Market Wrap: Bitcoin Down to $26K but Traders Remain Bullish

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Few appear to have been hit by Bitcoin’s volatility on Tuesday as the # 1 cryptocurrency by market cap fell to the $ 26,000 level after first trading above $ 28,000 on Sunday. Many market participants are convinced that private and institutional investors will drive the Bitcoin price up after the vacation break.

  • Bitcoin (BTC) is trading at $ 26,937.67 as of 9:00 PM UTC (4:00 PM ET). Gain of 0.37% in the last 24 hours.
  • Bitcoin’s 24-hour range: $ 25,875.05 – $ 27,117.95 (CoinDesk 20)
  • BTC between the 10-hour and 50-hour averages on the hourly chart, a sideways signal for market technicians.

Bitcoin trading on Bitstamp since December 23rd

Source: TradingView

Due to the limited institutional trading activity in the final days of 2020, traders and analysts told CoinDesk that the recent price movement has been largely driven by retail investors.

“It’s pretty unusual for the past whole week to be like this, since it’s a holiday season. Usually there is a liquidity crisis during the holiday season, ”Mable Jiang, principal at the crypto hedge fund Multicoin Capital, told CoinDesk. “The heat was driven in part by the recent surge in Bitcoin and resurgent interest in the market, at least in China.”

Jiang noticed some patterns in recent retail trading activity. Some roll altcoins in bitcoin and ether. Others are looking for coins that may outperform Bitcoin in returns over the coming months.

Bitcoin volume through exchange since December 1, 2020

Source: CoinDesk, CryptoCompare

In TradeBlock’s weekly market commentary dated December 28, the cryptocurrency research firm wrote that the recent highs for Bitcoin and Ether were driven by outflows from XRP.

“The only two digital currencies are those [Securities and Exchange Commission] has definitely determined that Bitcoin is not a security, ”said TradeBlock. “When the regulatory uncertainty in the altcoin market increased following the SEC’s approach [against Ripple Labs, claiming it was trading an illegal security, XRP]Traders took the opportunity to focus on more regulatory assets, bitcoin and ether, while maintaining crypto risk amid one of the toughest bull runs ever recorded. “

Continue reading: Coinbase to suspend XRP trading following SEC lawsuit against Ripple

Although Bitcoin price has fallen below $ 26,000 in the past 24 hours, many market participants appear optimistic for the weeks and months ahead, especially after investment activity has returned after the holidays.

“Should the expected wave of retail flows set in, I would expect the Bitcoin fee to be above $ 30,000 by the start of the new year,” said Denis Vinokourov, head of research at London-based prime brokerage Bequant.

Continue reading: CME tops the Bitcoin futures rankings in the face of rapidly growing institutional interest

Chris Thomas, Head of Digital Assets at Swissquote Bank, said last month’s price move towards the previous resistance level of $ 20,000 is a compelling argument to support that optimism. During this rally (on November 25, December 1 and December 5) there were three small sell-offs, prices rebounded quickly as strong demand for Bitcoin outweighed the amount of Bitcoin sold.

Continue reading: Whale watching is running out and easing downward pressure on Bitcoin: Analyst

“Since then, the bears have been reluctant to sell too much more as there is a good chance they will be able to sell at higher levels in a few weeks or months,” said Thomas. “I suspect we will see a range of $ 26,500 to $ 27,500 in the first few days of the new year. From January 4th, institutional positions should come back on the market. “

Continue reading: Grayscale manages $ 19 billion worth of crypto assets, up from $ 16.4 billion last week

Ether lower for active retail activities

The second largest cryptocurrency by market capitalization, Ether (ETH), fell Tuesday, trading at $ 728.59, up 0.47% within 24 hours at 21:00 UTC (4:00 p.m. ET).

Similar to Bitcoin, market sentiment for Ether’s performance has also remained positive despite price volatility.

Continue reading: Ether is trading above $ 700 for the first time since 2018

Ethereum volume since December 1, 2020

Source: CoinDesk, CoinGecko

“For now, [ether’s] The trading volume is more than 15% higher than average, further proof that ether is on the rise, ”said Guy Hirsch, US CEO of eToro. “We expect the second largest crypto asset to continue to recover in the new year and potentially exceed $ 800 in the first half of the year.”

If they aren’t already, institutional players could be looking at ether soon too, especially after the Chicago Mercantile Exchange (CME) announced it would enter into a futures contract on ether in February 2021. This could be a good sign of Aether’s performance versus Aether’s Bitcoin, according to some analysts.

Continue reading: According to Messari Analyst, institutions will start buying ether from 2021

“CME Group’s imminent launch of ETH futures should generate additional adoption, particularly from financial institutions looking to diversify their digital asset holdings with another regulated product they are familiar with,” said Vinokourov. “This combined with [decentralized finance’s] A sustained surge should help ETH outperform BTC for the foreseeable future. “

Retailers also appear to be more interested in ether, as Total Value Locked (TVL) provided by analytics website DeFi Pulse hit $ 14.47 billion in DeFi on Tuesday.

Total value of decentralized funding since January 2020.

Source: DeFi Pulse

“From the market making side [on DeFi]We see pretty steady flows with a little more [stablecoins] More than the opposite, which I think suggests there are still plenty of retail investors trying to jump on the wagon, “said Peter Chan, a trader at Hong Kong-based crypto firm OneBit Quant, who specializes in the DeFi- Trade focused.

Other markets

Digital assets on CoinDesk 20 are mostly red on Tuesday. Notable Winner as of 9:00 PM UTC (4:00 PM ET):

  • Oil rose 0.76 %%. Price per barrel of West Texas Intermediate Crude: $ 47.98.
  • Gold was in the green at 0.31% and at press time at $ 1,879.03.
  • The US 10-year Treasury yield fell to 0.931 on Tuesday.

The CoinDesk 20: The assets that matter most to the market