Bitcoin needs catalyst for $100K, gold going higher, ETH still undervalued: Analyst

November 1, 2024 Coin Telegraph

Bitcoin needs catalyst for 0K, gold going higher, ETH still undervalued: Analyst

Gold and silver are halfway into a “decade-long bull market,” and Bitcoin is one narrative catalyst away from rallying to $100,000, according to 1971 Capital CIO Brian Russ.

In a few years, finance wonks and crypto advocates will look back to 2024 and agree that it was the year Bitcoin went mainstream and saw mass adoption within traditional finance. The incredibly successful launch of the spot Bitcoin ETFs, MicroStrategy CEO Micheal Saylor’s plan to buy $42 billion in Bitcoin and Bitcoin rallying to a new all-time high are just a few of the major milestones of the year.

Bitcoin (BTC) is officially in the big leagues and deep dives into how BTC’s integration into all aspects of finance are a frequent topic of discussion by analysts and thought leaders at crypto conferences and on social media. In order to get a better understanding of the ramifications of Bitcoin and crypto’s integration into traditional finance, Cointelegraph spoke to Brian Russ, the chief investment officer at 1971 Capital.

Cointelegraph: Institutional and retail investors are buying shares of the spot Bitcoin ETFs, but further down the road, how do you see BTC being integrated into investment portfolios?

Bitcoin price correction was overdue — Analysts outline why the end of 2023 will be bullish

February 10, 2023 Coin Telegraph

Coin Telegraph

BTC and the crypto market will continue to battle with strong headwinds, but analysts explain why Q3 and Q4 of 2023 could turn out well for Bitcoin.

Bitcoin (BTC) price and the wider crypto market corrected at the start of this week, giving back a small portion of the gains accrued in January, but it’s safe to say that the more experienced traders expected some sort of technical correction.

What was unexpected was the SEC’s Feb. 9 enforcement against Kraken exchange and the regulator’s announcement that staking-as-service programs are unregulated securities. The crypto market sold-off on the news and given Kraken’s decision to close up 100% of its staking services, traders are concerned that Coinbase will eventually be forced to do the same.

The real question is, does this week’s price action reflect a change in the trend of bullish momentum seen throughout January, or is the “staking services are unregistered securities” news a simple blip that traders will disregard in the coming weeks?

According to analysts at analytics firm Delphi Digital, crypto is set up for a “roller coaster ride in 2023.” Analysts Kevin Kelly and Jason Pagoulatos explained the start of the year price action as being fueled by “recent increases in global liquidity” which are favorable to risk assets, but both agree that macroeconomic headwinds will continue to negatively impact markets until at least the third quarter of 2023.

*Major asset classes year-to-date normalized % change. Source: Delphi Digital*

Beyond the negative news of this week and its impact on crypto prices, there are a handful of metrics that provide some insight into how the rest of the year could be for the crypto market.

DXY comes back to life

The US Dollar index has rebounded from its recent lows, a point highlighted by Cointelegraph newsletter author Big Smokey.

In a recent post, Big Smokey said:

“December’s below expectation CPI print and the upcoming February FOMC and interest rate hike clearly provided the necessary investor sentiment boost to push prices through what had been a sticky zone for months.

But, as shown below, BTC’s inverse correlation with the U.S. dollar index (DXY) says it all. Recently, DXY has been losing ground, pulling back from a September 2022 high at 114 to the current 101. As is custom, as DXY pulled back, BTC price amped up.”

*BTC and DXY weekly price action. Source: Trading View*

Taking a look at DXY this week, one will note that DXY rebounded off its Jan. 30 low at 101 and reached a 5 week high near 104. Like clockwork, BTC topped out at $24,200 and began to rollover as DXY surged.

*DXY. 1-week chart. Source: TradingView*

According to JLabs analyst JJ the Janitor:

“How DXY fares after retesting the 50-, 100-, and 200-day MAs in the weeks to come will provide us much insight into the market’s next move…If it breaks through and holds above its 200-day MA (currently at ~106.45), asset markets will indeed become bearish again, and we could expect November’s lows to be threatened. However, should this DXY back-test fail, either now (at the 50-day) or later, we can take it as confirmation that we have entered into a new macro environment. One where the strong dollar that terrorized us in 2022 is now a neutered beast.”

The Fed pivot takes way longer than investors expect

For months retail and institutional traders have prophesied an eventual pivot from the U.S. Federal Reserve on its interest rate hike and quantitative tightening policies. Some seem to interpret the shrinking size of the recent, and future rate hikes as confirmation of their prophecy, but in the last FOMC presser, Powell hinted at the need for future rate hikes and while speaking to David Rubenstein during a open interview at the Economic Club of Washington, Powell said:

“We think we are going to need to do further rate increases,” primarily because according to Powell, “The labor market is extraordinarily strong.”

According to Delphi Digital analysis, market participants are “playing chicken with the Fed trying to call their bluff” and the analysts suggest that data shows the bond market is signaling that the Fed’s policy too firm.

Generally, equities and crypto markets have rallied when FOMC decisions on rate hikes align with that of market participants for anyone who was breathing and following crypto markets in 2022 will remember that everyone and their mother was waiting for Powell to pivot before going ultra long on large cap cryptocurrencies.

From the vantage point of technical analysis, a retest of underlying support in the $20,000 zone is not a wild expectation, especially after a 40%+ monthly rally from BTC in January.

Based off historical data and fractal analysis, Delphi Digital analysts suggest that there is room for further upside from BTC as “there isn’t a lot of overhead supply for BTC in the $24K - $28K range” and earlier reporting from Cointelegraph highlighted the importance of Bitcoin’s recent golden cross.

While this is all encouraging in the short-term, the reality of certain CPI components remaining sticky and Powell seeing a need for further interest rate hikes due to the strength of the labor market should be a reminder that crypto is not yet in bull market territory. Interest rate hikes increase operational and capital costs for businesses and these increases always trickle down to the consumer. Another consistent and alarming development is the continuance of layoffs in big tech companies.

Banks and major U.S. brokerages continue to spin down their earnings estimates and big tech has a way of being the canary in the coal mine for equities markets, earnings and the rate of layoffs taking place. The high correlation between equities markets and Bitcoin, along with concerning macroeconomic hurdles suggest that there is an expiration date on crypto’s recent mini bull market and investors would do well to keep this front of mind.

If the long-awaited “Fed pivot” continues to remain elusive, certain realities will come to the forefront and they are bound to have a stronger impact on pricing in the crypto and equities markets.

Looking deeper into 2023

Despite the more bearish nature of the challenges listed above, Delphi Digital analysts issued a more positive outlook for the bottom half of 2023. According to their analysis:

“The need for liquidity expansion will become more pressing as the year progresses. Cracks in the labor market will also become more apparent, which will give the Fed cover for a shift towards more accommodative policy. The reversal in Global Liquidity we cited at the end of last year will start to accelerate in response to a weaker growth outlook and concerns over growing fragilities in sovereign debt markets, acting as support for risk assets in 2H 2023. The impact of changes in global liquidity on financial markets tends to lag anywhere from 6-18 months, setting up a more optimistic outlook for 2024-2025.”

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin and Ethereum gave back their gains, but has anything actually changed?

December 16, 2022 Coin Telegraph

are altcoins bullish

Bullish crypto momentum fizzled after Fed Chair Powell poured cold water on investors’ hopes that a positive CPI report would trigger a trend change, but higher time frames remain interesting.

Crypto markets threw a nice head fake this week by rallying into resistance on a “positive” Consumer Price Index (CPI) report, before retracing the majority of those gains right after Federal Reserve Chair Jerome Powell took on a surprisingly hawkish tone during his post-rate-hike presser.

The Fed hiked interest rates by 0.50%, which was well within the expectation of most market participants, but the eyebrow-raiser was the Federal Open Market Committee consensus that rates would need to reach the 5%–5.5%+ range in order to hopefully achieve the Fed’s 2% inflation target.

This basically threw cold water on traders’ lusty dreams of a Fed policy pivot taking place in the first half of 2023, and the damper on sentiment was felt throughout crypto and equities markets.

As the charts below show, Bitcoin (BTC) and Ether (ETH) reversed course right as Powell began his presser on Dec. 14.

*BTC/USDT and ETH/USDT, 4-hour chart. Source: TradingView*

How do you like them apples?

It’s also not surprising that BTC and ETH price action and market structure on the lower time frames also look identical.

So, yes, markets retraced their recent gains over bad news, but has anything actually “changed?” Bitcoin is still trading with a clear range; Ether is doing the same, and neither asset has made new yearly lows recently.

As the saying goes, when in doubt, zoom out. So, let’s do that briefly and take a better look at the lay of the land.

When in doubt, zoom out!

On the weekly timeframe, Bitcoin is still bouncing around in a falling wedge, a classic technical analysis pattern that tends to lean bullish. The price is doing pretty much what one would expect the price to do within the framework of technical analysis.

There’s expected resistance at the 20-MA, which is lined up with the descending trendline. The volume profile metric shows a bulk of activity in the $18,000–$22,500 range, and the lower arm of the falling wedge has so far functioned as support.

Similar price action was seen in May 2021–July 2021, but of course, the situations were entirely different, so that’s a bit of an apples-to-oranges comparison. There’s a divergence on the MACD and RSI. In short, the price is trending down, and MACD and RSI are trending up on the weekly timeframe, which is possibly something worth keeping an eye on.

*BTC/USDT 1-week chart. Source: TradingView*

What I like about the weekly timeframe is that candles form slowly, and trends, whether bullish or bearish, are pretty easy to call and confirm. It’s easier to build a solid investment thesis of the weekly time frame than spend endless hours pouring over four-hour, one-hour and daily charts.

Anyhow, breakouts from the falling wedge are likely to be capped at the descending trendline, while a breakdown of the pattern or drop below the lower support could see the price fall as low as $11,400. That’s all within the market consensus for most analysts.

As for Ether, like I covered in greater detail in last week’s Substack and newsletter, it’s still doing the bull flag thing: bouncing around between support and resistance and seeing breakouts capped at key moving averages and the descending trendline of its bull flag.

$2,000 remains the eventual target on the radar of most analysts, and downside to the $1,100 is far from shocking.

A dip under $1,000 is likely to raise eyebrows and draw the attention of those looking for more resolute shorts.

*ETH/USDT 1-week chart. Source: TradingView*

Ether price action is basically doing the same predictable thing as Bitcoin: nothing to see here, stick to the plan (whatever that might be for you). Similar to BTC, there’s also a divergence on Ether’s MACD and RSI — something worth keeping an eye on.

Litecoin update

Last week, I also put eyes on Litecoin (LTC) due to its upcoming network reward halving. While the price has retraced from its local top at $85, the uptrend remains intact, and on the daily timeframe, the GMMA indicator is still bright green.

*LTC/USDT 1-week chart. Source. TradingView*

The vertical black lines track LTC’s bullish momentum leading into halvings and the corrections that occur right after the halving occurs. For the time being, everything looks to be proceeding according to plan.

Of course, none of this is financial advice. Make sure you do your own research, calculate your risk, think about the worst-case scenarios, weigh your ROIs and take profit, and cut losses zones a few days before actually making a trade. Remember that 1:3 and 1:5 is the optimal risk-to-reward outcome one should be chasing after.

Ignore the short-term FUD and price action. Zoom out and build a strong thesis from that vantage point.

This newsletter was written by Big Smokey, the author of The Humble Pontificator Substack and resident newsletter author at Cointelegraph. Each Friday, Big Smokey writes market insights, trending how-tos, analyses and early-bird research on potential emerging trends within the crypto market.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Why is Ethereum (ETH) price down today?

December 16, 2022 Coin Telegraph

Coin Telegraph

Ethereum price is down today and a growing list of challenges could continue to weigh on ETH price for the foreseeable future.

Ether (ETH) price is down on Dec. 16 and the pre-FOMC rally to $1,350 was obliterated after Federal Reserve chair Jerome Powell issued hawkish statements following a 0.50% hike in interest rates.

The Ether sell-off follows a market-wide decline that has sent Ethereum network fees plummeting by 39.90% in the past 30-days.

*Daily Ethereum network fees and daily active users. Source: TokenTerminal*

The total value locked in Ethereum-based smart contracts also decreased by decentralized finance by 4.49% in 24-hours.

Following the FTX exchange scandal, regulators are attempting to fast-track new regulations on the cryptocurrency sector.

*Total USD value locked on the Ethereum network. Source: DefiLlama*

While some analysts believe Ethereum still possesses multiple bullish catalysts that warrant investing in the asset, on-chain data paints a grim picture of its short-term price prospects.

Here are three reasons why Ether price is down today.

Ethereum turns inflationary as total revenue falls

Ether price fell as daily fees on the Ethereum network plummeted to $2.9 million, down from pre-FTX levels of $12.8 million on June 13. In addition to the decreasing fees, the network registered lower daily active users (DAUs) from a July 26 peak at 961,196 users to only 367,000 DAUs on Dec. 16.

Post-Ethereum merge tokenomics were designed to help Ether become deflationary. However, with gas fees declining and reduced DAUs, Ethereum has turned inflationary by 0.073% in the past 30-days and added over 7,100 Ether. According to ultra sound money, since the merge, Ethereum’s network is inflationary by over 1,192 Ether.

*Ethereum supply. Source: ultra sound money*

A decline in DeFi use aligns with Ether’s price action

The total value locked metric is a common way to examine the health and sentiment of a Proof of stake (PoS) blockchain like Ethereum. Ethereum’s TVL reached a yearly high at $83.9 billion on March 31, but since that point, it has shed nearly $60 billion. As of Dec. 15, the network’s TVL stands at $23.46 billion.

The top 10 Ethereum protocols by market cap faced headwinds, with all seeing a drop in TVL and fees over a 7-day period. Notably, MakerDao and Uniswap (UNI) saw 5.82% and 3.49% respective declines in TVL.

*Ethereum network DeFi protocols sorted by market cap. Source: DeFiLlama*

Regulatory pressure continues to weigh on investor confidence

On August 9, the Invest in America Act (infrastructure bill) passed Congress and was signed by President Joe Biden. Members of the blockchain community blasted the bill for what they viewed to be harmful language. The legislation is set to take effect in January 2024.

If Ether is deemed a security in the United States, centralized exchanges (CEX) may be forced to delist the altcoin for US-based customers. The security classification could also negatively impact altcoins, DApps and decentralized exchanges (DEX) built on Ethereum. The Securities and Exchange Commission (SEC) has yet to decide if Ether passes the Howey test.

The announcement by the Commodity Futures Trading Commission (CFTC) which declared Ether a commodity also does not seem to be relieving any investor fears.

Investor expectations for 2023

Despite the looming Shanghai hard fork, which allows users to unstake Ether in March 2023, the Ether price is likely to remain under pressure.

While investors’ appetite for high-risk assets and their interest in DeFi could continue to diminish, factors like clarity on regulators' stance on cryptocurrencies and the eventual increase in Ethereum network-based protocols may prove to be a long-term catalyst for price growth.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ethereum and Litecoin make a move while Bitcoin price searches for firmer footing

December 9, 2022 Coin Telegraph

Coin Telegraph

Bitcoin price aims for support at $17,000, while LTC follows a pre-halving narrative and ETH looks somewhat bullish in its BTC pair.

Crypto price action has been rough over the past few months, but a few green shoots are finally beginning to emerge.

While Bitcoin (BTC) remains in a downtrend, its price has recently found support at the $17,000 level, and ping-pong price action in the $16,700–$17,300 range appears to be allowing traders to pursue some interesting setups in a few altcoins.

Let’s take a quick peek at some enticing patterns showing up on the weekly time frame.

Time for Litecoin’s halving hopium?

*LTC/USDT 1-day chart. Source: TradingView*

As a fork of Bitcoin, Litecoin (LTC) tends to turn bullish several months before its reward halving takes place, as was the case in 2015 and 2019.

Litecoin’s next reward halving is 237 days away, and it appears that the altcoin is undergoing a little pre-halving hype. Since Nov. 6, LTC has gained 58.6%, and it is starting to mirror the triple price action that occurred in previous halvings.

The Guppy Multiple Moving Averages (GMMA) indicator on the daily time frame has also turned green — something that rarely happens.

From a technical analysis point of view, LTC maintains a trend of higher lows, consolidation and bull flag breakouts, which are then followed by further consolidation.

If LTC maintains its current market structure and continues to ride along the 20-day moving average, its price could see a pre-halving run up to the $100–$125 area.

Ether plots its own course

The ETH/BTC weekly timeframe shows some notable developments. Depending on how one sees it, there could be a nice inverse head and shoulders forming.

*ETH/BTC 1-day chart. Source: TradingView*

One could also argue that the ETH/BTC weekly is flashing a massive cup-and-handle pattern.

*ETH/BTC weekly chart. Source: TradingView*

Like Litecoin, the GMMA indicator in the ETH/BTC weekly pair has been bright green since Aug. 8, which is nearly four months.

Ether’s price action in its U.S. dollar and BTC pair raise eyebrows, especially given the state of the broader market.

Despite this short-term bullish outlook, ETH’s price could be affected by red flags such as Ethereum blockchain censorship, U.S. Office of Foreign Assets Control compliance, ETH’s performance in its supposedly deflationary post-Merge environment, and concerns over the possibility of the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission changing their perspective on Ether being a commodity.

On-chain data tells an interesting tale

Looking at on-chain data provides a bit of color. Data from Glassnode shows that since Nov. 7, Ethereum addresses with balances greater than 32 ETH, 1,000 ETH and 10,000 ETH have been on an uptrend.

*ETH address balances. Source: glassnode*

While the rebound is small, it’s important to keep an eye on growth metrics like new Ethereum addresses, daily active users, increases in a variety of balance cohorts and the percentage of holders in profit because they could eventually mark a change in trend and sentiment.

Contrasting these metrics against trading volumes, price and other technical analysis indicators can help investors attain a more comprehensive view of whether opening a position in ETH is a good idea.

ETH’s MVRV Z-Score is also flashing a few signals. Similar to Bitcoin on-chain analysis, the MVRV Z-Score examines the current market capitalization of the asset versus the price at which investors purchased it.

The metric can suggest when an asset is overvalued or undervalued relative to its fair value, and it tends to signal market tops when the market cap is significantly higher than the realized cap.

According to the three-year MVRV Z-Score chart below, the Z-Score is back in the green zone.

Considering the uncertainty in the market, worries related to stringent crypto regulation, and the unresolved threats of insolvency, bankruptcy and contagion from the FTX debacle, it’s difficult to determine whether it’s time to go long on ETH.

Risk-averse traders looking to pull the trigger might consider going spot long and short through futures. That way, if one is long-term bullish on ETH, they can build a position while also hedging against short-term downside.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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