Crypto Extends Rebound After Bulls Regain Momentum

•  Bitcoin (BTC, Tech/Adoption Grade “A-”) is up about 1% today and has recovered back up to about $32,500.

•  Ethereum (ETH, Tech/Adoption Grade “A”) is roughly 2% higher, climbing back above the psychological $2,000 price level to $2,060.

•  Bitcoin’s dominance relative to the crypto market remained mostly unchanged, losing just 10 basis points to 46.15%.

Bitcoin’s range-bound trading adventure continues, minus the brief drop below $30,000 that lacked the selling pressure to send it tumbling lower. Despite a close below $30,000, the King of Crypto booked a solid relief bounce that’s keeping it on track to continue consolidating.

Despite the solid bounce off its support, Bitcoin is not out of the woods. It must still try to maintain this momentum to distance itself from the lower end of its trading range.

Bitcoin still trades significantly below its 200-day exponential moving average (EMA) and 21-week EMA, which are historically important long-term bull market support levels. Looking shorter-term, Bitcoin tested its 21-day moving average early in today’s trading before bouncing lower.

Here’s Bitcoin’s price in U.S. dollars via Coinbase Global, Inc. (Nasdaq: COIN):

Ethereum faced a similar challenge to Bitcoin as it retested support at $1,700, but it held above the level without breaking down. The second-largest cryptocurrency by market cap is already up 20% since Tuesday’s low and should continue consolidating after the relief bounce.

Ethereum is right at its 21-day moving average, which could pose as a temporary resistance like we saw with Bitcoin earlier today. Overtaking it would be a positive short-term signal and could lead to a move above the lower end of its recent trading range.

Here’s Ethereum’s price in U.S. dollars via Coinbase:

Index Roundup

After last week’s price action saw most of the largest cryptocurrencies continue towards the lower end of their established ranges, this week brought similar movements until the reversal.

The broader market headed lower until we experienced a bounce on Tuesday when bullish investors were able to retake the momentum with minimal selling pressure.

The Weiss 50 Crypto Index (W50) dipped 0.72% overall, which is irrelevant when considering the volatility of the crypto market.

The Weiss 50 Crypto Ex-BTC Index (W50X) lost 0.91%, showing that Bitcoin performed largely in line with the broader market.

Breaking down performance this week by market capitalization, we see that the mid-caps lost ground to the largest and smallest cryptocurrencies.

The Weiss Large-Cap Crypto Index (WLC) gained 9.53%, as large-caps managed to regain momentum on July 20.

The mid-caps lagged behind the smallest and largest cryptocurrencies, but they still finished the week in the green. The Weiss Mid-Cap Crypto Index (WMC) increased 3.29%.

The small-caps had the best week by a narrow margin, but they also experienced the most volatility. The Weiss Small-Cap Crypto Index (WSC) rose 9.67%.

The crypto market continues to experience short-term volatility within established ranges. As long as the broader market can avoid a significant breakdown below support levels, the bullish thesis after a period of consolidation is intact.

While small-caps performed solidly again this week, it will almost certainly take a decisive move higher from Bitcoin and the large-caps before they can sustainably outperform in an altseason.

Notable News, Notes and Tweets

•  Pomp emphasizes gold’s underperformance this past year despite unprecedented economic stimulus measures.

•  Tyler Winklevoss dismisses the notion that the inflation we’re seeing is solely due to supply chain disruptions.

•  A survey by Goldman Sachs Group, Inc. (NYSE: GS) shows that “nearly half of its family office clients are interested in cryptocurrency.”

What’s Next

As expected, institutions are looking to further dive into the crypto space while prices are significantly off of their all-time highs. With inflation ramping up, more and more institutions are hedging against the current financial system by entering crypto.

The Federal Reserve has repeated that it will continue juicing the economy until it is satisfied with the recovery, but this could take an extended period of time considering how employment numbers and jobless figures keep missing estimates.

Meanwhile, the crypto market will most likely continue consolidating. Bitcoin faced an important challenge when it closed below $30,000 during the week, and buyers jumped in to protect it.

This is a very positive sign, and as long as the biggest players in crypto avoid setting lower lows, we should see a continuation of the bull market — and the anticipated parabolic phase — after the consolidation period.

For many, now is the chance to enter before the next leg up.

Best,

Sam

About the Investment Analyst

Sam graduated from The Weiss School, interned at Weiss Research while attending Babson College, and now dedicates his time at Weiss Ratings to in-depth analysis of natural resource stocks and cryptocurrency markets. He regularly contributes to the research and news posted daily to the Weiss website.

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