On this episode of our Friday Market wrap, Nick Mancini, Chief Community Officer of Trade the Chain, joined our host, Gordon Paul, to review a volatile week in the crypto markets and what sentiment might be indicating for future price action.
BITCOIN MIAMI CONFERENCE
(00:49) The magnitude of the bitcoin conference speaks to the growing impact of the digital assets space and how it is bridging the gap between both sides of the retail and institutional market.
(02:05) In other news, the colonial pipeline hack, the biggest cyberattack on an oil infrastructure target in history, proved again why the market remains bullish on bitcoin. The 75 bitcoin (valued at $4.4 million) paid as ransom to the hackers was successfully retrieved from their cold wallets.
(02:14) El Salvador news has also become the first sovereign nation to accept bitcoin as a legal tender, a massive step for global acceptance of the digital asset.
(03:19) On some bearish news, Ethereum has announced the postponement of the finalization of its ETH 2.0 to late 2022. The market had been expecting a “winter storm” that had hoped to resolve the network’s issues, especially proof of stake.
BTC 7-Day Sentiment Chart
The charts show a topsy-turvy movement of bitcoin as a result of trade activity.
(05:18) “…you can see kind of the spike whenever the seizure news broke and then see the dip whenever retail ended up you know realizing that this is bearish. It was interesting to see the divergence of sentiment and price action because retail did think that that news was bullish and, it ended up being bearish for a multitude of reasons,” Nick explained.
(05:39) “…price reacted when the El Salvador news broke as “the trough ofsentiment” was formed. The price and sentiment began to skyrocket and, sentiment has continued to be steady bullish. That is great news for bitcoin after three weeks of bad news, so I think bitcoin is turning another leaf here,” Nick added.
ETH 7-Day Sentiment Chart
(07:15) Ethereum has not been performing well when compared with bitcoin.
(07:46) After the news of the ethereum 2.0 delay broke, sentiment plummeted; trading volume consequently reduced by double digits, signaling a loss of interest in trading ethereum.
The public sentiment is that this drop in ethereum would bolster the L1 competition; Solana, Polkadot, Tron, and others.
(08:25) Nick believes ethereum may fall out of the limelight for a while but remarks that development would continue.
(08:31) “I think that even though the traders’ outlook is low (which means it won’t have as much trading activity) if you’re a fundamental investor looking to build ERC20 assets, that could just create cheaper ethereum for longer-term value,” Nick said.
Despite the downfall, Nick insists shorting ethereum against other competitors is “the worst trade idea in the world.”
(09:09) “That money is going to rotate somewhere else because L1 investors would continue to be L1 investors. They’re not just going to move all their money elsewhere so, expect the competition to heat up at least on the price chart,” Nick explained.
ETH Daily Price Chart
(10:03) The white line within the USD 2,000 range shows resistance. The two hard hits and rejections indicate a double top, which is not a good formation for a daily chart.
(10:17) “The candle formations don’t look that good. Having looked at the markets for three-four years, this is not something you want to see,” Nick remarked.
The chart also shows more buy action at the USD 1,800-1600 price target, where trade volume is much thicker.
(10:36) “…a bunch of people are stacking their buys in case ethereum drops USD 300-500 that is where they’re going to buy. So, if you are shorting, USD 1,800 is not a bad target and, if you are looking to buy more, it is also not a bad target,” Nick added.
In conclusion, Nick believes a lot of money would be invested into bitcoin as it becomes the “sexy trade”, ethereum would not get as much attention but generally advises against counting ethereum out.
(11:09) “…don’t count ethereum out just because of this price action. You know things have a funny way of changing right when you think they’re
dead. I would watch this chart closely and come back to it around USD 1,800 – 1,900 if you’re an ethereum investor,” Nick added.