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 traders can learn from sentiment towards future price action.
This Week in Crypto
China gathered all of its banks on Sunday to further solidify its stance on banning cryptocurrency and crypto-related transactions through any centralized banking platform.
Shortly after the news in China, MicroStrategy announced a purchase
of USD 500 million worth of Bitcoin.
Citigroup has begun crypto trading this week for their high net worth clients. The bank first began exploring a global payment token, CitiCoin, in 2015 but announced that it was no longer pursuing the project in 2019.
Andreessen Horowitz, an American VC firm, announced a 2 billion crypto
fund to invest in companies building in the crypto space.
Paraguay is reportedly considering making bitcoin, a legal tenure like El Salvador did a few weeks ago.
Lastly, Bitcoin options on the CME expire today. Traders would be executing their spot actions by the end of the CME close, as they hedge their trade
Bitcoin Sentiment Chart
The chart shows that Bitcoin and sentiment have been closely correlated, almost on a one-one ratio.
(03:23) 21st June showed bearish sentiment as a result of news from China. Sentiment shot up in the morning of the 21st because of MicroStrategy.
(03:33) “I think the most interesting part about this chart is the furtherance of the impact of sentiment on price. If you look in the early morning of the 21st and midday on the 22nd, you can see sentiment hit a double bottom in the mid-30s range. Right after that second double bottom on the 22nd, price began to skyrocket along with sentiment,” Nick explained.
Although news about the CME may seem neutral, it is leaning towards bearishness as the market remains uncertain about its expectations from the CME. Prices remained relatively stable around the news. Nick projects a selloff as the market figures out what it is looking for over the weekend.
(04:38) As expected, the bullish RSI divergence that occurred three days positively affected the price of Bitcoin. There were three days’ worth of green candles but, it found resistance at the 50-day moving average.
(04:56) The arrow on the right side of the chart shows support currently at the 32.5k region. If that breaks, then we want to see 31.5k hold.
(05:10) The week has also seen an increase in trading volumes which signals the potential for more interest and higher prices should it be sustained. If trading volume continues to increase throughout the weekend to the next week, trading interest will also increase.
“I’m neutral. I’m not going super deep into bitcoin but, I may place a few trades. I think given that the options expiry today, I would say it may
be better to place a bet potentially on Monday or over the weekend,” Nick said.
Ethereum continues on its bearish downturn. It currently sits on the
200 moving average daily chart.
(06:40) “If you’ve been following the bitcoin death cross narrative, the 200 moving average on the daily chart is a very key moving average and supports resistance level. Right now, it’s acting as support. It’s currently breaking just beneath that on the current candle so, if it does break that today, 1600 is likely, with a potential lower bound of 1,500 for Ethereum. That may be a good level to get in,” Nick said. Although, Ethereum is not looking good over the short term or this weekend.
Cardona has grown to mass popularity in recent times and has had a lot of news traction. The chart highlights the recent sentiment spike of Cardona and its impact on price.
(09:07) The bottom price of Cardano on 22nd June coincided with a rise in sentiment that led to a 40% increase in the value of the ADA token. The rapid growth spanned across three days at the back of sentiment.
(09:24) “Seeing sentiment go from bearish to a near-perfect bullish level is shocking to see and just shows the power that the ADA army of “hodlers” have over the market and the narrative,” Nick said.
Bitcoin Dominance Chart
Bitcoin is expected to see resistance in the 49k range. Currently hovering around the mid 47k level, Bitcoin is likely to rise about 1% before reaching resistance.
With the CME future expiring, several narratives could emerge. If Ethereum reaches a bottom on Monday and Bitcoin begins to rise over the weekend, there could be a divergence where bitcoin dominance continues to grow while Ethereum bottoms.
“I think it’s it’s tough to go heavy into alts with a rising bitcoin dominance level because everything about this chart says that bitcoin is stronger than all other coins. If you believe that bitcoin is stronger, why take the risk with other weaker assets. As long as Bitcoin rises, it would continue to be King of Markets, but that could change next week,” Nick explained.