General Crypto Market
The general market outlook is bullish, despite what the Bitcoin price may look like at the moment. Our market outlook is not always reflected in charts, as we are more observant of the overall sentiment of cryptocurrency and blockchain. We’ll outline some key activities that contribute to this market outlook.
Earlier this week, Mike Novogratz shared the Bloomberg Galaxy Crypto Index chart and called a price bottom while stating that the market retraced to the whole of the bubble.
There was an 81% drawdown of the total market capitalization (MC) during the last serious bear market in 2014. If we are to experience a similar retrace during this bear market, it would bring the market to a total MC of $160B, which lines up nicely with support. If we are to bounce around that range, we will be looking for consolidation, lower volatility, and essentially an extended accumulation phase for the overall market.
Goldman Sachs, Morgan Stanley, Citigroup, and the owner of the New York Stock Exchange (ICE) are all reportedly gearing up to launch Bitcoin products and services for institutional investors. It was reported that Goldman Sachs was canceling their crypto trading desk, however this was proven to be yet another fake news item after they refuted the stories.
One piece of news to look out for that has not been covered yet is the looming SEC decision regarding the VanEck ETF, as we’ve written about previously. While it is unknown what the decision will be at the end of this month, we believe the ETF will be approved in due time. Whether that approval comes in September or February remains to be seen.
Based on the current market environment, we can expect some volatility in Bitcoin (BTC) price in the upcoming weeks, with these forces in mind:
– CME futures expire on the 28th of September
– Update on VanEck ETF decision by SEC by September 21st at the latest
– Lowest daily trading volume since July 2017
– BTC volatility hit yearly lows
The macro outlook for Bitcoin is bearish while short-term outlook is bullish. The weekly price closed strong around $6500 for September 16th and hints that we will have further upside to the $6700-7000 range. Historically a green close on BTC usually leads to another green week. However, if it cannot push past the current range ($6200-6500), further downside is to be expected.
The macro trend is still down, as BTC has been making lower highs all the way down from the yearly highs. Yearly lows are still very possible. The current yearly low around $5800 has been tested multiple times, which leads us to believe that the demand there will not hold if it is tested again.
With Bitcoin reaching its lowest daily volume of the year and its lowest volatility of the year, a big move can be expected.
Bullish news about Ethereum (ETH) regarding the Constantinople hard fork and a breakthrough in blockchain sharding contributed to the strength that ETH showed this week.
ETHUSD market outlook is cautiously bullish overall. ETH seemed to find a bottom around $167 and has recovered well to the low $200s. The bullish bias stems from the fact that ETH appears to have had a capitulation wick on the Daily and Weekly timeframes, with massive volume coming in at the $165 level. This resulted in the highest daily trading volume in 12 months. The Weekly candle started out as a strong sell, and throughout the week turned into a 30% recovery.
One piece of information to consider is that since ETH futures launched on BitMEX, ETH prices have followed BTC noticeably.
The Binance (BNB) token typically moves in anticipation of the quarterly token burn. This should be one of the better altcoin plays out there for the upcoming weeks. There is strong upside potential in BNB, as the prior token burns have resulted in strong increases in price. With the possible volatility in Bitcoin price, one thing to consider is that BNB has acted very well as a hedge against BTC downside for a large portion of the current bear cycle.