In 2017, the price of Bitcoin (BTC) reached as high as $20,000 before crashing rapidly. Now, the same on-chain top signal has reemerged, according to researchers at Glassnode. But besides much stronger fundamentals this time around, the ongoing rally feels significantly different for other reasons.
Bitcoin typically pulls back when whales take profit, causing a ripple effect throughout the cryptocurrency market. As such, when the overwhelming majority of the market is in profit, the chances of correction rises.
The percentage of Bitcoin UTXOs in profit. Source: Glassnode
98% of all Bitcoin addresses are now in profit
Since the March 2020 crash, when the price of Bitcoin dropped below $3,600 on BitMEX, BTC has rallied 260%. After such a large rally, a consolidation phase or a pullback could cause a healthier rally in the medium term.
Glassnode researchers found that the last time 98% of all Bitcoin UTXOs were profitable was in December 2017. After Bitcoin peaked at $19,798 on Dec. 16, 2017, it dropped 45% within six days to $10,961.
Weekly price chart of Bitcoin since 2017. Source: TradingView.com
At the time, many whales and retail investors took profit, causing massive volatility. Glassnode said:
“98% of all #Bitcoin UTXOs are currently in a state of profit. A level not seen since Dec 2017, and typical in previous $BTC bull markets.”
However, there are various fundamental and technical differences between the ongoing rally and the 2017 top.
First, the current rally of Bitcoin has been far more stable than the parabolic 2017 upsurge, which happened so suddenly that no clear resistance and support levels were established.
This time, Bitcoin has been climbing steadily, confirming $10,500, $11,300, $12,000 and $12,500 as key support levels.
Second, the overall institutional and spot demand is high, relative to the volume coming from the derivatives market.
Following Square, MicroStrategy and Stone Ridge’s high-profile allocations into Bitcoin, the volume of institution-focused platforms surged. LMAX Digital, CME and Bakkt specifically saw trading activity surge significantly since August.
Over-the-counter volumes are rising too
When miners, whales and high-net-worth individuals buy and sell Bitcoin, they usually rely on the over-the-counter market.
The OTC market allows large trades to be matched with minimum slippage, which otherwise could trigger massive price fluctuations on exchanges.
The consistent increase in over-the-counter deals suggests that the appetite for BTC from large investors and institutions is likely rising. Analysts at on-chain data provider CryptoQuant said:
“To see how much OTC deals are on-going, you might want to check out Fund Flow Ratio. Its 30-day moving average hits the 2-year low. Big wallets are moving outside of exchanges. Paypal news might be just the beginning.”
The confluence of high volume, a stable uptrend and growing OTC volumes makes new inflows into the Bitcoin market more likely. If the trend is sustained, it may offset potential profit-taking pullbacks in the cryptocurrency market.
Title: Bitcoin top signal from 2017 reappears, but here’s why it may not matter this time Sourced From: cointelegraph.com/news/bitcoin-top-signal-from-2017-reappears-but-here-s-why-it-may-not-matter-this-time Published Date: Thu, 22 Oct 2020 13:00:15 +0100
On Oct. 21 Bitcoin (BTC) price overtook the $13K mark to reach $13,217 after traders took out key resistance levels at $11,900, $12,000, and $12,500 in the last 48-hours. While there are various technical reasons behind the abrupt upsurge, there are three key factors buoying the rally.
The three catalysts are a favorable technical structure, PayPal enabling cryptocurrency purchases, and Bitcoin’s rising dominance rate.
PayPal’s crypto announcement adds to BTC’s momentum
Earlier today, PayPal officially announced that it is allowing users to buy and sell cryptocurrencies, including Bitcoin.
Throughout the past year, speculations on PayPal’s potential cryptocurrency integration continuously intensified after various reports claimed the company was working on it.
In an official statement, Dan Schulman, the president and CEO of PayPal, confirmed the cryptocurrency integration. He wrote:
“We are eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
Following PayPal’s statement, the price of Bitcoin immediately rose from around $12,300 to as high as $12,900.
Sui Chung, the CEO of CF Benchmarks, a subsidiary of Kraken exchange, told Cointelegraph that bullish sentiment is likely returning to the crypto market. According to Chung:
“Bitcoin passing $13,000 today, a 16-month high, demonstrates that this trend is only picking up pace. That PayPal, a household name, has received a conditional BitLicense is likely propelling bullish sentiment. Today is significant as a signpost for further price appreciation in the future… the point by which mainstream media and ‘mom and pop’ retail investors may soon start to show interest in the asset, as they did in late 2017.”
Bitcoin dominance is rising
In the past week, Bitcoin has outperformed alternative cryptocurrencies, decentralized finance (DeFi) tokens, and Ethereum.
The dominance of Bitcoin. Source: Josh Olszewicz
Josh Olszewicz, a cryptocurrency technical analyst, said the dominance of BTC is above a key moving average. Technically, this suggests that Bitcoin could continue to outperform altcoins in the near term. Olszewicz said:
“BTC dominance back above the 200-day moving average for the first time since May, king corn is back.”
BTC shows a bullish high time frame structure
Throughout October, traders have pinpointed the favorable technical structure of Bitcoin on the higher time frames.
Bitcoin’s weekly chart, in particular, has shown a breakout and surpassed the previous local top achieved in August.
BTC/USD weekly chart. Source: TradingView.com
Two months ago, BTC topped out at $12,468 on Binance and proceeded to fall below $10,000. As mentioned earlier, today’s high volume surge took the price to a new 2020 high at $13,217, which is well above the previous local top.
In the short-term, traders anticipate that the market will cool down after such a strong rally. Flood, a pseudonymous crypto futures trader, said:
“I think we are quite overextended on $BTC for now. I’d imagine seeing a bit of a retrace where we try to find support in the 12.2-12k range. Not saying we can’t run further, but hedged a bit here.”
Title: Here’s what traders expect after Bitcoin price rallied to $13,217 Sourced From: cointelegraph.com/news/here-s-what-traders-expect-after-bitcoin-price-rallied-to-13-217 Published Date: Thu, 22 Oct 2020 01:01:28 +0100
— Alistair Milne (@alistairmilne) October 22, 2020
Milne: other currencies will follow
Bitcoin’s weekly gains stood at over 15% overnight on Wednesday, as BTC/USD reached $13,200 before reversing to press-time levels of $12,800.
The rate of change surprised many and came at a time when many countries’ fiat currencies — specifically those of developing nations — were suffering from the coronavirus and the impact of central banks’ economic reactions to it.
The last time that Bitcoin traded at around $13,000, and even when it hit its own all-time highs of $20,000 in late 2017, the economic picture looked very different.
In Brazil for example, where 1 BTC now buys more reals than ever before, savers have seen the value of their currency decline by 28% against the U.S. dollar in a single year.
At 209 million, Brazil formed the largest country by population on Milne’s list. The others include Turkey, Argentina and Venezuela, with the total population of all countries involved standing at 450 million.
Milne additionally forecast that Russia and Colombia would soon join, followed at some point in time by “all other fiat currencies.”
USD faces its own battle
Meanwhile, Bitcoin’s inverse correlation to the U.S. dollar currency index remained in focus as its bull run took hold.
Measuring USD strength against a basket of trading partner currencies, DXY declined during October to press-time levels of 92.72, coinciding with fresh strength in BTC.
U.S. dollar currency index 1-month chart. Source: TradingView
The impact of the upcoming U.S. elections may produce further USD volatility, analysts warned.
“If the DXY closes below the structure in the 92.5 zone, this would support any inflation assets like commodities and gold, as well as growth stocks,” Miles Ruttan of Bytown Capital wrote earlier in the month.
The extent of Bitcoin’s growth has nonetheless led to announcements that it has left behind its correlation to traditional macro assets.
Title: Bitcoin price hits new record high in these 7 countries Sourced From: cointelegraph.com/news/bitcoin-price-hits-new-record-high-in-these-7-countries Published Date: Thu, 22 Oct 2020 10:07:17 +0100
The move occurred after Monday’s (Oct. 19) high volume surge to $11,822 was followed by continued buying into Tuesday, providing enough momentum for bulls to push above the ascending channel to $12,038.
BTC futures volume by exchange. Source: Digital Assets Data
The rally to $12K was also accompanied by soaring volumes across the top Bitcoin futures exchanges on Monday through Tuesday, and earlier this week Cointelegraph reported that the most recent CME commitment of traders report shows institutional longs reached a record-high.
At the start of the week traditional markets took a hit as investors feared a stalemate between Democrats and Republican lawmakers in Congress would prevent the passing of a second round of economic stimulus aimed at alleviating the financial pressure placed on small businesses and Americans in need of a second stimulus check.
Fortunately, by today’s market closure the Dow, S&P 500 and Nasdaq wrapped the day up with marginal gains.
Notably, the Dow closed 100 points higher after U.S. House Speaker, Nancy Pelosi said she felt “optomistic” about a deal being struck between the Congress and the White House.
Bitcoin’s recent price action has been somewhat dislodged from that of equities markets, leading some analysts on crypto Twitter to again call for a ‘decoupling’ but this all seems a bit premature.
Bitcoin price vs the S&P 500 (3 months). Source: Skew
Regardless where one stands on Bitcoin price decoupling from traditional markets, the digital asset remains one of the top performers for 2020, currently up 65.4% year-to-date.
Macro Assets 2020 returns. Source: Skew
Bitcoin bulls must flip $12K to support
BTC/USDT daily chart. Source: TradingView
Today’s daily high at $12,038 is only $10 away from the previous high on Sept.1 when Bitcoin price formed a tweezer top and corrected 18.5% over the next few days. So naturally, traders have expressed mixed emotions about the price hovering near $12,000 again, especially considering that the last 5 visits to this resistance were followed by sharp sell-offs.
Price action wise, when an ascending channel is trendline is broken near a key resistance level, it’s normal for some profit booking to take place, and this typically results in the price dropping to retest either the ascending channel trendline or a former resistance like $11,900 to determine whether or not buyers remain bullish enough to confirm the level as support.
BTC/USDT 4-hr chart. Source: TradingView
On the 4-hr timeframe we can see that this is what has occurred as the price dropped to $11,850 as investors pulled in profits.
At the time of writing, BTC is trading around $11,940 and with less than 2-hours until the daily close, a push to secure $12,000 before the day ends would be a positive sign.
Given the recent importance of the $12K level, multiple failed attempts to overcome the resistance or a clear loss of momentum might motivate bearish traders to open short positions from $11,900-$12,000. This would heighten the possibility of a repeat of the previous sell-offs from 12K.
As mentioned in a previous analysis, Bitcoin price has support at the 20-MA ($11,600) and at the $11,500-$11,400 level. If the price were dip below the ascending channel midline, there is also support at $11,200 and $10,900.
Over the next day or so some consolidation in the $11,950 to $11,800 zone could lead to the formation of a bull flag or a pennant so traders should keep an eye on the 4-hour chart and volume across the 1-hour to 4-hour timeframe.
A push to the daily high ($12,038) would put the price back at a key resistance level (see dotted blue line) which if flipped to support would put Bitcoin price back on the path to securing a new 2020 high.
Title: Bitcoin price rally to $12K is meaningless until bulls flip it to support Sourced From: cointelegraph.com/news/bitcoin-price-rally-to-12k-is-meaningless-until-bulls-flip-it-to-support Published Date: Wed, 21 Oct 2020 00:50:07 +0100
Bitcoin (BTC) gained almost 5% on Oct. 21 as bullish price action combined with fresh corporate adoption news to boost gains.
Cryptocurrency market daily performance overview from Coin360
PayPal takes BTC price to $12,400
Data from Cointelegraph Markets and Coin360 showed a strong 24 hours for bulls on Wednesday, with BTC/USD topping out at $12,400.
At press time, $12,300 formed the focal point, around an hour after Reuters reported that payment giant PayPal plans to support Bitcoin and other cryptocurrencies via its wallet and Venmo app from 2021.
BTC/USD daily price chart. Source: Tradingview
The announcement added to an already buoyant BTC trading environment, with $12,000 resistance evaporating overnight on Tuesday.
Weekly gains stand at 8.5% for Bitcoin, which is increasingly diverging from other macro assets, which put in lackluster performance over the same period.
Earlier, Cointelegraph published a list of factors which one analyst believes all support the bull case for Bitcoin going forward.
PayPal should also support altcoins Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH). Following the news, ETH/USD increased by a modest 2.2% to $378, while BCH/USD put in 4.5% gains to hit $456.
Title: Bitcoin breaks above $12.3K after PayPal says Venmo will become a BTC wallet Sourced From: cointelegraph.com/news/bitcoin-breaks-above-12-3k-after-paypal-confirms-venmo-to-become-btc-wallet Published Date: Wed, 21 Oct 2020 13:34:00 +0100
Bitcoin (BTC) abandoning correlation with traditional markets will be its “biggest story” if it continues, one popular analyst says.
In a series of tweets on Oct. 21, Cole Garner highlighted Bitcoin’s market decoupling among bullish price factors.
Garner: Decoupling will be crypto’s “biggest story”
Garner retweeted a chart of Bitcoin, gold, the S&P 500 and Ether (ETH), which shows Bitcoin striking out on its own, delivering positive returns while other assets floundered.
The chart originated from Eric Wall, CIO of crypto hedge fund Arcane Assets, who described the trend as “unusual.”
“BTC’s correlation to traditional markets appears to be unwinding. If this persists in the coming weeks, it’ll be the biggest story in crypto,” Garner commented.
Bitcoin (orange) vs. gold, S&P 500 and Ethereum. Source: Eric Wall/ Twitter
Bitcoin previously demonstrated long-term correlation to the S&P 500 in particular, also forming a close relationship to gold in the months after March’s coronavirus-induced price crash.
Others have previously noted the now-decaying trend, among them statistician Willy Woo, who in September forecast that it would continue.
“Clear skies” above $12,000 resistance
Also buoying the mood for Garner is the “amazingly neutral” funding rate across perpetual swaps on exchanges.
Despite Bitcoin’s latest gains which took it above $12,000, the funding rate suggests support for longs at the expense of shorts — an encouraging sign for further upward momentum.
Coupled to this is institutional investor sentiment, which from last weekend’s commitment of traders (COT) report is firmly long, not short.
As Cointelegraph reported, BTC/USD suddenly retook $12,000 overnight on Tuesday, having spent time tackling the pivotal resistance point of $11,900.
As Garner and others note, very little stands in the way of further positive price action above $12,000 due to how Bitcoin spent the brief periods of time above that level before.
“Skies are mostly clear above $12K across exchange orderbooks,” he summarized.
Other factors remain from previous weeks and months, notably the lack of inflows from whales, suggesting that the desire to sell large amounts of BTC remains low. Exchange balances are in fact continually dropping despite the price rises, data shows.
Bitcoin exchange balances vs. price with latest drop highlighted. Source: Cole Garner/ Glassnode
Concluding, Garner’s only concern was that, if Twitter sentiment is a reliable measure, few hodlers expected the current scenario.
“Too many people were unprepared for this,” he wrote, linking to a recent survey in which 35% of respondents claimed that Bitcoin made up less than 10% of their crypto portfolio.
“I’m no maximalist, got plenty of love for crypto all around, but you gotta respect the king.”
Title: Bitcoin trader shares 7 reasons to be bullish on BTC beyond $12K Sourced From: cointelegraph.com/news/bitcoin-trader-shares-7-reasons-to-be-bullish-on-btc-beyond-12k Published Date: Wed, 21 Oct 2020 11:00:00 +0100
On Oct. 14, Wilshire Phoenix investment firm released its Efficient Price Discovery report, which detailed how CME Bitcoin (BTC) futures impact Bitcoin price discovery.
The firm concluded that “CME Bitcoin futures contribute more to price discovery than its related spot markets.” And the researchers also suggested that:
“CME Bitcoin futures have grown to become significant, this is not only demonstrated through trading volume and open interest, but also by influence on spot price formation.”
Wilshire’s analysis correctly states that price discovery in traditional markets is a contested topic. The report also adds that studies on price formation often find that the futures markets lead most of the time, but this doesn’t mean their conclusions about CME Bitcoin futures are absolute.
According to the report, CME Group, the leading derivatives venue, trades $5.15 trillion per day across its multiple markets. According to Nasdaq data, this number compares to the $430 billion in daily volume seen in the U.S. stock market.
This data shows that the trend of derivatives volumes surpassing spot exchanges by tenfold is the norm rather than an exception.
The CME index is missing key ‘ingredients’
U.S. Securities and Exchange (SEC) documents show that In June, Wilshire Phoenix filed for a publicly tradable Bitcoin-backed fund similar to the Grayscale Bitcoin Trust.
It is important to note that the Bitcoin held by Wilshire’s fund will follow a BTC price index called the Bitcoin Reference Rate (BRR) listed by the CME.
In the report, Wilshire Phoenix explained that the CME Bitcoin Reference Rate (BRR) is used to determine the price on which BTC futures contracts are cash-settled in U.S. dollars.
For CME and aspirant funds based in the U.S., it might make sense to exclude stablecoin volumes and focus on more regulated exchanges. Even if Bitcoin price discovery does not happen there, arbitrage efficiency has grown over the years, according to a 2019 Bitwise Investments report.
Analysis from Bitwise found that “arbitrage between these ten exchanges is virtually perfect.” Therefore, by not having sustained price discrepancies, the CME reference index can comfortably select a handful of exchanges, excluding the top three.
Although the latest Bitwise Bitcoin ETF proposal has been withdrawn, its price formation was different from its competitors. Using a broader base, it also included stablecoin based exchanges.
Bitwise Bitcoin ETF proposal, March 2019. Source: Bitwise Investments
Those familiar with cryptocurrency markets will know that stablecoin market caps, trading volumes, altcoin pairings, and their impact on the crypto market have increased immensely over the past two years.
Not only has the stablecoin market capitalization risen eightfold to $21 billion in the past two years, but the dominance of stablecoin pairs and their trading volumes have also grown significantly.
Messaris Bitcoin Real Volume”. Source: Messari.io
Take notice of how the top Bitcoin pairs are Tether (USDT) based. Even more worrisome is that the CME excludes the three leading exchanges from the Bitcoin Reference Rate.
The above data leads to a significant difference in exchanges’ selection from more inclusive indexes such as Bitwise’s ‘Real Bitcoin Trade Volume’, Messari’s ‘Real Volume’, and Nomics ‘Transparent Volume’. Regardless of the reasons behind CME’s exchange selection, its BRR index excludes the top three exchanges, according to Messari’s 24-hour data.
Stablecoin impact on price formation has not been tested
Wilshire Phoenix’s report is a step in the right direction, and the study has an impeccable methodology. There is enough evidence to support their conclusion that the CME Bitcoin futures lead price formation compared to regulated USD fiat exchanges.
Although well-executed, the analysis does not disprove that Bitcoin price formation happens on Binance, Bitfinex, Huobi, or OKEx. Institutional investors, principally those based in the U.S., may not be interested in less regulated exchange volumes or Bitcoin pricing in stablecoins, but that does not mean those are irrelevant for the price formation.
As for the retail investor, using a broader set of exchanges and pricing makes more sense to test price discovery for an asset like Bitcoin. This conclusion is not equivalent to stating that CME’s Bitcoin Reference Rate is wrong or easily manipulated.
Are less-regulated exchanges inflating volumes by using market makers and large clients paying barely zero fees? Is Tether’s volatility too high to even consider when attempting to determine whether it impacts Bitcoin price formation in USD? These are all valid questions that warrant further discussion and investigation.
Therefore, a broader evaluation is necessary before concluding whether CME Bitcoin futures have the highest contribution to price discovery.
author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Title: Study finds CME drives Bitcoin price, but it excludes stablecoin volumes Sourced From: cointelegraph.com/news/study-finds-cme-drives-bitcoin-price-but-it-excludes-stablecoin-volumes Published Date: Tue, 20 Oct 2020 20:28:24 +0100
Within the past few hours, Bitcoin (BTC) price rose to $11,988 before pulling back to hover around the $11,900 level. The price is on the cusp of breaking above $12,000, and some analysts have suggested that the dominant cryptocurrency is in the process of decoupling from the rest of the market, including U.S. equities.
The general sentiment around Bitcoin among analysts and traders remains positive and multiple on-chain analysts say that Bitcoin has been behaving like a safe-haven asset.
Technical analysis suggests that first the $12,000 resistance level needs to be flipped to support and previous price action around this level suggests that it will be hard for BTC to surpass it cleanly in its first retest.
The daily chart of Bitcoin. Source: TradingView.com
Is Bitcoin on the verge of a new bull trend?
On-chain analyst, Willy Woo, has consistently been positive about the current Bitcoin price cycle.
Woo emphasized that BTC showing correlation with U.S. stocks in the near-term makes perfect sense, but, over the long term, the analyst noted that decoupling was inevitable. He said:
“The decoupling is upon us 🙂 Makes sense that BTC will continue to be correlated in short timeframe trading; but not in the longer timeframes. BTC is a safe haven, just that ‘risk-on’ (meaning it’s very new) is skewing this fact.”
While the fundamentals remain optimistic for Bitcoin, technical analysts and traders are wary about BTC at $12,000. Historically, the $12,000 level has acted as a strong resistance area for BTC.
A pseudonymous trader known as “Salsa Tekila” said that he remains careful as Bitcoin pulls closer to the $12,000 level. The trader wrote:
“Around $12K I’m very careful, think we get a pullback. Wouldn’t bet against that level on it’s first test.”
In addition to Bitcon’s favorable technical structure, the confluence of preferable macro factors are buoying the sentiment around BTC.
Heading into the Nov. 3 presidential election, risk-on assets are demonstrating a high level of uncertainty. This has caused the U.S. dollar index to decline, causing alternative stores of value to rally.
What’s next for BTC?
Traders are pointing to the spot market as the primary driver of today’s bullish move. Meanwhile, the futures market is cautious but spot traders are continuing to accumulate BTC.
Derivatives trader Cantering Clark noted that there is not much buyer demand in the futures market. He said:
“Not exactly a ton of perp aggression by buyers up here. This seems mostly spot driven. Perps are still being used to bet mostly against.”
Previous bull cycles were led mostly by the futures market, particularly by BitMEX and Binance Futures. If the spot and futures market are showing contrasting directions, it could spark significant volatility in the short term.
If Bitcoin cleanly breaks $12,000, traders believe the momentum would lead to the formation of a new uptrend. Another pseudonymous trader known as “Byzantine General” said:
“The books are super thin above 12K. If it breaches, don’t try to short it. It’s like standing in front of a freight train.”
Title: Breakout or fakeout? Top traders react to Bitcoin price rally to $12K Sourced From: cointelegraph.com/news/breakout-or-fakeout-top-traders-react-to-bitcoin-price-rally-to-11-9k Published Date: Tue, 20 Oct 2020 18:33:11 +0100
Crypto market sentiment appears to be improving across the board and the global push to mainstream central bank digital currencies is also making headway.
In China’s Shenzhen province about 2 million people had applied for the digital yuan giveaway and the lucky 50,000 among them received “red envelopes” of digital yuan totalling $1.5 million.
By the end of Oct. 18 about 47,573 of the recipients had spent roughly $1.3 million of the bounty, amounting to 88% of the total giveaway. This suggests that the pilot program was a success and shows that China is far ahead of other developed economies in developing their central bank digital currency..
To speed up the process of launching its CBDC, the Bank of Canada recently listed a job opening for an economist with thorough knowledge of financial technology and digital currencies.
However, U.S. Federal Reserve Chair Jerome Powell seems unfazed by the progress other countries are making with CBDCs. According to Powell, “it’s more important for the United States to get it right than it is to be first.”
In other news, a survey by Statista shows that only 7% of Americans have used or owned Bitcoin (BTC).
This figure is far less than Nigeria where the penetration rate is 32%, but also higher than Germany and Japan. This shows that the asset class has a long way to go before it can truly become a ‘mainstream’ currency.
Currently, the bearish sentiment that dominated the markets for the past month appears to be alleviating as Bitcoin price moves closer the the $12K level.
Let’s study the charts of the top-10 cryptocurrencies to spot the ones that may perform well in the short-term.
BTC/USD daily chart. Source: TradingView
Bitcoin (BTC) has risen to the resistance line of the ascending channel where it could face selling pressure from the bears. However, the upsloping 20-day exponential moving average ($11,201) and the relative strength index above 67 suggests that bulls are in command.
If the bulls can exploit this advantage and push the price above the channel, the up-move could pick up momentum and quickly rally to $12,048.05. A breakout of this level may challenge the yearly highs at $12,460.
However, the bears are unlikely to give up without a fight. They will try to stall the rally at the resistance line. If the price turns down from the current levels but stays above $11,500, then the BTC/USD pair could slowly grind higher inside the channel.
The first sign of weakness will be a break below $11,178, and the trend will turn in favor of the bears if they can sink the price below the support line of the channel.
The bears could not sustain Ether (ETH) below the moving averages on Oct. 16 and 17. This attracted buying and the bulls will now try to push the price above the overhead resistance at $395.
ETH/USD daily chart. Source: TradingView
The 20-day EMA ($368) has started to turn up slowly, and the RSI has risen above 57, which suggests that bulls are attempting a comeback.
If the bulls can push and close (UTC time) the price above $395, it will complete an ascending triangle pattern. This bullish setup has a target objective of $478, just below the 52-week highs at $488.134.
This positive view will be invalidated if the pair turns down from the current levels or from $395 and plunges below the uptrend line. Such a move could keep the pair range-bound between $308.392 and $395 for a few more days.
Although XRP broke below the moving averages on Oct. 15, the bears could not capitalize on this advantage and sink the price to the bottom of the range at $0.2295. This suggests a lack of sellers at lower levels.
XRP/USD daily chart. Source: TradingView
The bulls have currently propelled the price back above the moving averages. If they can sustain the higher levels, there will be another attempt to clear the $0.26 hurdle.
A breakout and close (UTC time) above $0.26 is likely to start a new uptrend that may reach $0.2905 and then $0.303746.
However, the flat moving averages and the RSI just above the midpoint suggest a balance between supply and demand. If the XRP/USD pair turns down from the current levels or $0.26, the range-bound action could continue for a few more days.
The bulls have held the critical support at $242 for the past two days, and Bitcoin Cash (BCH) is now attempting to resume its up-move.
BCH/USD daily chart. Source: TradingView
The upsloping 20-day EMA ($241) and the RSI above 58 indicates that the bulls are in control. The first target on the upside is $266.46, and if that is scaled, the up-move can reach $280.
However, if the bulls fail to push the price above $266.46, the BCH/USD pair could remain range-bound for a few days. A break and close (UTC time) below the moving averages will indicate weakness and could pull the price down to $200.
The support at $29.5646 is acting as a new floor for Binance Coin (BNB). Both moving averages continue to rise, and the RSI has been sustaining in the positive zone for the past few days, which suggests that bulls are in command.
BNB/USD daily chart. Source: TradingView
The bulls will now again try to push the price above the $32– $33.3888 resistance zone. If they can pull it off, the pair is likely to pick up momentum and challenge the all-time highs at $39.5941.
This bullish view will be negated if the BNB/USD pair turns down from the current levels or from the overhead resistance and sustains below the 20-day EMA ($29.17). Such a move could drag the price down to the 50-day simple moving average ($26.83).
Chainlink (LINK) has held above the 20-day EMA ($10.52) for the past three days but the bulls have not been able to push the price back above the $11.1990–$11.8028 resistance. This suggests that demand is drying up at higher levels.
LINK/USD daily chart. Source: TradingView
However, the gradually upsloping 20-day EMA and the RSI in the positive territory suggests a minor advantage to the bulls. The momentum could pick up after the bulls push the price above the overhead resistance zone. The first target is $13.28 and then $18.
This bullish view will be invalidated if the LINK/USD pair turns down from the current levels or the overhead resistance and breaks below $10.15. Such a move could pull the price down to the $8.7975 support.
The failure of the bears to sink Polkadot (DOT) to $3.5321 suggests that lower levels are attracting buying by the bulls. If the buyers can push the price above the downtrend line, the bearish descending triangle setup will be invalidated.
DOT/USD daily chart. Source: TradingView
Above the downtrend line, the DOT/USD pair could move up to $4.6112 and if this level is crossed, the rally may extend to $5.5899.
However, the bears are unlikely to give up without a fight. The sellers will try to reverse the direction from the current levels and again at $4.6112. If the pair turns down from either resistance, it could again drop to $3.5321.
A breakdown and close (UTC time) below $3.5321 will signal that bears are back in command.
Cardano (ADA) has bounced off the 20-day EMA ($0.103), which shows that the sentiment is positive and the bulls are accumulating at lower levels. The buyers will once again try to push the price above the resistance line of the rising wedge pattern.
ADA/USD daily chart. Source: TradingView
If the bulls can manage a close (UTC time) above the resistance line, a rally to $0.128062 and then to $0.1445 is possible. The upsloping 20-day EMA and the RSI above 61 suggest that the path of least resistance is to the upside.
Contrary to this assumption, if the ADA/USD pair turns down from the resistance line, the bears will once again try to sink the price below the 20-day EMA and the support line of the wedge. If they can do that, the advantage will tilt in favor of the bears.
Litecoin (LTC) has bounced off the uptrend line and the bulls will now try to push the price above the moving averages. If the buyers can sustain the price above the moving averages, a move to the overhead resistance zone of $51–$52.36 is possible.
LTC/USD daily chart. Source: TradingView
However, the bulls are unlikely to have it easy as the bears will try to defend the moving averages. If the LTC/USD pair turns down and breaks below the uptrend line, a drop to $42 will be on the cards.
Currently, the flat 20-day EMA ($47.99) and the RSI at the midpoint suggests a balance between supply and demand. Hence, the price action could remain volatile for the next few days as both the bulls and the bears try to dominate proceedings.
A breakout and close (UTC time) above the resistance zone will complete an inverse head and shoulders pattern that may signal the start of a new uptrend.
Bitcoin SV (BSV) is attempting to stage a recovery but the rebound off the Oct. 16 intraday lows lacks strength. This suggests that the bulls are in no hurry to buy as they are not confident that the bottom is in place.
BSV/USD daily chart. Source: TradingView
The downsloping moving averages and the RSI in the negative zone suggest that the advantage is with the bears. If the bulls do not push the price above the moving averages within the next few days, the bears will make one more attempt to sink the price to $146.20.
Conversely, if the bulls can push the price above the moving averages, the BSV/USD pair could move up to $180.63. A breakout and close (UTC time) above this resistance could start a journey to $189 and then to $227.
According to CME, the amount of Bitcoin (BTC) long contracts held by institutions are at an all-time high. Yet, CME’s most recent Commitment of Trader report shows hedge funds are at a record-high for BTC shorts.
There seemingly is a major difference in the perception of Bitcoin’s short to medium-term trend between hedge funds and institutions.
CME Bitcoin futures net open interest. Source: Skew
Why are hedge funds aggressively shorting Bitcoin but not institutions?
Hedge funds typically implement varying strategies to generate returns for investors. Oftentimes, hedge funds will utilize derivatives and employ a more high-risk strategy.
In contrast, institutional investors who are allocating a percentage of their portfolio to Bitcoin likely have a long-term strategy. This means they are not concerned about the short to medium-term performance of BTC.
Some analysts say that hedge funds are likely short on Bitcoin to provide liquidity to institutions longing the top cryptocurrency.
When institutional investors increasingly build up their long positions, there need to be sellers on CME to balance the order book. Mitchell Nicholson, a cryptocurrency analyst, said:
“Many HFs are likely shorting CME futures hedged to capture the basis or providing liquidity to the institutions going long.”
Technically, hedge funds might also be shorting Bitcoin after repeated rejections of a key resistance level. Bitcoin has been unable to break out of the $11,700 to $12,000 resistance range since August.
For over two months, Bitcoin has been mostly ranging between $10,500 to $11,700, struggling to show upside momentum.
After BTC’s recovery from $3,600, hedge funds may be expecting a significant pullback.
A pseudonymous trader known as “Bluntz” said that the current technical structure of Bitcoin looks similar to February. In March, BTC dropped to $3,596 on BitMEX in an abrupt capitulation phase.
Whether hedge funds are net short on BTC or providing liquidity to buyers on CME remains unclear based on open interest. Skew said:
“New CME Commitment Of Trader report just came in for BTC Futures: HFs all-time short. Institutions all-time long. Who’s wrong?”
Institutions continue to demonstrate high demand
Despite the growing Bitcoin short positions from hedge funds, institutional investors are continuing to accumulate BTC.
On Oct. 17, Barry Silbert, the CEO of Grayscale, said the firm reached all-time high assets under management (AUM) at $6.4 billion. The figure from Grayscale is critical to measure institutional activity because their products mainly tailors institutional investors.
In the U.S., there is not a Bitcoin exchange-traded fund (ETF) approved by the U.S. Securities and Exchange Commission (SEC). As such, institutions rely on the Grayscale Bitcoin Trust, which operates more like an exchange-traded product (ETP) to gain exposure to Bitcoin.
Major multi-billion dollar conglomerates that have invested in Bitcoin, such as MicroStrategy and Square, also emphasized their intent to treat BTC as a treasury asset. At least in the short to medium term, these institutions are unlikely to sell their BTC holdings.
Title: Institutional Bitcoin longs at record-high, hedge funds short — CME data Sourced From: cointelegraph.com/news/institutional-bitcoin-longs-at-record-high-hedge-funds-short-cme-data Published Date: Mon, 19 Oct 2020 20:06:06 +0100