Friday’s U.S. jobs report, which could affect assets considered risky, including cryptocurrencies.

If Friday’s jobs numbers are stronger than expected, market participants could anticipate the Fed’s rate hike sooner than expected, Alexander Blum, managing partner of digital asset manager Two Prime, wrote in an email to CoinDesk.

A strong jobs report could be bearish for short-term digital assets, according to Blum, while a lower-than-expected number would be bullish.

Returns collide

Bitcoin’s cumulative annual return of around 20% beats the S&P 500 Index, but lags behind the Thomson Reuters Core Commodity Index.

The chart shows the cumulative returns for the year for bitcoin, stocks and commodities.

Source: Koyfin

Over the past year, bitcoin and ether have shown similar risk-adjusted performance to popular US stocks such as Alphabet (NASDAQ: GOOG) and Tesla (NASDAQ: TSLA).

The chart shows the Sharpe ratios (risk-adjusted return) for bitcoin, ether, and popular US stocks.

Source: IntoTheBlock

Decoupling of the Bitcoin cycle

The current bitcoin bull cycle has decoupled from the 2013 and 2017 cycles. This is due to a combination of factors, including regulatory crackdowns, environmental concerns, and an occasional tweet from Tesla CEO Elon Musk, who interrupted the 2021 bull cycle.

It’s important to note that each cycle is ultimately unique, Coin Metrics wrote in a bulletin released Monday. Each halving effectively signaled the start of a new cycle, with the 2013 cycle peaking 370 days after the first halving and the 2017 cycle peaking 524 days after the second halving.

Bitcoin is currently 413 days after the third halving, which occurred in May 2020, as shown in the chart below.

The chart shows the recent bullish cycles in bitcoin.

Source: coin metrics

Hedge funds unwind short positions

Open interest in bitcoin futures at CME Group in June is at an all-year low, with open interest currently standing at $ 1.39 billion, according to data from Skew.

This shows that hedge funds are now unwinding their short positions because cash-and-carry transactions, a strategy that aims to exploit the differences between the spot and futures market, are no longer lucrative, according to Arcane Research.

According to Arcane, hedge funds ran out of contracts for $ 1.5 billion worth of bitcoin contracts at their peak, and that number has dropped to $ 400 million.

Bitcoin futures are opening interest at their lowest annual level.

Source: Arcane Research

Altcoin balance sheet

Ethereum transaction fees: Ethereum transaction fees fell to their lowest since December as blockchain activity cooled while use of Layer 2 Ethereum solution protocols such as Polygon (MATIC) grew is reheated. Gas refers to the computational efforts required to perform specific operations on the Ethereum network. Fees, paid in ether, are required to complete a transaction on Ethereum. DeFi meets AI: Fetch.ai, a Cambridge, UK-based artificial intelligence lab with a bent on crypto, has launched a service to tackle the risk of losses in the experimental decentralized finance market ( Challenge). The DeFi Agents Toolkit can be configured to automatically withdraw funds from Uniswap v2 and PancakeSwap users based on predefined conditions such as the exchange rate of a given token falling to a certain level.

Relevant news

Other markets

All digital assets except one on CoinDesk 20 rose on Tuesday.

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

[ad_2]