Bitcoin tackles $40,000 as Biden unveils new $6 trillion federal spending budget

May 27, 2021 Coin Telegraph

Bitcoin

The money printer is going brrr in the United States.

Bitcoin (BTC) may get a boost to finally clear $40,000 at the expense of the U.S. dollar as United States President Joe Biden's new $6 trillion federal spending budget proposal is unveiled.

On May 28, the United States president will announce the massive fiscal policy, the largest since the Second World War, to ensure investments in major infrastructure, education and healthcare projects, reported The New York Times on May 27.

Biden reportedly wants the federal government to spend $6 trillion in 2022. He also plans to raise the total spending to $8.2 trillion by 2031.

Biden had earlier proposed significant tax hikes on America's richest companies and individuals to fund his massive spending program. But it would take the government at least until 2030 to shrink its budget deficits, the Times reported. That means the United States would face a monumental debt burden as it borrows money to finance Biden's record proposal.

*The U.S. federal deficit surged from $4.17 trillion in January 2020 to $7.92 trillion in May 2020. Source: FRED*

The scenario, per recent history, serves as an ideal bullish backstop for Bitcoin. The decentralized cryptocurrency rallied 1,582% from its $3,858 low in March 2020 as the U.S. government ramped up spending to unprecedented levels to combat the coronavirus pandemic.

On the other hand, the U.S. dollar strength index (DXY), which measures the greenback's strength against a basket of top foreign currencies, crashed by up to 13.38% after topping out in March 2020 amid the global market crash.

*DXY downtrend remains despite bouncing in 2021. Source: TradingView.*

Meanwhile, Anthony "Pomp" Pompliano, a well-renowned Bitcoin lobbyist and founder of Pomp Investments, predicts further declines in dollar bids.

"The government is proposing to push our country further into debt while simultaneously destroying the value of our currency," Pompliano said. "Historians will write that the government accelerated the destruction of the world reserve currency as the citizens cheered them on."

Other analysts also jumped in to propose Bitcoin — with its fixed supply — as a remedy against a steepening U.S. debt curve.

US President Joe Biden set to announce $6 Trillion budget.

Debt as a % of GDP will rise to highest levels since World War II.

Buy #Bitcoin
— Bitcoin Archive (@BTC_Archive) May 27, 2021

#bitcoin has no top because fiat has no bottom pic.twitter.com/Zl3AygwVsB
— PlanB (@100trillionUSD) May 27, 2021

Bitcoin reclaims $40,000

The New York Times' coverage caused jitters during the early morning U.S. trading session, with the DXY falling by a modest 0.01% at the New York opening bell while Bitcoin reclaimed $40,000.

*Bitcoin crosses above $40,00 in the early morning New York trading session. Source: TradingView*

The BTC/USD exchange rate tested its 200-day simple moving average (the orange wave in the chart above) — which sits at around $40,756 — for a breakout move to the upside.

If achieved, the pair would eye a close above its 20-day exponential moving average (the green wave) — near $43,655 — to confirm its short-term bullish bias.

Number of Bitcoin wallets holding 100–1K BTC soars after Tesla’s $1.5B buy-in

May 27, 2021 Coin Telegraph

Bitcoin

New data shows a dramatic rise in the number of Bitcoin wallets holding anywhere between 100 BTC to 1,000 BTC — but there may be a catch.

The amount of Bitcoin (BTC) held by whales increased by around 14% after Tesla announced its foray into the cryptocurrency sector in early February 2021.

The latest data from on-chain analytics platform Glassnode shows an inflow of roughly $19.5 billion worth of Bitcoin — according to current exchange rates — into wallets that hold at least 100 BTC and a maximum of 1,000 BTC. The deposits spiked right after Tesla revealed in its January securities filings that it had added $1.5 billion worth of BTC to its balance sheet.

The news hit the wire on Feb. 8 when the cost to purchase one Bitcoin was as low as $38,057 on Coinbase. The rates had shot up to $65,000 by mid-April, driven higher by bulls expecting Tesla’s involvement in the cryptocurrency sector to influence more corporates into adding Bitcoin to their balance sheets.

Honestly, I’m not surprised that Tesla bought #Bitcoin and I won’t be surprised when Apple and Microsoft do it. Having $BTC is just common sense at this point.
— Samson Mow (@Excellion) February 9, 2021

The adoption prospects for Bitcoin among corporates and other institutions boomed because of the cryptocurrency’s anti-inflation narrative. Many speculators projected Bitcoin as an insurance against the Federal Reserve’s expansionary monetary policies that sapped investors’ appetite for traditional safe havens like the United States government bonds and the U.S. dollar.

*USD index shows erratic inverse correlation with Bitcoin after March 2020. Source: TradingView*

Tesla, in its first-quarter filing to the U.S. Securities and Exchange Commission, also noted that it wanted to buy Bitcoin by utilizing its unused cash reserve worth $1.5 billion, hinting that the electric carmaker was looking to offset potential dollar devaluation risks.

*The Glassnode BTC supply metric shows signs of stabilization following latest crash. Source: Glassnode*

The entire Tesla episode served as a bullish cue for investors looking to maximize their returns from the Bitcoin bull run. The Glassnode metric showed that the Bitcoin supply held by 100–1,000 BTC wallets was stable before Tesla’s announcement but spiked dramatically after it.

But there’s a catch

However, another Glassnode metric, which measures the Bitcoin supply held by wallets with a 1,000–10,000 BTC balance, illustrated a steady decline — from around 455,000 BTC (~$17.88 billion) to roughly 410,000 BTC (~$16.11 billion).

The outcome revealed that bigger whales sold their Bitcoin holdings following Tesla’s announcement. As a result, they became part of the 100–1,000 BTC supply group.

*Entities with 1K–10K BTC balance dropped after Tesla’s Bitcoin investment. Source: Glassnode*

Meanwhile, the sell-off from the 1,000–10,000 BTC supply group did little in offsetting the Bitcoin bull run. The cryptocurrency approached its all-time high of $65,000, indicating smaller whales and retail traders absorbed the selling pressure from bigger investors.

Bitcoin is trading around $39,300 at time of writing, down roughly 38% from its record peak in mid-April.

3 convincing signs the Bitcoin bears have stopped selling

May 26, 2021 Coin Telegraph

Bitcoin

BTC price rebounding back to $40,000 is just one of the few signs that the bears may be exhausted.

The price of Bitcoin surged higher on May 26, breaching the $40,000 level for the first time in five days as traders brushed aside concerns about China's crypto ban and the United States' crypto tax proposal.

The benchmark cryptocurrency reached an intraday high of $40,855 before turning lower owing to profit-taking sentiment.

In the meantime, analysts such as Cheds and Korous AK expect BTC/USD to hit $42,000 in the short term but advised caution on extended upside positions unless the spot market confirms a clear bullish breakout.

Cheds, particularly, showed a bullish conviction if Bitcoin reclaims its 200-day simple moving average (200-day SMA), which is currently around $40,600. The wave has historically served as a strong price floor against long-term bearish trends.

Be careful getting too bullish until $BTC #Bitcoin turns both the 42k area and MA 200 back into support on daily
— Cheds (@BigCheds) May 26, 2021

*Bitcoin briefly closed above 200-day SMA. Source: TradingView*

More support for a bullish Bitcoin outlook came from on-chain data. At least three blockchain-focused metrics showed that the cryptocurrency bottomed out after crashing to $30,000 on May 19.

Bitcoin exchange deposits decline

On-chain analytics platform Glassnode revealed earlier on May 26 that the total number of crypto addresses sending Bitcoin to cryptocurrency exchanges declined on a seven-day average timeframe.

*Previous 1-month low of 6,356.643 was observed on May 25. Source: Glassnode Alerts*

The metric, dubbed "Number of Addresses Depositing to Exchanges," illustrates the number of unique addresses that appear as a sender in a transaction sending funds to exchanges. Simply put, it shows a decline in the number of new Bitcoin traders who might want to transfer BTC to exchanges to sell it or trade it for other assets.

New traders/investors are prone to react more emotionally to wild crypto price swings. But with the Glassnode metric showing a plunge in unique Bitcoin depositors to exchanges, it signals a downtrend in potential selling pressure.

NVT reaches classic bullish reversal level

Meanwhile, the seven-day average output on Bitcoin's network value-to-transaction (NVT) signal has dropped to a 14-month low, Glassnode data shows.

*Bitcoin bearish sentiment seems to be exhausting as the NVT signal drops to March 2020 low. Source: Glassnode Alerts*

Bitcoin's price reacted bullishly when the NVT signal touched 500 on the hourly chart, as the chart above shows. Based on fractal sentiment alone, the metric now suggests a sharp bullish reversal in the Bitcoin market as it trades 36% above its previous bottom level of $30,000.

Accumulation address uptrend

Another Glassnode metric shows that the latest Bitcoin price dip has done very little in shaking investors' long-term bullish sentiment. The "Number of Accumulation Addresses" claimed a record high just as the BTC/USD exchange rate hit $30,000 on May 19, taking the total to above 545,000.

#Bitcoin HODL Army is growing through this dip. pic.twitter.com/L8q6vO0rZl
— Bitcoin Archive (@BTC_Archive) May 26, 2021

Glassnode defines accumulation addresses as those that have at least two incoming Bitcoin transactions and that have never spent funds. The analytics service considers these addresses as long-term holders.

A spike in accumulation addresses during the BTC price crash that destroyed billions in leveraged positions shows that bulls with long-term setup absorbed the selling pressure. That marks another sign of bearish exhaustion as Bitcoin attempts to flip $40,000 into a new support level.

Bitcoin price volatility hits 2021 high as one analyst paints $15,000 target

May 26, 2021 Coin Telegraph

Bitcoin price volatility hits 2021 high as one analyst paints ,000 target

ARK investments

Wild price fluctuations are likely in the top two cryptocurrencies as both record a dramatic spike in their 30-day realized volatility charts.

The current cryptocurrency market scenario is only for traders who have an extremely high appetite for risks. But for the faint of heart, analysts advise patience and caution ahead.

The outlook stands tall for Bitcoin (BTC) and Ether (ETH), the top cryptocurrencies by market capitalization that more or less behave as locomotives for the rest of the crypto market. As of Wednesday, the ETH/USD Realized Volatility on a 30-day timeframe has reached near its 2017 peak levels, according to data provided by Skew.

*Bitcoin and Ether 30-day realized volatility reaches 2021 high. Source: Bybt.com, Skew*

Meanwhile, Bybt.com shows Bitcoin’s 30-day volatility at its yearly high, suggesting that the benchmark asset remains at risk of wild price fluctuations in the sessions ahead. Simply put, the top two crypto assets show a likelihood of moving in either direction with a higher degree of volatility. All in all, that could mean both aggressive gains and losses for daytraders.

Buying in a falling market

The volatility alarm rings at the time when both Bitcoin and Ether have posted incredible recovery rallies, following their recent price declines. In retrospect, the BTC/USD exchange rate plunged more than 50% after topping near $65,000 in April — a correction partially driven by Elon Musk’s anti-Bitcoin tweets and China’s crypto ban reiteration last week.

Ether, whose positive correlation efficiency with Bitcoin currently sits near 0.88, tailed the benchmark digital asset’s bearish correction. The second-largest cryptocurrency experienced a maximum of 60% decline in its market valuation — compared to its record high of $4,380 from mid-April.

But bulls saw opportunities in the said price dips, insomuch that they helped Bitcoin and Ether prices recover by up to 36.12% and 68.52% from their local price bottoms, respectively. Some analysts anticipated that the upside retracement would extend further based on supportive macroeconomic catalysts, mainly inflation fears.

Tech bull Cathie Wood, who heads Ark Investment Management, reiterated her $500,000 Bitcoin price target after last week’s crash, calling the dip “a really great time to buy.”

Ark's Cathie Wood is sticking with her $500,000 target for Bitcoin #TheBusinessweek https://t.co/9eBp5M39Zi pic.twitter.com/VeSRF5fplm
— Businessweek (@BW) May 19, 2021

Nevertheless, many also cautioned traders against buying during a bearish correction phase, especially after a year-long price rally that increases the risks of profit-taking by long-term investors. Analysts at BiotechValley Insights Consulting Group noted that Bitcoin dropped hard even after the United States Consumer Price Index rose to 4.2%, stating that the crypto market is now going through an “anxiety stage.”

“I believe Bitcoin has a long way to fall from here,” one of the BiotechValley analysts wrote in a note. “I think it will slowly grind down the slope of hope with a periodic dead cat bounce.”

The group called for a $15,000–$16,000 price target for Bitcoin.

Lower risk-appetite? Just wait

Koroush AK, an independent market analyst, took a rather middle approach. He advised traders to wait for a clear bounce above short-term resistance levels before determining their market bias, tweeting:

“After a 60%+ market crash, it’ll take more than a small bounce for me to shift bias back to bull market bullish. Cautious until we capture $45,000 BTC and $3,400 ETH. [I] will be patient here. Don’t need to catch exact bottoms or sell exact tops to make money.”

The recent rebound has coincided with an increase in the number of outstanding Bitcoin Futures contracts from $11 billion to $11.88 billion, showcasing a steady climb in leveraged positions in the derivatives market. Meanwhile, more than $12 billion worth of long positions has been liquidated since the May 19 price crash.

Bitcoin price must now hold this key level to regain $40K

May 25, 2021 Coin Telegraph

Bitcoin

Will $37,000 hold for more upside in the near term for Bitcoin?

Bitcoin (BTC) prices pulled back on May 25, wiping a small portion of the gains it had made during the previous session amid another day of volatile trading.

The BTC/USD exchange rate fell up to 6.11% after opening the Asia-Pacific session at $38,856. The pair met a strong resistance force near its 200-day simple moving average (20-day SMA) that prompted a majority of traders to secure their intraday profits.

As a result, the bids for the BTC/USD pair started dropping while heading into the early London session, eventually finding support at a level that was instrumental in limiting the market's bearish trend during the last week's price crash.

*Bitcoin attempts to establish support level at $37,000. Source: TradingView*

Rekt Capital, a pseudonymous cryptocurrency trader, called the blacked horizontal line in the chart above — roughly $37,000 — a "key retest" level, noting its significance in determining Bitcoin's short-term market bias.

The analyst put a blue arrow above the support level that pointed north, stating that he anticipated BTC/USD to bounce back in the coming sessions.

"Bitcoin turns $37,000 into support in the short-term," tweeted Rekt Capital. "But might need to retest that area once again given how strong yesterday's Daily Close was Still on track for following the blue path."

The statement appeared as Bitcoin continued its whipsaw trend, logging sudden intraday reversals of high percentage margins. The choppy price movements reflected an absence of clear directional bias among traders, especially as analysts weighed equally convincing bearish and bullish catalysts against one another.

Will Bitcoin crash further? The opinions differ

Victor Dergunov, the founder of Albright Investment Group, admitted that he was buying the Bitcoin price dip, adding that he expects the cryptocurrency to at least reach the $40,000-$42,000 area in the near term.

"There was enormous volume leading up to and right around $30K, which is what we want to see at the epicenter of the correction process," Dergunov explained in his note.

"Next, we see a retest attempt, at around $31K, but volume is notably weaker than during the initial drop."

Offsetting Dergunov's bullish opinion was portfolio management and analytics firm, the Income Generator. It said the Bitcoin market risked facing the "worst crypto winter" in its twelve-year lifetime, citing the U.S. dollar's bullish response to rising inflation figures that could sap investors' appetite for the cryptocurrency.

"It now seems as though rising inflation levels might actually work in the opposite direction and bring renewed buying activity back into the U.S. dollar," Income Generator said in a note.

Meanwhile, Mike McGlone, the senior commodity strategist at Bloomberg Intelligence, reiterated his bullish stance on Bitcoin, noting that he still sees the BTC/USD exchange rate hitting $100,000 on the prospects of a declining supply rate.

"Bitcoin has backed up for reasons that support an extended bull market and a path to $100K," he said.

"A bit hot in April, a primary factor cited for the crypto's correction -- excessive energy use -- represents the strength of the world's largest decentralized network, and getting greener."

With "greener," McGlone cited Elon Musk's proposal to create a mining council in North America that could track and subsidize Bitcoin's carbon emissions.

The Tesla CEO was instrumental in crashing the bitcoin prices from $59,000 to as low as $30,000 over the past few weeks. He criticized the cryptocurrency for its potential environmental impact and discontinued accepting it as payment for Tesla's electric vehicles.

Historically accurate Bitcoin metric suggests BTC price has bottomed out

May 25, 2021 Coin Telegraph

Bitcoin

Bitcoin bulls may get some respite from a derivatives market indicator that hints at a price bottom.

As the price of Bitcoin (BTC) is attempting to establish support at $37,000 on May 25, the recent $30,000 lows may have been the bottom, suggests one derivatives market indicator with a history of accurately predicting BTC/USD cyclical lows following its bear cycles.

The last time it predicted a bottom was on Nov. 1, following which the cost to purchase one Bitcoin surged from $13,771 to as high as $64,899 on Coinbase.

Anatomy of a bullish indicator

Dubbed as "rolling basis," the indicator mathematically represents the relative difference between the price of the futures contract and the spot rate on an annual timeframe. For instance, if a Bitcoin contract trades at a 2.5% premium than its spot price on the three-month basis chart, then its annualized rolling basis comes to be 10%.

In hindsight, assets in the futures market trade either at a discount or a premium. When an asset's spot rate is higher than its futures price, this is is called backwardation (discount). Conversely, when the spot rate trades below the futures one — which is typical in traditional financial markets — it ̦represents the state of contango (premium).

Bitcoin futures markets tend to fluctuate between backwardation and contango. An extreme contango often signals a top in a bull market. Conversely, an extreme backwardation helps to find potential bottoms in a bear market.

For instance, in June 2019, the Bitcoin Futures market on OKEx experienced a contango rise above the 3.5% level. It peaked around at 6.8% in the same period Bitcoin crossed $11,000. However, the BTC/USD spot rate kept on rising until it reached $14,000. Thereafter, the pair entered a multi-month bear market, bottoming out near $3,100 eventually in December 2019.

*Bitcoin Futures contango example from June 2019. Source: TradingView*

Ben Lilly, a crypto economist at Jarvis Labs, pitted the reading on the "BTC Futures Annualized Rolling 3 Month Basis" chart against the Bitcoin spot prices, noting that when the former approaches or closes below 1%, the latter takes it as a cue to bottom out and start a new upside cycle.

*The vertical lines show the day when Bitcoin rollin basis reached 0%. Source: TradingView*

The BitMEX chart above shows several instances wherein the rolling basis reading fell below 1% during Bitcoin's downside moves in the spot market. The cryptocurrency later started experiencing a rebound rally — a new bullish cycle — before correcting all over again to find a new bottom just as the rolling basis slipped below 1%. Rinse and repeat.

For instance, in March 2020, during the coronavirus-led global market crash, the Bitcoin Futures logged a backwardation rise to just shy of negated 14%, which would mark Bitcoin's bottom in the spot market at around $3,858.

Bitcoin Futures Rolling Basis as of May 25

Lilly shared a Skew chart that showed BTC Futures annualized rolling basis slipping below 1% for the first time since November 2020.

*Bitcoin rolling basis dropped below 1% following May's crash in spot markets. Source: Skew*

"This looks promising in terms of finding a bottom," noted Lilly in his newsletter.

"It harkens back to why we use funding rates so much. Because just when people think crypto is coming to an end and it's off to the woodshed, it bounces back."

He added that based on basis readings alone, it is a good time for Bitcoin spot traders to accumulate, albeit noting that it does not mean opening leveraged long positions in the futures market.

The risks appeared higher in the derivatives market due to lack of bullish transactions. Lilly said the sell-off pressure has not subsided even after 6 billion worth of USDC entered the market — a sign that traders want to use the dollar-pegged stablecoins to buy cryptocurrencies like Bitcoin.

"Right now we’re flying in no man’s land," he added.

The statements appeared as Bitcoin showed an extreme bias conflict short-term, logging wild intraday price swings in the previous sessions. The Monday session saw BTC price get rejected by resistance at $40,000 level.

Currently, BTC is attempting to find support at $37,000, roughly 40% below the all-time high.

Bitcoin’s epic $7.5 billion long squeeze just made BTC price more bullish — Here’s why

May 21, 2021 Coin Telegraph

<div>Bitcoin's epic .5 billion long squeeze just made BTC price more bullish — Here's why</div>

Bitcoin derivatives

Not everyone is bearish after Bitcoin price dropped from $40,000 to $30,000 and back up again.

This Wednesday's price crash in the Bitcoin (BTC) spot market wiped about $7.56 billion worth of long-leveraged positions from cryptocurrency derivatives markets.

*Leveraged bullish investors winded up around $7.5B in longs on Wednesday. Source: ByBt.com*

The event marked the biggest bullish leverage wipeout since March 2020. Retail and institutional investors borrowed from leading exchanges to amplify their potential returns.

But a sudden reversal in the Bitcoin spot rates, reportedly led by Elon Musk's anti-Bitcoin tweets over the weekend and fueled by China's reiteration of a ban on crypto transactions, blew up bulls' leverage ratios. That led to a so-called liquidity cascade in the derivatives market.

In traditional markets, investors use cash as collateral to back their leveraged bets. Nevertheless, the cryptocurrency industry enables Bitcoin-backed collaterals. So, when the BTC rates fall, their downside move catches bullish traders — ones with leveraged positions on higher BTC rates — on the wrong foot.

The event led many analysts to simmer down their bullish bias in the Bitcoin market, with Scott Minerd, the chief investment officer of Guggenheim Partners, referring to crypto as "Tulipmania." Earlier, the Wall Street executive had called for a $600,000-price target for Bitcoin.

But the mind-boggling long liquidation event has not made everyone bearish. On the contrary, some analysts have highlighted the wipeout as a catalyst for the next big bullish setup in the Bitcoin market.

For instance, pseudonymous trader "Twitterati CL207" posted a long thread explaining why he thinks a drop in open interest has made Bitcoin stronger in the long run.

Money-makers

CL207 highlighted the role of market makers in running a cryptocurrency derivative platform. The analyst explained how their strategies assisted in transferring Bitcoin from weaker hands to stronger hands during the Wednesday dip.

In retrospect, the Bitcoin futures market is typically excessively long. That prompts market makers to gain exposure on the other side of the bullish trades. So, they open short positions.

But that does not necessarily make the liquidity providers bearish. They prefer to back up their short positions by hedging in spot markets by purchasing BTC or other bullish derivative exposure (options, futures, perpetual swaps, etc.).

"Sometimes," said CL207, "there's hedge/short demand hitting the market maker too so that the market maker can sell their shorts back to them, but generally in crypto, its long-biased, and thus market maker holds [the] spot as collateral to their shorts."

The analyst added that market makers buy spot coins against high leverage demand from bulls, noting that leveraged long position holders are "the weakest possible hands" — most vulnerable to liquidations should the spot bitcoin rate turn lower.

When the long liquidation occurs, market makers close their shorts against them to provide liquidity. They also sell their spot positions to remain neutral.

6/7

and during a long liquidation heavy move, the MM constantly get hit by longs closing, so now they have to close their shorts against them (to provide liquidity) while selling spot (to remain neutral) to unwind this entire process
— CL (@CL207) May 20, 2021

The trader explains that what happened on Wednesday when roughly $5 billion worth of long positions were liquidated as Bitcoin price fell from nearly $40,000 to $30,000 within three hours. But then, the BTC/USD exchange quickly recovered back to $40,000.

At the same time, the Bitcoin futures open interest did not follow the spot price recovery.

*Bitcoin price recovers while futures' open interest stay low. Source: TradingView.com*

"This means we just had the most significant weak hands to strong hands transfer in probably since March 12, 2020," noted CL207, adding that strong hands with real cash bought the BTC on the cheap from market makers. He said:

"These coins have now transferred from short-term leverage speculators to real cash buyers."

Who are strong Bitcoin hands?

Meanwhile, Willy Woo wrote in his latest newsletter that long-term prospects in the Bitcoin market remain healthy, reiterating what fellow trader CL207 highlighted in his Twitter thread: That the coins are going into the pockets of long-term investors.

A long-term investor in the Bitcoin market, or "hodler," typically defines an entity that sees the cryptocurrency as a hedge against fiat currencies. Capital injection policies undertaken by western central banks to cushion the impact of coronavirus on their economies have raised fears of inflation.

For instance, the U.S. Federal Reserve announced last year that it wants to push inflation above 2%. The central bank has been maintaining a near-zero interest rate policy and has been buying $120 billion worth of government bonds and mortgage-backed securities every month.

"There is no need for Bitcoin to replace fiat currencies to maintain value completely," said Vincenzo Furcillo, risk analyst at Seeking Alpha. He added:

"Despite the possible volatility, the projections show a positive skew over the next five years. In small proportions, Bitcoin should find space as a strategic investment in the portfolio of investors looking to hedge to upcoming inflation."

Bye alt season? Analysts see traders rotating back to Bitcoin after $30K ‘reset’

May 20, 2021 Coin Telegraph

<div>Bye alt season? Analysts see traders rotating back to Bitcoin after K 'reset'</div>

Altcoins

The short-term investment case for Bitcoin remains intact on the prospects of rotational trading from altcoin markets.

The Bitcoin (BTC) market bias stands divided on how to interpret the BTC price crash this week, wherein the pair lost more than 35% of its value at one point on Wednesday, crashing to as deep as $30,000 on Coinbase.

Global media outlets attributed the plunge to China reiterating its anti-crypto business stance and Tesla suddenly discontinuing Bitcoin payments for its electric vehicles.

*Traders buy the dip, leading Bitcoin to bounce immediately after testing $30,000. Source: TradingView.*

Nikolas Panigirtzoglou, managing director for global market strategy at JP Morgan, further noted an ongoing decline in the capital that flows into publicly-listed Bitcoin funds. He suspected a rotational investment setup, wherein institutional investors were winding up their positions in the Bitcoin futures market and reallocating the proceeds to build long positions in gold funds.

"It is not clear what is driving this shift," Panigirtzoglou added.

"Perhaps institutional investors are fleeing Bitcoin as they see its previous two-quarter uptrend ending and thus seek the stability of traditional gold away from the rapid downshifting of digital gold."

He nevertheless reminded that Bitcoin's momentum signals remain in positive territory. Thus, it is still too early to declare the end of the bull market.

Bitcoin dominance awaits rebound

Stack Funds' Head of Research Lennard Neo also presented a similar, near-term upside setup, citing a potential rotational setup, but from altcoins to Bitcoin.

Lennard cited the recent directional trends in the Bitcoin market and its strength against a vast pool of alternative digital assets, dubbed as the Bitcoin Dominance Index. He noted that the net crypto market cap surged by around 40%, as Bitcoin's dominance against altcoins declined from 73.5% to 40.5%.

*Bitcoin dominance index (blue) vs. crypto market capitalization (red). Source: Stack Funds*

That suggests that many investors remained entrench within the cryptocurrency markets, focusing mostly on transferring their Bitcoin gains to altcoins that seemed promising in the short term. Lennard added that Ether's 180 percent year-to-date surge late last month emerged from the same Bitcoin-to-altcoin setup.

But now, the capital would want to fly back into the Bitcoin market, the former Bloomberg analyst stated, adding:

"We believe the rotational playbook has reversed as dark clouds loom over the markets. We are expecting investors to cycle back into Bitcoin as uncertainties increases as the markets undergo another reset. Hence, a bounce in Bitcoin dominance should occur, further supporting Bitcoin’s price in the short-term."

"Pretty routine"

Veteran hedge fund manager and investor Ben Miller also came out in support of Bitcoin's bullish bias, calling its recent downside correction as a "routine pullback."

"If I liked something at higher prices, it is a safe bet I will like it even more at lower prices," said the former Legg Mason Capital Management CIO as he cited similar Bitcoin price dumps during the mammoth 2017 bull market.

But bearish woes continue to offset the bullish predictions, especially as Guggenheim’s CIO Scott Minerd, who called for a $600,000 price target for Bitcoin, did a complete backflip while referring the cryptocurrency with "Tulipmania."

Meanwhile, Mark Haefele, CIO of UBS Global Wealth Management, called Bitcoin an unreliable store-of-value asset over its high price volatility. Julius de Kempenaer, a senior technical analyst at Stockcharts.com, also noted that Bitcoin's recent price crash dampened its safe-haven outlook.

Bitcoin was trading above $40,000 at the time of this writing, up more than 30% from its sessional low of $30,000.

Bitcoin chart fractal notorious for 60%-70% price crashes is back — What’s next?

May 19, 2021 Coin Telegraph

$<div>Bitcoin chart fractal notorious for 60%-70% price crashes is back — What's next?</div>$

Bitcoin Price

Bitcoin slipped below the 20-week exponential moving average for the first time since February 2020, which is a big bearish signal.

Bitcoin (BTC) bulls should brace for aggressive downside market corrections in the sessions ahead, especially as the benchmark cryptocurrency breaks below a critical support level.

Dubbed as the 20-week exponential moving average (20-WMA), the wave has historically served as a primary downside target for bulls to accumulate BTC. For instance, the BTC/USD exchange rate maintained its bullish bias all across 2020 while trading above the 20-WMA wave. It eventually closed the year up more than 400%.

Similarly, the 20-WMA wave supported massive bullish rallies in the April-June 2019 session. Meanwhile, the price floor overstayed its welcome in the 2015-2017 session as Bitcoin surged from $250 to $20,000.

Conversely, slipping below the 20-WMA wave brought havoc to the Bitcoin market. For instance, the January-December 2018 session logged a 72% decline after the BTC/USD rate slipped below the 20-WMA. It repeated the same pattern in the September 2019-March 2020 trading session; the pair fell by around 60% after breaking below the said wave support.

*Bitcoin extends sell-off towards the blue wave after breaking below the green one. Source: TradingView*

Negative fundamentals also fueled sell-offs in 2018, 2019 and 2020. In 2018, traders offloaded their bitcoin positions under the influence of initial coin offering scams. Meanwhile, in 2019, worries over Facebook's Libra token launch, coupled with Bitcoin Cash (BCH) hard fork and its potential impact on the Bitcoin network, pulled prices lower.

In 2020, the coronavirus pandemic prompted a global market crash. In February, Bitcoin, which was sitting atop attractive rebound profits, became an ideal scapegoat for investors to withdraw their profits to cover their losses in other traditional markets.

The bearish case at present

Bitcoin's break below the 20-WMA support this week appeared out of a flurry of panic-inducing events. First, Elon Musk, who had invested $1.5 billion in Bitcoin via his electric vehicle firm Tesla, reversed his decision to accept the cryptocurrency as payments, citing environmental concerns.

The "emotional billionaire" doubled his attack on Bitcoin this weekend after raising alarms that he would unload his $1.5 billion investment into the cryptocurrency.

That thoroughly coincided with a breakdown in Bitcoin price. First, they fell from $55,000 to $50,000, and then to nearly $42,000.

The 20-WMA during the price declining period was near the $46,000-level. This week, BTC/USD crashed to a new sessional low of $30,000 on Coinbase.

*Bitcoin eyes extended downside momentum towards the blue wave (and the red horizontal line). Source: BTCUSD on TradingView*

The technical fractals alone suggest that the bitcoin price eyes an extended downside correction towards its 50-week simple moving average (the blue wave in the chart above). Part of the reason is the cryptocurrency's tendency to test the 50-WMA wave for pullbacks.

The "Fractal 2" box in the chart above shows the same; Bitcoin maintained support above the blue wave before crashing below it in the wake of pandemic FUD. The "Fractal 1" box also showed the same.

Meanwhile, when even the 50-WMA did not hold up strong against bears, the prices crashed toward the 200-week simple moving average (200-WMA). At present, the 200-WMA sits near $12,800.

"If we see the low $30,000s soon, it will then be a question of will we see $10,000-$20,000," also noted Clem Chambers, the chief executive of financial research outlet ADFVN.com.

"To me, that’s possible because when the ‘I bought at the top’ brigade stampedes for the exit, it will get extremely spicy," he added.

Some bullish hopes for Bitcoin

Higher inflation remains one of the core bullish catalysts behind the yearlong Bitcoin price rally. It has soared by more than 300% in the previous 12 months, despite the recent downside correction, taking cues from the Federal Reserve's aggressive quantitative easing policy that has lifted investment appeal off traditional safe-havens, including government bonds and the U.S. dollar.

Bitcoin bulls present it as a provably scarce asset, citing its limited supply cap of 21 million tokens. That has prompted veteran investors such as Stan Druckenmiller, Paul Tudor Jones, and Mike Novogratz to gain exposure in the cryptocurrency market.

Meanwhile, corporate houses other than Tesla, which includes Square and MicroStrategy, have added Bitcoin to their balance sheets as a measure against inflation. Institutional banking systems such as JPMorgan, Goldman Sachs, and Morgan Stanley have also announced Bitcoin-enabled investment services for their wealthy clients, pointing that they would b

Novogratz reminded on Tuesday Bitcoin is still trading about 32% higher on a year-to-date timeframe, telling CNBC that sometimes markets get ahead of themselves and correct lower to neutralize its overall sentiment. He added:

"Crypto and blockchain are still being adopted by institutions and retail traders alike, so there is no reason to worry."

"We are seeing more and more institutions," says @Novogratz. "I just see an inexorable move from financial institutions and tech companies into the #crypto space. Will it all be #bitcoin or #ethereum? I think #bitcoin will preserve its lane as a stored value." pic.twitter.com/f2yJkfwTFZ
— Squawk Box (@SquawkCNBC) May 19, 2021

On Tuesday, Cathie Wood's Ark Invest increased its crypto exposure by scooping up 118,214 shares of Coinbase (NASDAQ: COIN). a U.S.-based cryptocurrency exchange in a major portfolio reshuffle.

Bitcoin’s drop from $64K comparable to Black Thursday, but Coinbase outflows hint at accumulation

May 18, 2021 Coin Telegraph

<div>Bitcoin's drop from K comparable to Black Thursday, but Coinbase outflows hint at accumulation</div>

Anthony Pompliano

The ongoing Bitcoin price correction draws a comparison with the March 2020 crash with one big difference.

Elon Musk and coronavirus have something in common: they have both panicked investors — at least once — into dumping their Bitcoin (BTC) holdings.

The similarities notched up higher in the previous six days as Musk doubled down on his chaos-inducing perspective toward Bitcoin. The billionaire entrepreneur engaged in Twitter spat with top cryptocurrency advocates over the weekend, including podcaster Peter McCormick, as he projected his favorite token, Dogecoin, as superior to Bitcoin.

Obnoxious threads like this make me want to go all in on Doge
— Elon Musk (@elonmusk) May 16, 2021

At one point in time, Musk almost admitted that he would have Tesla unload the $1.5 billion investment that it had made in Bitcoin in February. Meanwhile, the bids for the flagship cryptocurrency kept on declining with each of Musk's tweets. First, they went to $50,000, then sub-$45,000, eventually to bottom-out near $42,000.

Musk later clarified that Tesla has not dumped its bitcoin holdings.

To clarify speculation, Tesla has not sold any Bitcoin
— Elon Musk (@elonmusk) May 17, 2021

But his clarification did little in offsetting Bitcoin's downside bias. The cryptocurrency eventually extended its bearish correction to more than 35% when measured from its all-time high of nearly $65,000.

That also marked one of the quickest and deepest top-to-bottom retracement moves in the cryptocurrency's recent history, with on-chain indicators showing that its impact on the market bias was as bad as the one caused by the Black Thursday crash in March 2020 in the wake of the coronavirus pandemic.

Meanwhile, Blockchain analytics platform Glassnode reported a decline in the profits of Bitcoin's circulating supply via its proprietary metric.

The "BTC Percent Supply in Profit (7d MA)" showed readings near 81.122 as of London morning on Tuesday, its lowest level since October 2020. The readings were also weak during the March 2020 crash, wherein Bitcoin declined by more than 50%.

*Percentage of circulating supply in profit on a 7-day average timeframe. Source: Glassnode*

More on-chain indicators point out similar readings between the current, Musk-led bitcoin price crash and the one that appeared amid the coronavirus panic in March 2020.

For instance, the Bitcoin transfer volume tracker at Glassnode showed a spike in BTC inflow across all the exchanges. Its scale was comparable to the inflows seen during the March 2020 sell-off and the distribution by the PlusToken Ponzi scheme in 2019.

*Bitcoin Net Transfer Volume from/to crypto exchanges. Source: Glassnode*

A higher BTC inflow indicates a higher probability of traders selling those tokens for other assets, including fiat and altcoins. Conversely, a higher outflow shows traders' willingness to hold BTC for longer periods.

Institutional versus retail sentiment

Glassnode's Bitcoin transfer volume data meanwhile provided two stark investment perspectives between retail and institutions. In its weekly newsletter, the analytics platform broke down its observation based on the inflow/outflow data collected from two of the world's largest cryptocurrency exchanges: Binance and Coinbase.

Binance is a non-US entity that attracts mostly retail traders and investors around the world. Meanwhile, Coinbase's standing is higher among US-based institutional investors. Glassnode noted that Binance was the biggest receiver of the Bitcoin inflows during the Musk-led market crash.

"This provides further indication that the recent inflows are likely to be driven by both new market entrants (panic sellers) and potentially due to capital rotation into other crypto-assets," wrote Glassnode in a weekly note.

Ki-Young Ju, the chief executive of CryptoQuant — a South Korea-based blockchain analytics platform, also noted that most BTC inflows went to Binance, adding that it is not necessarily a bearish signal.

"I'm going to wait until the inflow signal cools off," he added, nonetheless.

*Bitcoin Net Transfer Volumes from/to Binance. Source: Glassnode*

On the other hand, Coinbase logged higher new Bitcoin outflows ever since the cryptocurrency broke above the $20,000-price milestone last year. The trend continued even in the current week, showing that institutional investors were absorbing the retail market's selling pressure.

*Bitcoin balance on all exchanges vs. Coinbase vs. Binance. Source: ByBt.com*

Still bullish

In other words, rich investors purchased bitcoin tokens at local lows as average ones sold them under the influence of Musk.

"Don’t listen to what they say," said early-stage investor Anthony Pompliano in his note to clients on Monday. He added:

"Just watch what they do with their money. Elon Musk and Tesla understand that they are going to be dependent on bitcoin moving forward. It wouldn’t surprise me if they are actually buying more bitcoin now at depressed prices or at least plan to purchase more in the future."

Pompliano added that Bitcoin remains the best-performing macro asset, an "apex predator" with vastly outperformed stocks, bonds, real estate, and commodities. Twitter CEO Jack Dorsey, whose payment company Square added bitcoin to its balance sheet to beat inflation fears, also noted last Friday that his team would "forever work" to make Bitcoin better.

The comments came in contrast to Elon Musk's support for Dogecoin. Veteran investor Paul Santos wrote in his Seeking Alpha piece that the Tesla CEO might want to make money out of thin air by exploiting the so-called cryptocurrency euphoria.

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