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| By Alex Benfield |
The market sure can be complicated, and sometimes it's not easy to pick out the actionable signals from the noise.
Just last week, I mentioned that our cryptocurrency market leaders had dropped below some key support lines that we’ve been watching closely. This typically indicates a negative trend shift.
However, after a longer-than-usual sell-off that started after the April 14 high, we were also awaiting a long overdue rally.
We might finally be in the midst of that rally, as Bitcoin (BTC, “A-”) gained 15% to start off the week! Indeed, it has just blasted up above the key $30,000 level.
The explosiveness of the rally so far this week is something that has been missing from this market for months. In fact, the last time BTC rallied this hard and this fast was back in mid-March, when it climbed 45% in just nine days.
The catalyst to this rally could well be the unexpected news of institutional interest sparking in the crypto sphere.
A series of events involving some heavyweight financial institutions has drawn attention, generating speculation that their involvement might be driving Bitcoin's price surge.
Just as the dust from the recent lawsuits against Coinbase (COIN) and Binance began to settle, BlackRock (BLK) — a titan of traditional finance — made a surprising move: The firm declared its intent to launch the first spot Bitcoin exchange-traded fund, generating mixed responses in the market.
BlackRock's action raises eyebrows, particularly because many crypto-native firms — which arguably have less entanglement with Wall Street — have seen their attempts to launch similar products thwarted.
As a beacon in the financial world, BlackRock boasts an impressive record of successful ETF applications. In its 35-year existence, only one application has been rejected. Therefore, the result of this endeavor is awaited with keen anticipation by the market.
Additionally, it was announced just yesterday that Citadel, Fidelity and Charles Schwab are teaming up to launch a new crypto exchange platform called EDX Markets. The timing of such an announcement seems — at the very least — intriguing.
Regardless of whether there is a whiff of regulatory favoritism or not, one fact stands clear: Wall Street firms are playing catch-up.
TradFi’s push into crypto — either via the launch of new products or exchanges — indicates a trend toward wider adoption of the crypto market.
While we are left to speculate on the motives and backroom discussions, the market responds in real time. And it's possible we're seeing Bitcoin's rally as a result.
For now, we will have to wait and see just how far this new institutional interest can pump the price of Bitcoin. But there is one main challenge left.
After skyrocketing above $30,000, the final test for Bitcoin is whether it can climb above its current 2023 high of $31,000, which was reached on April 14. Should that happen, it’s possible that the market could remain bullish for a while longer.
However, if BTC fails to clear above $31,000 before the next correction, then we have almost surely seen the end of this year’s bullish price action. The market would likely return to a neutral phase at that point.
All eyes are on Bitcoin right now.
Although Ethereum (ETH, “B”) broke below its yearly uptrend when it set a low at $1,625 on June 15, it has also started to rally.
Right now, ETH’s chart looks less bullish than BTC’s chart, even though ETH has continued its trend of higher highs and higher lows. To be specific, ETH has gained 15% from that June 15 low, but it still needs to climb about another 15% to make a new yearly high.
While that is definitely possible, the most likely scenario here is that ETH has topped out for the year. But as always, I’ll be watching the charts incredibly closely over the next few days to confirm or deny that suspicion.
Overall, this could be the long overdue rally we’ve been waiting weeks on end for. The big question remaining is whether this is too little too late.
To answer that question, we will have to watch closely to see whether Bitcoin and Ethereum can set new yearly highs while they still have bullish momentum on their side. If they fail to do so, the market will likely return to neutral conditions as we finish out the year.
To find out more, make sure to tune in to Weiss Crypto Daily for the latest market updates.
Best,
Alex
