- Bulls have been struggling to gain decisive control of Bitcoin throughout the past few days and weeks
- This has resulted in it being quite heavy, with each rally being aggressively sold into as bears aim to push it back down to $30,000
- Despite this, the crypto has been able to hold strong within the lower-$30,000 region, and every dip below $30k has been met with massive buy-side support
- There’s a possibility that this support is coming from institutional buyers
- One trader is now noting that one on-chain trend does seem to indicate that upside could be imminent in the near-term
- The balance of BTC being held on exchanges has been plummeting and is the lowest it has been since the macro bottom in December of 2018
Bitcoin has been struggling to gain momentum in either direction, but the aggressive selling into every attempted pump suggests that bears may currently have an edge over it.
The crypto’s slight weakness at the moment has not been enough to spark any prolonged downtrend, however, and many analysts remain bullish in the short and mid-term.
On-chain data supports this sentiment, as the spot reserves of BTC on exchanges have been dropping rapidly throughout the past couple of weeks.
Bitcoin Struggles to Gain Momentum as Consolidation Persists
At the time of writing, Bitcoin is trading up just over 2% at its current price of $33,850, which marks a notable decline from its recent highs of nearly $35,000 that were set overnight.
This rally may have come about due to Elon Musk’s appearance on Clubhouse last night, which led many to speculate that he would discuss Bitcoin and maybe make a big announcement surrounding it.
He did note that he believes BTC is on the cusp of gaining mainstream adoption, but he didn’t announce that he has purchased any.
This On-Chain Trend is Greatly Favoring Bulls
One analyst pointed to the balance of spot Bitcoin on exchanges as a bullish trend that seems to favor imminent upside.
He noted that global BTC spot reserves are now at the lowest since the macro bottom in December of 2018.
“Spot reserves dropped pretty hard yesterday (which is bullish). Global $BTC spot reserves are now at its lowest point since the macro bottom in December 2018.”
Image Courtesy of Byzantine General. Source: BTCUSD on TradingView / CryptoQuant
Unless Bitcoin breaks below any key technical levels in the mid-term, its present consolidation phase will likely result in the crypto seeing an upwards expansion in the near-term.
Featured image from Unsplash. Charts from TradingView.
More Rate Shocks for Bitcoin Ahead Despite Latest Price Rebound
Bitcoin traders should get used to facing more shocks from Treasury markets even as the cryptocurrency goes through a strong rebound phase.
With coronavirus cases falling, another round of government stimulus looking likely, and millions of Americans receiving vaccines each week, expectations have surged higher about how quickly the US economy could expand this year. A Reuters poll showed that 90 percent of the 120 economists believe the US economy would reach pre-COVID-19 levels within a year.
Bitcoin Faces Headwinds
Expectations of a stronger economy have pushed long-term interest rates higher, with the 10-year Treasury note yielding 1.455 percent versus 0.93 percent at the year’s beginning. While that is a usual response to optimistic economic outlooks, it has posed risks for assets that logged supersonic bull runs amid low-yielding environments since March 2020.
They include Bitcoin, which has surged by more than 1,200 percent from its mid-March nadir. Investors chose it as an alternative against poor yields, alongside certain sectors in the US stock market (read tech shares) that offered to stay profitable during the coronavirus-induced lockdowns.
FactSet data shows that the S&P 500 now traded 22 times higher than its estimated earnings over the next year. It is the highest price-to-earnings ratio in 20 years, even higher than what it was after the 2009 economic crisis. As a result, even a modest move in yields tends to cause volatile moves in overvalued stocks.
On the other hand, Bitcoin expects to absorb the pressure as long as Treasury yields rise on US economic growth prospects. Nevertheless, any sudden spike in interest rates could pose risks for the cryptocurrency, given how it corrected lower by more than 21 percent last week as bond sell-off picked sudden momentum.
The Federal Reserve officials have clarified that they plan to leave short-term interest rates near-zero while buying Treasurys and mortgage securities at a pace of $120bn per month. But if the coronavirus crisis fades away after a speedier vaccination program, then it may question the central bank’s commitment to continue its asset purchasing program.
Such uncertainty could lead to higher volatility in bond markets, affecting Bitcoin and US stocks in the process. Meanwhile, a definite rate hike from the Fed could risk putting the cryptocurrency on a correcting course downwards.
“If the FED decides to change course and tighten up, this can act as a major headwind for crypto,” explained Ben Lilly, the author of ChainPulse, a crypto-focused newsletter. “That’s because, in such an environment, capital will be less likely to flow into assets at the tail end of the risk curve… Aka crypto.”
In other words, Bitcoin’s sell-off last week could be a preview of what a jittery bond market could do to the cryptocurrencies.
Price analysis 3/3: BTC, ETH, ADA, BNB, DOT, XRP, LTC, LINK, BCH, XLM
Evolve Fund Files for Ethereum ETF after Bitcoin Approval in Canada
Just weeks after opening a Bitcoin (BTC) exchange-traded fund, Evolve Fund has opted to file for a similar ETF product based on Ethereum (ETH). With $1.7 billion assets under management, Evolve is a Canadian-based ETF provider that specializes in “bringing disruptive innovation ETFs to Canadian investors.”
Just a month prior, Evolve Funds scored an approval from the Canadian government to proceed with listing their Bitcoin ETF on the Toronto Stock Exchange. Found under ticker EBIT.TO, the fund is down approximately 15% since its listing date.
“As a leader in disruptive innovation, we look forward to providing Canadian investors with access to another leading cryptocurrency through an ETF structure,” said Raj Lala, President and CEO at Evolve Fund. As Ethereum is the second biggest cryptocurrency by market cap, the digital asset has enjoyed similar levels of attention to Bitcoin from financial institutions.
Moreover, the Ethereum-based ETF would give potential investors exposure to the daily movements of Ether. Thanks to the “creation and redemption” processes offered by ETF structures, there would be minimal tracking errors between spot price and the ETF. Its portfolio will be based on ETHUSD_RR, a daily benchmark index price for Ethereum denominated in U.S. dollars.
The proposed fund would work similarly to its pre-existing Bitcoin counterpart. If approved, both ETFs would contract Cidel Trust Company and Gemini as their custodian and sub-custodian. This means that these two firms will hold client’s securities in electronic form, most likely through digital wallets.
Institutional Interest in Crypto, From Bitcoin to Ethereum, Continues to Grow
There is no doubt that institutions will continue to bring crypto-based investment products to the traditional financial markets. Just days ago, Goldman Sachs, one of the largest investment banks in America, reopened its Bitcoin-futures trading desk.
As public demand soars and financial institutions rush to join in, the future of cryptos looks brighter than ever.
Featured Image from Unsplash
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