• Bitcoin (BTC, Tech/Adoption Grade “A-”) is up 5% so far today as it rapidly approaches $47,000.
• Ethereum (ETH, Tech/Adoption Grade “A”) is up 6% after climbing past $3,200.
• Bitcoin’s dominance over the crypto market fell to 45.5% as altcoins started closing the performance gap.
Bitcoin is responding well after a small 6% pullback saw it dip from the upper-$46,000 level to about $44,000. Don’t let the correction worry you. It’s healthy in a bull run for assets to take a breath and regroup. Confirming this as a positive sign was when the King of Crypto resumed its uptrend.
Bitcoin has now blasted through multiple resistance levels, including its 200-day exponential moving average (EMA) and 21-week EMA.
It also sits well-above its 21-day moving average after the explosive move over the past several weeks. If we see another pullback as traders take profits, this level could provide short-term support as it catches up.
Here’s Bitcoin’s price in U.S. dollars via Coinbase Global Inc. (Nasdaq: COIN):
Ethereum has performed even better than Bitcoin recently, as we see several extra green candles over the past couple of weeks in its chart below. The second largest cryptocurrency by market capitalization is up 59% this month compared to Bitcoin’s 41% gain.
That’s because investors are excited about EIP-1559 making ETH more deflationary as it moves toward its upgrade to ETH 2.0.
Ethereum is also way ahead of its 21-day moving average, and it wouldn’t be surprising if we saw some extra profit taking.
Here’s Ethereum’s price in U.S. dollars via Coinbase:
Index Roundup
The broader crypto market had an excellent seven-day trading week as most assets climbed higher with improving market sentiment. It was a healthy sign to see a brief pullback and an even better signal after it was quickly reversed.
Best yet was the way the markets shrugged off any short-term fear, uncertainty and doubt (FUD) streaming from Washington this week. While the impacts of the proposed crypto regulation in the infrastructure bill still wait to be seen, the markets’ resilience is bullish, indeed.
Smaller altcoins took advantage of the positive large-cap movement over the past couple of weeks and used this momentum in an attempt to close the wide gap between their current trading levels and the all-time highs they set in May.
The Weiss 50 Crypto Index (W50) increased 23.73% as most cryptocurrencies extended recent gains.
The Weiss 50 Crypto Ex-BTC Index (W50X) climbed 27.07% as altcoins slightly outpaced Bitcoin.
Breaking down performance this week by market capitalization, we see that the small-caps outperformed both larger and mid-sized cryptocurrencies. Still, performance for all market cap sizes was overwhelmingly positive.
The Weiss Large-Cap Crypto Index (WLC) rose 23.99%, with most of the top names leading the way.
Mid-cap cryptocurrencies gained the least this week by a small margin, but they still performed solidly, increasing 22% according to the Weiss Mid-Cap Crypto Index (WMC).
The small-caps led the way, with the Weiss Small-Cap Crypto Index (WSC) soaring 33.76%.
This week’s market action was overwhelmingly positive, and it feels good after being stuck in consolidation for so long.
But as I mentioned above, nothing goes up in a straight line. Small corrections along the way can help prevent larger ones that shake market sentiment.
Of course, given the nature and volatility of the crypto space, larger corrections are still completely expected from time to time.
Notable News, Notes and Tweets
• Pomp cites the increase in Bitcoin adoption in Cuba, where citizens are trying to sidestep the traditional financial system.
• MicroStrategy Inc. (Nasdaq: MSTR) CEO Michael Saylor emphasizes his decision to adopt Bitcoin as its primary treasury reserve asset.
• Bloomberg notes that leveraged bets aren’t the driving force behind the recent Bitcoin rally.
What’s Next
Despite the altcoins leading the rally during the past week, it’s still up to Bitcoin and the large-caps to set the pace. They’re the market leaders, and without their decisive moves higher, altcoins would stagnate and struggle to gather any momentum.
Institutions and corporations continue diving into the industry, and this week’s action was notably highlighted by AMC Entertainment Holdings Inc.’s (NYSE: AMC) decision to start accepting Bitcoin by the end of this year.
July’s consumer price index (CPI) inflation data may have come in under expectations, but prices still rose 5.4% over the last twelve months. Inflation could easily show stickier long-term effects than the Fed believes, with Chair Jerome Powell already having claimed that it “could turn out to be higher and more persistent than we expected.”
Current fiscal and monetary policy decisions from governments and central banks are unsustainable. Crypto could prove to be an effective form of protection.
As more institutions continue loading up on crypto assets, prices should keep moving higher and higher.
Best,
Sam
