XRP price will fall to new lows vs. Bitcoin if this famous chart pattern plays out

June 25, 2021 Coin Telegraph

Bitcoin

XRP price bulls watch out! The popular Head and Shoulder pattern is statistically among the most accurate trend indicators.

Ripple blockchain's native token XRP could make a full bearish price swing against Bitcoin (BTC), as per a classic technical indicator.

Dubbed as Head and Shoulders (H&S), the pattern develops when an asset forms three peaks atop a common baseline. The outside peaks, known as Shoulders, are close in height, while the middle one, called the Head, is the highest.

The H&S pattern is completed when the asset breaks below its baselines support, with high volumes, confirming a negative breakout. The so-called neckline also serves as the most common entry point for bearish traders as they target deeper downside levels. Though not every time, an H&S pattern's profit target comes to be equal to the distance between the pattern's high point and its neckline.

All-time low ahead

Peter Brandt, the CEO of Factor LLC, a global trading firm he established in 1980, sees the XRP/BTC instrument painting an H&S pattern. In a tweet published early Friday, Brandt raised speculation that the bearish indicator might prompt the Ripple token to turn into "a tidal wave" against Bitcoin. The veteran trader added:

"Completion of the [H&S pattern] would set [XRP/BTC] target at all-time-lows."

*XRP has broken below the H&S neckline with strong volumes. Source: TradingView.com, Peter Brandt*

The total distance between the H&S pattern's top and its baselines comes out to be around 1,794 satoshis. Meanwhile, the neckline support coincides with 2,120 satoshis. Therefore, the profit target in XRP/BTC's case is (2,120-1,794), i.e., 326 satoshis.

Support levels ahead

But as XRP/BTC approaches its record low levels, the pair would still need to pass through a series of strong support levels.

*XRP tests 200-day simple moving average as its first line of support. Source: TradingView.com*

The XRP/BTC exchange rate bounced off its 200-day simple moving average (200-day SMA; the saffron wave) support at 1,696 satoshis. Should the pair sustain above the wave, the likelihood of retesting the H&S neckline around 2,120 satoshis is high. Meanwhile, a close above 2,120 satoshis would invalidate the H&S structure.

On the other hand, breaking below 200-day SMA exposes XRP/BTC to the next line of support near 1,555 satoshis. The level was instrumental in pushing the pair up by more than 170% in November 2020. Nonetheless, its Volume Profile shows a weaker trading activity in recent history, raising possibilities that it won't be able to handle strong selling volumes as the H&S breakout accelerates.

The last line of defense, as per the Volume Profile indicator, sits at 847 satoshis, more than twice above the H&S profit target of 326 satoshis.

XRP/USD

Against the US dollar, XRP continued trending lower in its months-old descending channel pattern, while promising short-term upside opportunities.

*XRP bounced off its lower descending channel support on June 22. Source: TradingView.com*

The XRP/USD rebounded by up to 44.53% after testing the Channel's support trendline on June 22. The pair's move uphill had it test $0.69 as its interim resistance as bulls targeted an extended push towards $0.78.

$XRP

Reclaiming $0.63 is cool but $0.79 will be the real test.

Let's see if $BTC allows price to even get close to $0.79 in the short term... pic.twitter.com/PhHR7OJCQQ
— Posty (@PostyXBT) June 25, 2021

The $0.69-level has served as the resistance between November 2020 and April 2021. Meanwhile, the $0.78-level capped XRP/USD from extending its downside bias throughout May 2021.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin bounce from $28.8K activates century-old financial model’s bullish thesis

June 23, 2021 Coin Telegraph

Bitcoin

Bitcoin's recent push from under $30,000 to over $34,500 asserts hopes of a big price recovery ahead.

A recent upswing in the price of Bitcoin (BTC) following a nail-biting price crash below $30,000 this Tuesday has activated a classic financial model's bullish outlook on the cryptocurrency.

Titled Wyckoff Method, created by Richard D. Wyckoff in 1888, the model attempts at navigating financial market trends based on the relationship between assets' supply and demand. The method has two schematics: Accumulation and Distribution.

In an Accumulation setup, an asset signals bottoming out following a sharper price decline. It eventually leads to the price rebounding to the upside. Meanwhile, the Distribution setup sees the asset topping out after a solid price moves uphill. After that, the price reverses direction to the downside.

Each setup has five unique phases. For example, in Distribution, an asset goes through the following events across the said phases (in order): Preliminary Supply (PSY), Buying Climax (BC), Automatic Reaction (AR), Secondary Test, Sign of Weakness (SOW), Last Point of Supply (LPSY), and Upthrust After Distribution (UTAD).

*Wyckoff events and phases during distribution*

Meanwhile, in the Accumulation schematic, an asset logs the following events across its five phases (in order): Preliminary support (PS), Selling Climax (SC), Automatic Rally (AR), Secondary Test (ST), Last Point of Support (LPS), and Sign of Strength.

*Wyckoff events and phases during accumulation*

Wyckoff confirms Bitcoin accumulation

Comparing the Bitcoin recent price action and the events presented in the Wyckoff Accumulation schematic, it appears the cryptocurrency is grappling with its Last Point of Support of Phase C.

*Bitcoin phases imagined per Wyckoff Accumulation Schematic. Source: TradingView.com*

Phase A in the chart above shows exhaustion in the previous downside momentum at the Secondary Test (between $28.8K and $30K) and Selling Climax (approx $34K) levels. Up to this point, the supply was dominant as per the Wyckoff Method.

An automatic rally (AR) approached in Phase B, led by both institutional demand for Bitcoin and short-covering. Later, the price repeatedly dipped towards secondary tests and bounced back after testing the Selling Climax horizontal line from Phase A.

Now, the Bitcoin price has entered Phase C, leaving it to the "smart money" to decide whether the cryptocurrency is ready to go higher. An upside confirmation would come if the ongoing rebound extends above the SC-ST phase, accompanied by stronger volumes.

Phase D and Phase E reflect an all-and-all recovery run towards $60,000.

"It seems like a possibility," said market analyst Kevin Swenson. "We just got the lower low at $28.8K ... If this model plays out, we will now enter the final phase of the recovery back up."

In terms of the Wyckoff method, this $28.8K lower low is very similar to the $65K higher high. Both cause a maximum emotional effect on market participants."

Meanwhile, Bloomberg Intelligence's senior commodity strategist, Mike McGlone, albeit not referring to the Wyckoff Method, noted that repeated bullish rejections near $30,000 are similar to how Bitcoin bounced from $4,000 in 2019-2020.

*Bitcoin bulls show resilience at $30,000. Source: Bloomberg Intelligence*

"Selling Bitcoin around good support & similar dips below most means as about $30K this year hasn't ended well," he added, "and if the key question this time around is whether it's different, we see a more-enduring bull market."

A ‘seismic mining shift’ may be driving Bitcoin price below $30K: Report

June 22, 2021 Coin Telegraph

Bitcoin

The benchmark cryptocurrency slipped briefly under the $29,500-level this Tuesday as a Glassnode report indicated possibilities of miner capitulation in China.

Bitcoin (BTC) plunged 7.38% to hit its five-month low of $29,313 on Tuesday as the market stared at the prospect of another sell-off, this time led by miners affected by a recent crackdown against cryptocurrency entities in China.

*Bitcoin drops below $30K for the first time since January 2021. Source: TradingView.com*

The People's Bank of China on Monday said it had summoned multiple regional institutions, including the Agricultural Bank of China, China Construction Bank, and ICBC, as well as Jack Ma's payment platform Alipay, to “strictly implement” its recent ordinances on curbing Bitcoin and other cryptocurrency-related activities, including mining.

Sichuan, a hydropower-rich region in South-West China, ordered the 26 largest crypto mining farms to stop operating, Chinese Media report on Friday. The province was contributing 75% of the total global hash power to run the Bitcoin blockchain network.

The regulatory warnings followed a decline in the Bitcoin market, which, in mid-April, traded near $65,000, spurred by backings from high-profile advocates, including Tesla CEO Elon Musk.

Miner capitulation FUD

A report published by Glassnode revealed a "seismic mining shift" taking place in China. The data analytics platform noted that many miners are in the process of either shutting down or migrating their hash power outside China to comply with the mining ban.

"One of the largest migrations of Bitcoin hash-power in history appears to be underway," wrote Glassnode, adding that the estimated mean hash-rate (7DMA) has declined from circa 155 EH/s to around 125 EH/s in just two weeks after the China FUD (a backronym for Fear, Uncertainty, and Doubt).

*Bitcoin mean hash-rate plunged 16% in two weeks after China FUD. Source: Glassnode*

Glassnode anticipated that the Chinese mining industry would likely liquidate a portion of their Bitcoin holdings when coming to grip with relocating their farms abroad or selling their hardware. Those sell-offs might reflect "miners hedging risk" and "obtaining capital to facilitate and fund logistics."

Meanwhile, for some miners, it may be a general exit from the industry entirely, the report added.

Recent on-chain trends have shown a spike in miners' BTC distribution and a decline in accumulation.

For example, the Miner net position change metric, which tracks the transactional flow of Bitcoin mining pools, showed miners distributing BTC at a rate of 4K to 5K per month over the period in which the hash rate fell 16%.

*Miners sold more Bitcoin than they held in the last two weeks. Source: Glassnode*

"This has reversed the trend of net accumulation which was active since April."

Big investors absorbing miners' OTC distribution

Miner capitulation is not necessarily a bad thing as long as the market absorbs the selling pressure. During the first quarter of 2021, bids for BTC/USD rose from as low as $28,700 to $61,788 even as miners sold their Bitcoin holdings en masse.

Jonathan Ovadia, chief executive at OVEX — a South Africa-based cryptocurrency exchange, credited institutional investors behind the latest sell-off absorption as he drew evidence from MicroStrategy's ongoing Bitcoin accumulation spree. He said:

"The continuous accumulation of Bitcoin by institutional investors, particularly MicroStrategy, is based on a very deep conviction of the potential future upside beyond this current correction."

Meanwhile, taking a look at over-the-counter (OTC) desks, which miners utilize to match their large size distributions with institutional buyers, also showed demand among large volume buyers.

"During both the May Sell-off and over the last two weeks, between 3.0k and 3.5k BTC in net inflows have been observed," Glassnode observed. "However in both instances, almost the full inflow size was absorbed by buyers over just a few weeks.

*Miners's supply of 3K BTC to OTC desks met buyers within two weeks. Source: Glassnode*

As a result, OTC's Bitcoin balances were relatively flat since April.

Classic bearish chart pattern forms for Bitcoin as BTC price tumbles to $32K

June 21, 2021 Coin Telegraph

Bitcoin

Bitcoin flashes a classic bearish technical pattern that could crash BTC prices to below $20,000.

Bitcoin (BTC) bulls should look for a cover, at least as far as chart technicals are concerned.

The flagship cryptocurrency continued its price declines into the new weekly session, hitting $32,105 ahead of the London opening bell following an approximately 10% intraday drop. In doing so, it raised the prospect of retesting its quarter-to-date low of $30,000 for either a bearish breakdown or a bullish pullback.

*Bitcoin consolidates between $30,000 and $42,000. Source: TradingView*

But as traders grapple with the ongoing medium-term bias conflict in the Bitcoin market, one classic technical pattern has surfaced to boost a bearish outlook.

The cup has turned

Spotted by Keith Wareing, an independent market analyst, the so-called “Inverse Cup and Handle” structure points to an extended downside price correction ahead in the Bitcoin market. In detail, the pattern develops when an asset forms a large crescent shape as it rallies higher and corrects lower, followed by a less extreme, upward rebound.

Traders look at the Inverse Cup and Handle pattern as their cue to open short positions to target deeper levels. The most extreme bearish target, in such a case, is determined by measuring the distance between the cup’s top and the pattern’s breakout level.

Meanwhile, traders typically spot breakout levels when the price breaks out from the handle pattern to the downside while accompanied by higher volumes.

*Bitcoin Inverse Cup and Handle formation hints bearish breakout is ahead. Source: Keith Wareing, TradingView*

Based on the chart provided by Wareing, Bitcoin’s recent price action — ranging from its pump to nearly $65,000 followed by a dump to $30,000 and a retracement to $40,000 — almost checks all the boxes that confirm the presence of an Inverse Cup and Handle structure.

Except, the Bitcoin price still awaits a bearish breakout.

Back in play pic.twitter.com/aqLVazTK8J
— Keith Wareing (@officiallykeith) June 21, 2021

The depressive Bitcoin setup appeared as traders assessed the United States Federal Reserve’s hawkish reversal on interest rates and inflation. Last week, the U.S. central bank signaled that it could raise benchmark lending rates by the end of 2023 instead of 2024 to tame the rising inflation.

James Bullard, one of the Fed officials, said separately on Friday that the central bank could raise rates by as early as 2022.

Fed Chair Jerome Powell also said in a press conference on Wednesday that his office would move to discuss reducing the $120 billion worth of monthly asset purchases it had started in March 2020.

Bitcoin and other pandemic winners, including gold and Wall Street stock indexes, fell in tandem owing to the Fed’s hawkish tones. Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a pool of top foreign currencies, rose to its two-month high, suggesting a renewed appetite for cash among investors.

More bearish outlooks emerge

The latest Bitcoin price plunge also took cues from reports of China’s deepening crackdown on crypto mining farms in the region. The state-backed newspaper Global Times reported that authorities in Sichuan ordered miners to wind down their operations.

Sichuan is home to China’s second-largest crypto mining community. The latest ban means that 90% of China’s mining capacity, which makes 75% of the global computing supply, has probably gone offline, noted Global Times.

Bitcoin’s hash rate dropped to its November 2020 low following the China crackdown story.

*Bitcoin’s hash rate drops to 140.3 EH/s for the first time in six months. Source: Blockchain.info*

Jeffrey Ross, founder and CEO of Vailshire Capital Management, said that he expects Bitcoin to stay weak for the next one to three weeks, fearing liquidation at the end of Chinese miners.

Nevertheless, he added that the cryptocurrency’s macro outlook remains bullish as long as it holds key technical targets above 12- and 48-month moving averages.

*Bitcoin's breakdown below 12-month moving average risks wiping its market valuation by more than 50%. Source: Jeffrey Ross, TradingView*

Bitcoin’s 48-month moving average is currently around the $13,000 level.

Bitcoin pinned below $38K as investors stash record $756 billion with Fed

June 18, 2021 Coin Telegraph

Bitcoin

Bitcoin bulls ducked for cover as the Federal Reserve started paying interest rate returns on cash deposits via its reverse repurchase program.

Bitcoin (BTC) suffered as investors moved a record amount of cash in Federal Reserve's overnight facility after the central bank started paying interest on the money.

The U.S. central bank received $756 billion via its reverse repurchase program from nearly 70 market participants on Thursday. The stash is about $172B higher than the one deposited last week and roughly $235B more than on Wednesday, wherein only 53 investors tapped the facility.

A reverse repo facility takes in cash majorly from money-market funds and government-sponsored banks. Until Wednesday, the service offered eligible users a return interest of zero percent.

But after the Federal Reserve signaled faster and sooner interest rate increases — in 2023 instead of previously anticipated 2024, the facility moved its revere repo rate up to 0.05% and interests on excess reserves rates, which banks deposit 0.15% from 0.10%.

*Fed's rate tweaks supercharge demand. Source: FT, Federal Reserve, Bloomberg*

Putting excess cash to earn interest

Primarily due to quantitative easing for the U.S. economy, excessive dollar liquidity has been pouring into money market funds that later invest this in short-term government securities. Higher demand for those securities has often sent their yields into negative territories.

*Total financial assets held in Money Market Funds before and after recessions (shaded). Source: FRED*

Negative-yielding securities in response to Fed's quantitative easing turned out to be one of the major bullish catalysts for Bitcoin and other digital assets since March 2020. Against traditional debts, the cryptocurrency sector promised better returns and, in some cases, consistent yields from the emerging decentralized finance industry.

But with Fed throwing a curveball at the markets with its hawkish tones, mainstream investors have been turning to facilities that seem less risky than Bitcoin or gold and promise a decent yield. As a result, the Fed's repo market records its most enormous inbound cash flow.

"We appear to be seeing a growing inversely proportional correlation between the price of Bitcoin and the Reverse Repo market from the Fed," said Petr Kozyakov, co-founder and CEO at crypto wallet service Mercuryo. He added:

"Many investors choose the more volatile Bitcoin as it promises higher returns. However, with the current market trends, some BTC investors are perhaps offloading their positions as the dollar outlook is vital at this point.

The U.S. dollar, also considered a haven against market uncertainties, rose to 92.70 against a basket of top foreign currencies this Friday. That marked the greenback's highest level since mid-April. Bitcoin reacted negatively to a stronger buck.

*Bitcoin and the U.S. dollar index's response to the Fed's rate hike signal [so far]. Source: TradingView.com*

Bitcoin shall overcome?

Raoul Pal, the founder/CEO of Global Macro Investor, said the dollar's climb killed the inflation narrative. Nevertheless, the macroeconomic analyst stressed that the Fed-led tapering woes wouldn't hurt alternative hedging assets like Bitcoin and gold in the long run.

He noted that the U.S. government tends to push through more stimulus packages that expand the Fed balance sheets. That means the central bank keeps buying the sovereign debt, thereby pushing bond yields lower. Pal said:

"My view remains that H2 is weaker than expected and inflation fears subside for now, and growth looks patchy. That results in more stimulus (not tightening) in Q4.

*U.S. 10-year Treasury note yield dropped after every recession since 1980. Source: Bloomberg, Global Macro Investor*

The analyst added that the dollar's recovery trend would stabilize in the second half of 2021. Eventually, the capital would start flowing back into gold and crypto markets.

Diversification into Bitcoin a ‘prudent move,’ says Bloomberg strategist

June 16, 2021 Coin Telegraph

Bitcoin

The statement appeared as Bitcoin investors waited for fresh economic projections from the Federal Reserve and China pledged to release metal reserves amid concerns over commodity rally.

Bitcoin (BTC) price has retreated by more than 40% after topping out near $65,000 in mid-April. But that is not enough to derail the flagship cryptocurrency's long-term bull trend, especially as global markets grapple with declining national currencies and the prospect of a commodity market crash.

So believes Mike McGlone, the senior commodity strategist at Bloomberg Intelligence, who said Wednesday that diversifying into store-of-value assets is a wise strategy against gloomy currency and commodity market outlooks.

"There's little risk of the dollar dropping in value vs. similarly depreciating currencies, which means that diversification into store-of-value assets like gold and Bitcoin is simply a prudent move, in our view," he tweeted Wednesday.

Money printer goes brrr

McGlone's bullish analogy took references from a recent spike in money injected into the U.S. and Eurozone economies. The U.S. Money Supply M2, a measure of the money supply that includes cash and checking deposits (M1) and near money, reached $20.256 trillion on May 3, 2021, from $15.384 trillion on Feb. 10, 2020.

A surplus liquidity injection into the U.S. economy left the dollar weaker against top foreign currencies. As a result, the U.S. dollar index (DXY) fell by almost 11.22% from its mid-March 2020 high of 101.947 to 90.5 as of June 16.

*U.S. recessions are shaded; the most recent end date is undecided. Source: Board of Governors of the Federal Reserve System*

Meanwhile, the Eurozone Money Supply M2, the money supply in the European Union area, surged from €5.6 trillion in February 2020 to over €14 trillion in March 2021

However, Euro rallied against the U.S. dollar despite its oversupplied status, with Jordan Rochester, a Group-of-10 foreign exchange analyst at Nomura International, noting that the European government's attuned response to the coronavirus pandemic drifted capital out of the U.S. markets to enter the eurozone economy.

On the other hand, Bitcoin logged supersonic price rallies against the dollar and euro on promises to shield investors from higher inflation. While the BTC/USD exchange rate jumped from $3,858 in March 2020 to a little over $40,000 in June 2021, the BTC/EUR exchange rate spiked from €3,363 to around €32,000 within the same period.

Recent consumer price index reports in the U.S. showed that the inflation rate reached 5% in May 2021, the highest since 1992. In Europe, the headline rate for price growth reached 2%, topping the European Central Bank's (ECB) target.

Meanwhile, ECB chief Christina Legarde said that they would continue purchasing bonds, fearing tapering of any kind would derail the eurozone recovery.

Federal Reserve officials also expect to sideline inflationary pressure as they conclude their two-day Federal Open Market Committee policy meeting on Wednesday. Earlier, the U.S. central bank said that higher CPI in April and May are "transitory in nature."

Many are worried the fed's current policies are setting us up for (and we are already seeing) high inflation. Inflation is bullish asset prices, b/c the dollar is worth less. Even if the asset is worth the same, the dollar it's being marked against is worth less. BTC number go up
— Jonny Moe (@JonnyMoeTrades) June 16, 2021

Commodity shock ahead?

Investors deeming hedging assets like Bitcoin as risky chose to stay hedged in relatively less volatile areas of markets such as commodities. Copper, the bellwether for macroeconomic health, surged 67% as investors looked for havens against falling currencies. Aluminum, zinc, among other metals also reported massive uptrends.

But China recently has come up with a plan to tame the booming commodity prices. The National Food and Strategic Reserves Administration said Wednesday that it would increase the supply of metals, including copper, aluminum, and zinc, to make them available to manufacturers.

Wow, more big moves from China to tamp down the commodity boom. Big change from earlier this year. https://t.co/7EKPZJU1AJ pic.twitter.com/5Z3RCArxLH
— Joe Weisenthal (@TheStalwart) June 16, 2021

McGlone hinted that a prospect of declining commodity prices would also mean great investment opportunities in the gold and Bitcoin markets.

Looming ‘death cross’ may put Bitcoin bull run in danger ahead of Fed meeting

June 16, 2021 Coin Telegraph

Bitcoin

Analysts anticipate Bitcoin to continue its recovery rally above $40,000 on increasing anti-inflation bets. But a looming death cross could spoil the upside outlook.

Bitcoin (BTC) wobbled around $40,000 as investors waited for the Federal Reserve to release its new set of economic projections on Wednesday.

The market's focus shifted on two important questions: will the United States’ central bank officials signal their intentions to raise interest rates in 2023, instead of 2024? And how much inflation they think would rise in the remainder of 2021 and the next year?

Taper tantrum

In March, the last Fed projection saw 11 Federal Open Market Committee (FOMC) officials agreeing to keep interest rates near zero at least until 2023. That suggested a tightening in Fed's monetary policy in 2024. It would also imply that the Fed might trim its $120 billion asset purchasing program earlier than anticipated.

The prospects of "taper tantrums" in the medium run have also increased due to the latest consumer price index (CPI) readings, Fed's preferred gauge to measure inflation. The April CPI data showed that inflation rose to 4.2%. Meanwhile, in May, it rose to 5% for the first time since the year 1992.

Nevertheless, Fed rubbished the dramatic inflationary spikes by saying that they are 'transitory' in nature. The central bank has committed to waiting until it sees inflation rates holding themselves up near higher levels before announcing rate cuts. The projections on Wednesday will indicate how much officials will wait for the next tapering.

*Faster growth and inflation prospects make a rate hike move more likely in 2023. Source: Bloomberg*

David Tawil, president at ProChain Capital — a New York-based multi-strategy crypto-asset fund, believes Fed's sentiment towards keeping its expansionary policies intact would change following Wednesday's FOMC meeting.

"As always, the Fed's post-meeting statement is going to [be] parsed carefully by analysts," he told Cointelegraph.

"However, it is likely that even according to the most conservative reading, that the Fed will tip its hat to low unemployment and growth, and indicate a move toward tapering bond-buying and raising rates."

Bitcoin outlook bullish

The rate hike projections give Bitcoin at least two years to continue its anti-inflation bull run.

The benchmark cryptocurrency emerged as a star performer after the March 2020 global market crash, led by fears that the Fed's quantitative easing policies, coupled with the U.S. government's trillions of dollars worth of stimulus aid to Americans, would sap investors' appetite for government bonds and the U.S. dollar.

The BTC/USD exchange rate jumped from its mid-March 2020 nadir of $3,858 to as high as $64,898 in April 2021, up 1,582%. Meanwhile, the yield on the benchmark 10-year US Treasury note surged from 0.36% in March 2020 to 1.774% in March 2021. Yields move inversely to bond prices.

The U.S. dollar index, which measures the greenback's strength against a basket of top foreign currencies, crashed 9.48% in the same period. The bond market and the U.S. dollar have recovered lately on strong economic projections in the U.S. post reopening.

Meanwhile, Bitcoin has dipped by more than 25%, partly because of Elon Musk's anti-Bitcoin tweets and regulatory FUD.

*Bitcoin (orange), US dollar index (blue), and 10-year Treasury yield performance in 2020 and 2021. Source: TradingView.com*

Nick Spanos, the founder of Bitcoin Center NYC, noted that rising inflation coupled with Fed's efforts to keep interest rates near the current 0.25% gives Bitcoin ample opportunities to resume its bull run.

That is also because other traditional safe-havens, such as government bonds, offer historically lower yields. At the same time, Bitcoin promises a higher rate of growth.

Spanos said:

"Following the publication of the Fed Dot Plot today, I see a temporal reaction in the crypto market with an upsurge in the price of Bitcoin. Based on this fundamental, retesting the $45,000 level looks more likely, in the coming days."

Tawil also presented a bullish outlook for Bitcoin, noting that investors would keep looking at the cryptocurrency as their "flight to safety" against higher inflation.

"If the legislative critics and the celebrity personalities can keep their mouths shut regarding Bitcoin (which they probably can't), Bitcoin could make a run for $75K by year-end," he said.

Death cross looms

Technical setups on Bitcoin charts don't agree with bullish analysts.

For instance, the BTC/USD exchange rate has recently encountered higher selling pressure in the $40,000-42,000 range. As a result, traders apprehensively treat the area as their cue to secure short-term profits, thereby risking declines towards the next point of supports around $35,000, $32,000, and $30,000.

Meanwhile, Bitcoin's 50-day simple moving average (50-day SMA; the blue wave) hints at closing below its 200-day simple moving average (200-day SMA; the saffron wave). The said crossover is called Death Cross — an indicator notorious for predicting advanced price declines across financial markets.

*Bitcoin hints at bearish continuation on death cross fears. Source: BTCUSD on TradingView.com*

"Whenever a Death Cross occurs, Bitcoin experiences deeper downside," noted Rekt Capital, a pseudonymous market analyst. "In 2014, a Death Cross preceded an extra -71% drop. In 2017, an extra -65% drop. [And], in 2019, an extra -55% drop."

The trader added death crosses remain a prediction, not a scenario, hinting that the Bitcoin price might recover higher despite the bearish indicator's appearance in the sessions ahead.

98% of CFOs say their hedge fund will invest in Bitcoin by 2026: Study

June 16, 2021 Coin Telegraph

Bitcoin

The survey results coincide with U.S. inflation climbing to the highest levels since 1992.

Traditional hedge funds are willing to increase their exposure in Bitcoin and other cryptocurrency markets over the next five years, a new survey has found.

Intertrust Global — an international trust and corporate management company — polled the chief financial officers of 100 hedge funds globally about their intention to purchase crypto-assets. About 98% of them responded that they expect their hedge funds to invest 7.2% of their assets in cryptocurrencies by 2026.

The survey found that a 7.2% investment into the cryptocurrency sector would equal about $312 billion if replicated across the sector. Meanwhile, about 17% of the polled CFOs admitted that their hedge fund could have 10% of their assets allocated to cryptocurrencies like Bitcoin (BTC).

The results appeared as Bitcoin corrected by more than 50% after rallying from $3,858 in March 2020 to almost $65,000 in April 2021, leading to speculations that it would crash further due to overvaluation.

Nevertheless, the flagship cryptocurrency held through technical supports around $30,000 and, earlier this week, rallied back above $40,000.

*Bitcoin is up more than 800% from its mid-March nadir even after the May 2021 wipeout. Source: TradingView*

The Bitcoin price boom recap

A majority of Bitcoin's gains came on the back of anti-inflation narratives that became popular in the aftermath of the coronavirus pandemic-led March 2020's global market crash.

Global central banks responded with unprecedented monetary support, with the U.S. Federal Reserve launching a near-zero lending rate policy alongside a $120B monthly asset purchase program.

The central bank's decision crashed yields on U.S. government bonds to record lows. Meanwhile, liquidity injections into the economy, accelerated further by the White House-led trillions of dollars worth of stimulus aid, also pushed the dollar's value lower against its top rival fiat currencies.

Many investors turned to riskier safe-haven assets that benefited U.S. stocks, gold, silver, and Bitcoin. Out of all, Bitcoin delivered the best bull runs as the Fed's money-printing policies continued.

Many mainstream fund managers appeared at the forefront of Bitcoin's 2020 price boom. For example, billionaire investor Paul Tudor Jones — of hedge fund Tudor Investment Corporation — said last year that he holds small percentages of Bitcoin. Later, another legendary investor Stan Druckenmiller also revealed that he is invested in the benchmark cryptocurrency to offset inflation risk.

European hedge fund management company Brevan Howard, U.S. fund firms SkyBridge Capital, Fidelity Investments, and ARK Invest also turned into some of the biggest Bitcoin backers from the traditional finance sector.

Intertrust's survey also showed that all the surveyed executives in Europe, North America, and the U.K. have at least 1% exposure in Bitcoin and similar cryptocurrencies. It further noted that North American hedge funds would likely have an average exposure of 10.6% in cryptocurrencies than those in the U.K. and Europe that anticipated 6.8% exposure.

Inflation knocks

The Intertrust survey also came as inflation in the U.S. reached 5% in May for the first time since the year 1992, reported the U.S. Labor Department in its monthly Consumer Price Index (CPI) report.

Many analysts, including Randall Kroszner, a professor at the University of Chicago business school and a former Fed governor, noted that higher inflation would lead the Fed to withdraw its expansionary policies to some extent. The speculation over "tapering" also rose as the Federal Open Market Committee (FOMC) began its two-day meeting on Tuesday.

But so far, a majority of FOMC officials, including the Fed chair Jerome Powell, have treated the recent CPI spike as "transitory." ANZ economist Tom Kenny noted that the U.S. central bank would, therefore, keep its policies unchanged at least until it sees improvements in the labor data.

Meanwhile, Paul Tudor Jones said in his recent interview with CNBC, that he had increased his Bitcoin holdings from 1%-2% in 2020 to 5% after noticing the Fed's disapproval of recent inflation spikes. He noted:

"I like Bitcoin as a portfolio diversifier. Say 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities at the point in time. I don’t know what I will do with the other 80%. I want to wait and see what the Fed will do."

Bull trap fears engulf Bitcoin market as BTC paints CME gap below $40K

June 14, 2021 Coin Telegraph

Bitcoin

Spot Bitcoin prices rallied toward $40,000 over the weekend but hinted at bullish exhaustion as CME Bitcoin futures opened Monday with a $1,500-plus gap.

A run-up toward $40,000 in the Bitcoin (BTC) market risked exhaustion as Chicago Mercantile Exchange’s futures opened on Monday with a gap of $1,575, the first since May 17.

In retrospect, the downside risks heightened due to Bitcoin’s recent bearish pullbacks near the $40,000 level. Atop that, the said CME gap formed between Friday’s close of $37,325 and Monday’s open of $38,900, raising possibilities that the next correction would prompt Bitcoin bids to fall to at least $37,325.

That is due to a general psychological notion among traders that BTC/USD reverses its trends to fill Bitcoin futures gaps more than 90% of all time. So, for instance, traders partially filled a gap that appeared during the April 17–18 weekend session 11 days later.

Similarly, in May 2020, the missing weekend candle between $8,795 and $10,010 was filled immediately after its formation.

*Purple lines show filled CME Bitcoin Futures gaps, black shows the unfilled gaps. Source: TradingView*

But throughout 2020 and entering 2021, the Bitcoin market’s supersonic uptrend left many missing price candles unfilled. The last of such big gaps appeared during the long Christmas weekend last year, about $2,900 long, between $23,745 and $26,650, which remains unfilled to this date. Similarly, another unfilled CME gap between $18,020 and $19,155 dates back to early December 2020.

The maximum time traders have taken to fill a CME gap is three months — the missing price candle in focus appeared in June 2019 and was filled in September 2019.

*It took Bitcoin futures traders three months to fill July 2019 CME gap. Source: TradingView*

Fundamentals

Macroeconomic fundamentals played a huge role between June and September 2019 in keeping Bitcoin prices away from its lower CME gaps. Firstly, many investors bought Bitcoin as their haven asset as the United States–China trade war weighed on global growth and market sentiment.

Secondly, Facebook’s foray into the cryptocurrency sector with the launch of Libra created more upside opportunities for Bitcoin.

In 2020, the Federal Reserve’s open-ended expansionary policy served as a bullish backstop for Bitcoin. The U.S. central bank brought its benchmark lending rates to almost zero following the March 2020 global market crash.

At the same time, the Fed started buying government bonds and mortgage-backed securities at the rate of $120 billion per month. That sapped investors’ appetite for Treasury yields and the U.S. dollar and increased the appeal of Bitcoin, gold, and stocks as alternative safe havens.

Veteran investors, including Stanley Druckenmiller and Paul Tudor Jones, announced their exposure in the Bitcoin markets following the Fed’s expansionary moves. Meanwhile, Tesla, MicroStrategy, Square, Ruffer, Seetee and other corporate houses also added Bitcoin to their balance sheets, citing inflation fears.

That somewhat kept traders from filling the $23,745–26,650 and $18,020–19,155 CME gaps even five months upon their formation.

Twitter-based market analyst, known by his Planet-of-the-Apes pseudonym, xCaeser, meanwhile suggested traders watch $34,000 as a borderline level for determining the next market bias. In a tweet published in the aftermath of the May 19 price crash, xCaeser noted that holding $34,000 as support would increase Bitcoin’s potential to rally toward $47,000. He added:

“If $34k breaks will be looking for $23,300 and ultimately CME gap fill.”

Bitcoin has broken below $34,000 multiple times after May 19, but the cryptocurrency bounced back wildly after testing the $30,000–$32,000 area as its support following each of its bearish moves.

A bullish gap ahead

After reaching almost $65,000 in mid-April, Bitcoin prices declined on profit-taking sentiment while leaving a CME gap between $49,215 and $45,295. The missing price candle stands unfilled to this date.

That put Bitcoin in a conflicted technical setup — i.e., either Bitcoin could correct lower after approaching the $40,000 resistance level and fill the $37,325–$38,900 CME gap, or it could go continue heading higher to fill the $45,295–$49,215 CME gap.

Exchange data fetched from on-chain analytics platform CryptoQuant further showed a brewing bias-conflict in the Bitcoin market. In retrospect, both BTC inflow and outflow from exchanges decreased in recent sessions. Meanwhile, the number of inflow addresses declined while the outflow addresses fell to hit a one-year low.

Conflicted sentiment in $BTC negatively impacts exchanges withdrawals and deposits

- Inflow addresses are decreasing
- Outflow addresses are decreasing and hit a 1-year low of 15.5K

View Chartshttps://t.co/KStlUlSpt0 pic.twitter.com/2ahdyQFCoc
— CryptoQuant.com (@cryptoquant_com) June 14, 2021

Furthermore, Elon Musk announced that Tesla would resume the Bitcoin payment option once “there’s confirmation of reasonable (~50%) clean energy usage by miners.” The billionaire entrepreneur was reacting to Sygnia CEO Magda Wierzycka’s comments calling him a market manipulator.

“Bitcoin prices have maintained a good growth following Musk’s comment,” said Yuriy Mazur, head of data analysis department at CEX.IO Broker, adding that it increases the cryptocurrency’s potential to fill the $45,295–49,215 CME gap. He told Cointelegraph:

“It currently appears that prices are retracing from their highest levels in the past 24 hours, a surprising uptick may be ignited should the Musk-influenced buyers decide to awaken the market.”

Musk’s tweets were instrumental in crashing Bitcoin prices from $43,500 to $30,000 on March 19. His company Tesla still holds about $1.3 billion in BTC as a cash alternative.

New report: El Salvador Bitcoin pump failed to attract smart money, for now

June 10, 2021 Coin Telegraph

Bitcoin

Bitcoin market sentiments remain skewed to the downside even after it becomes a legal tender in El Salvador following a parliamentary nod.

Bitcoin (BTC) logged its best daily performance on Wednesday since Feb. 8, the day Tesla announced that it had added $1.5 billion worth of BTC to its balance sheet.

The flagship cryptocurrency surged 11.98% to $37,573 after El Salvador President Nayib Bukele passed legislation that approved it as a legal tender. In short, the Central American nation will now be able to price goods and services in BTC and will even accept the cryptocurrency for tax payments.

Meanwhile, Bukele clarified that his government would not impose capital gains tax on Bitcoin investors. He also announced that El Salvador would use excessive volcano energy to mine the cryptocurrency, weeks after Tesla CEO Elon Musk ended its Bitcoin payment support over its alarming carbon footprints.

I’ve just instructed the president of @LaGeoSV (our state-owned geothermal electric company), to put up a plan to offer facilities for #Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanos

This is going to evolve fast! pic.twitter.com/1316DV4YwT
— Nayib Bukele (@nayibbukele) June 9, 2021

Bearish sentiment prevails

But El Salvador's benchmark step to legitimizing Bitcoin as an upcoming store-of-value failed to generate bullish reactions from "smart" investors, according to Lennard Neo, head of research at Stack Fund, a Singapore-based crypto investment fund.

The chartered financial analyst said that Wednesday's upside sentiments in the Bitcoin market remained weak even after the El Salvador news. The popular Fear & Greed Index pointed towards "extreme fear," while contracts of Bitcoin derivatives from smart money were net short during the BTC/USD's 11.98% rally.

*CME Bitcoin derivatives were majority short on Wednesday. Source: Ecoinometrics*

Trading activity also looked frail, noted Neo, adding:

"We should not expect a significant impact on Bitcoin for a country with a GDP per capita less than 7% that of US, with its economy suffering the worst crash in decades last year."

Ben Lilly, an analyst at Jarvis Labs, provided further anecdotes on why bearish continuation remains a real risk even as Bitcoin posts its best daily candles in months. He flashed at the latest spike in BTCUSD Shorts, a dataset that records the number of margined short positions on Bitfinex exchange, on the same day the pair rallied in spot markets.

*"The white vertical lines pair up with big changes in shorting interest."*

Dramatic escalation in BTCUSD Shorts typically leads to declines in the Bitcoin spot rates. Conversely, a crashing BTCUSD Shorts signals an imminent price rally.

*Spot Bitcoin's correlation with BTCUSD Shorts. Source: TradingView*

Pablo, whales, etc.

Meanwhile, Lilly also brought back "Pablo" into his bearish analogy.

The analyst conceived the make-believe character last year to refer to a Bitcoin wallet owner that, according to him, played a major role in dumping and pumping BTC/USD markets on various occasions, including March 2020 crash.

Lilly warned that the anonymous trader still sits atop a Bitcoin stash that he might dump later. He added:

"Pablo doesn’t look to be quite done. He has been making moves periodically since Monday and still has another round sitting in the chamber."

The CVD indicator added to the Bitcoin market's bearish bias. The indicator, shared by Lilly, implied a spike in Bitcoin selling orders having volumes between $100,000 and $10M.

*Whale-induced Bitcoin selling orders spike. Source: Jarvis Labs*

Lily said that market movers are not behind the El Salvador Bitcoin price pump, noting that "they are letting price move about unencumbered."

"Wherever it lands, it lands."

Meanwhile, Bitcoin Dominance Index, a gauge to measure the benchmark cryptocurrency's strength against its rival cryptos, surged from 41.28% to 44.23%.

*Bitcoin Dominance Index climbs after El Salvador news. Source: BTC.D on TradingView.com*

The move uphill suggested that traders offloaded their altcoin positions to seek opportunities in the Bitcoin market, especially as the cryptocurrency became an official legal tender in El Salvador.

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