Market Wrap: Bitcoin Stalls Near $40K as Buyers Take Profit
Bitcoin traded sideways on Thursday as buyers appeared to be exhausted near the $40,000 resistance level. The cryptocurrency is up about 23% over the past week, a gain driven by improving sentiment and short covering.
Some analysts expect bitcoin to remain range-bound as the current rally takes a breather.
“Our sense is that the market will keep looking to trade within this $30K-$40K range in the near term,” wrote QCP Capital in a Telegram chat. “Into Friday’s month-end expiry, we expect $40K-$42K to hold as the open interest peaks here.”
- S&P 500: 4419.1, +0.42%
- Gold: $1828.2, +1.21%
- 10-year Treasury yield closed at 1.273%, compared with 1.233% on Wednesday
“price levels to consider are the $40,000 psychological price level, and $44,000, which is the next resistance level BTC saw when Tesla announced they would accept BTC as payment back in February,” Jeffrey Wang, head of Americas at Amber Group, wrote in an email to Fintech Zoom.
In the bitcoin options market, “there is not much open interest between the $45,000 and $50,000 strikes for the August expiry,” Pankaj Balani, CEO of Delta Exchange, wrote in an email to Fintech Zoom. “We can see sharp moves here.”
Bitcoin is up about 35% year to date, double the S&P 500’s 17% gain over the same period. Both bitcoin and stocks are beating gold’s 5% loss year to date.
Bitcoin open interest
“Bitcoin open interest has also been picking up, breaking above its June highs and retesting support,” Stack Funds, a Singapore-based crypto asset management firm, wrote in a newsletter Thursday. (See chart below.)
“Our expectations for a retest towards the mid/low $20K region is less likely,” Stack Funds wrote. The firm mentioned that a clear breakout in open interest is required in order to signal further upside in bitcoin.
Although bitcoin remains in a secular bull market, the cryptocurrency has fallen by a minimum of 25% once in every calendar year since 2013, according to Panxora, a crypto investment firm.
“Often that fall averages more than 40% and this kind of drawdown makes cryptocurrency a challenging investment for those that have no way to manage this kind of volatility risk,” Panxora wrote on its website.
When managing risk, crypto investors can consider macro conditions such as economic growth and inflation, which tend to influence the prices of assets in both traditional and crypto markets.
“I think inflation fears will reemerge,” Gavin Smith, CEO of Panxora, said in an interview with Fintech Zoom. “And I think that will be the catalyst for a true move in the cryptocurrency, certainly bitcoin’s over the next six to nine months.
“From a longer-term perspective, I’m quite bullish on the environment, because what we’ve seen in the downturn is really people pulling away from the inflation narrative that we saw,” Smith said. “Personally, I think it’s too early to pull away from that.”
Smith said that Panxora and other institutions he spoke to are “entering the buy zone.”
“Even if they’re long-term bullish on bitcoin, what they do is they wait for these frequent sell-offs,” Smith said. “And then they use that to start accumulating their holdings, rather than chasing the market higher.”
- Paxos discloses more investors: Paxos – a provider of blockchain infrastructure – said Bank of America, crypto exchange FTX, Founders Fund and Coinbase Ventures were among a heavyweight list of investors in its $300 million Series D funding round, the firm disclosed on Thursday. Oak HC/FT led the funding round, which the nine-year-old company announced in late April at a valuation of $2.4 billion. The round also included PayPal Ventures and Mithril Capital, among others. The firm has raised more than $540 million over multiple funding rounds.
- Traders bearish on AXS: Even though AXS, the governance token of Axie Infinity, has logged a year-to-date price return of over 7,000%, compared with bitcoin’s roughly 33% return and ether’s 212% return, some crypto traders are bearish toward the token. “The euphoric-herd mentality pushed the valuation to extremes, and as with any overcrowded trade, once the unwind takes place, the price swings will be extremely volatile,” Denis Vinokourov, head of research at London-based quantitative finance management firm Synergia Capital, told Fintech Zoom’s Muyao Shen. “The problem is market timing – timing the top of the market – is notoriously difficult.”
- FET Volatility: The price of Fetch.ai’s native token (FET) has endured a roller-coaster run over the last 24 hours following its listing on the U.S. cryptocurrency exchange Coinbase on Wednesday. It is not unusual for a coin being listed on one of the world’s best-known exchanges. Often dubbed the “Coinbase Effect,” the phenomenon is when a cryptocurrency experiences a sharp uptick in price preceding and following its listing. After the listing, though, a crypto’s price tends to cool as speculative traders look to cash in on the hype surrounding the crypto’s new home.
- Ethereum’s ‘Enterprise’ Play: As Ethereum celebrates its sixth anniversary, Joe Lubin, a co-founder of Ethereum and the CEO of ConsenSys, says the convergence between the public mainnet and corporate versions of the technology are now closer than ever. Lubin, who spoke today at the Enterprise Ethereum Alliance (EEA) anniversary event alongside Ethereum chief scientist Vitalik Buterin and Web 3.0 leader and angel investor Balaji Srinivasan, pointed to cryptocurrencies, decentralized finance (DeFi) and non-fungible tokens (NFTs) now entering pop culture.
Most digital assets on Fintech Zoom 20 ended up higher on Thursday.
Notable winners of 21:00 UTC (4:00 p.m. ET):
bitcoin cash (BCH) +4.38%