Bitcoin Struggles for Direction, but Institutions Are Still Buying

Here’s the thing about financial markets right now: They’re a mess. That goes for the old-school as well as the new.

Indeed, the still-developing cryptocurrency market is a directionless mess, as Sam Blumenfeld illustrated in the Friday, July 16, edition of Weiss Crypto Alert.

But here’s another thing about crypto in particular: Institutions are using current weakness to add to their positions. That’s the big takeaway for long-term investors.

Here’s a recap of the recent crypto action directly from Sam:

A close below the critical $30,000 support level would be an unwelcome sign, and it would have investors reevaluating the health of the overall market. The crypto market will likely continue consolidating before a push can start the next big uptrend. For now, it would be a good sign if Bitcoin bounced decisively off of support.

Meanwhile, the King of Crypto has fallen further below its 200-day exponential moving average (EMA) of $39,100 and 21-week EMA of $39,800. Bitcoin still sits below its shorter-term, 21-day moving average, which could act as a potential resistance in the event of an upward bounce.

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

Ethereum broke below $2,000 but is trading in a range above its $1,700 support. While it fell below an important psychological level, it is much more crucial that it doesn’t create a lower low.

The second-largest cryptocurrency by market cap should follow Bitcoin’s lead and continue consolidating. Ethereum slipped under its 21-day moving average as it lost momentum, and we could see this level become a short-term resistance.

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

Sam scaled out for a broader view of the crypto market in light of the leader’s recent price action:

While market sentiment has worsened and weak hands sell off, institutions are using this time to load up on crypto assets.

Capital International Investors, a subsidiary of the investment manager Capital Group, bought 12.2% of MicroStrategy Inc. (Nasdaq: MSTR) as a Bitcoin proxy investment. MicroStrategy holds over 105,000 Bitcoins on its balance sheet.

It can be tough waiting during periods of choppy sideways trading, but it is important to step back and note that Bitcoin and Ethereum are still up 115% and 337% over the past year, respectively. Nothing goes up in a straight line, and the crypto market’s wild gains could not be possible without significant volatility.

This month’s Consumer Price Index (CPI) inflation data showed the largest monthly increase since June 2008 at 0.9%, and our current economic policies continue to fan the flames.

Bitcoin is a hedge against the current monetary system and inflation with its absolute supply cap, and institutions are moving in. Sit tight and hold on.

Click here to follow cryptocurrency markets along with Sam and the Weiss Crypto Alert team.

Best wishes,

David Dittman