Daily Market Analysis and News From NordFX

[Stan NordFX]

– Arthur Hayes, the former CEO of the cryptocurrency exchange BitMEX, warned that voters supporting cryptocurrencies may lose their influence on politicians after the presidential elections in November 2024. He suggested that if a regulatory framework for digital assets is not established before the elections, the newly elected president and their administration are likely to shift focus to other pressing issues. Geopolitics may overshadow discussions about cryptocurrencies, with the president's attention potentially diverted to international conflicts, particularly those involving Iran and Russia.
"The capital required to support laws aimed at developing cryptocurrencies may be redirected to addressing more urgent foreign policy issues. Therefore, regulatory clarity must be achieved now, before the political landscape changes after the elections," Hayes stated.

– At the beginning of the year, Nigel Green, CEO of deVere Group, predicted a rapid rise in bitcoin to $60,000, which proved accurate. He now believes that the demand for the leading cryptocurrency will continue to grow, and its price could reach $100,000 by the end of the year. "Bitcoin is likely the best asset for growth potential by the end of the year," writes the financier. "It is currently priced at $65,000, but many expect it to hit $100,000 by year-end. Is this possible? Certainly, because the number of bitcoins is limited. If demand for BTC increases, the price will go up. Bitcoin is not the same as the U.S. dollar, where the Federal Reserve can simply print more." Green also noted that the possible election of Donald Trump as President of the United States could further benefit bitcoin.

– Analyst and trader RLinda identifies the bullish flag pattern as a key indicator of a potential upward movement for bitcoin. This pattern, observable on both daily and weekly charts, is characterised by a sharp upward movement followed by a consolidation phase. RLinda expects that a breakout from this consolidation could continue the previous uptrend, with a potential target around $90,000.
Support and resistance levels are crucial in this analysis. The key support levels at $59,300 and $63,800 have shown strong buying interest and stability. High trading volumes at these levels reinforce expectations that they will hold during any potential pullbacks.
Critical resistance levels are marked at $67,250 and $71,754. Overcoming these resistance points is necessary for BTC to advance towards higher targets. The all-time high (ATH) at $73,743 is particularly significant, with a successful breakout potentially triggering further bullish momentum.

– Peter Brandt, head of Factor LLC, expressed skepticism that the price of bitcoin will exceed $71,000 and set a new record. He stated, "I try to be as honest as possible when identifying patterns. The current stagnation in the bitcoin market is incorrectly labeled as a flag (it has lasted too long); it actually represents a descending channel. Anything that lasts longer than 4-6 weeks is not a flag," wrote Brandt.
The flag pattern, which some analysts believe has emerged on the BTC/USD chart, is typically a precursor to a bullish rally. However, the descending channel mentioned by the veteran trader suggests a price decline. This pattern is characterised by lower highs and lows, which have been established since bitcoin reached its all-time high in March.
Based on the chart Brandt published, he believes that bitcoin's price will not surpass the resistance line around $71,000. If this scenario plays out, a bearish trend may ensue, potentially driving the price of the digital asset down to $51,000. The descending channel is slightly widening, indicating that price volatility is expected to increase over time.

– Analysts from the cryptocurrency market maker Wintermute predict that Ethereum could rise to a maximum of $4,300 in 2024. They believe that demand for this altcoin will be lower than expected, estimating that investment in these derivatives will range between $3.2 billion and $4.0 billion in the first 12 months following the start of trading. Under this scenario, the ETH price could increase by a maximum of 24% during 2024, reaching approximately $4,300.
In contrast, researchers at ASXN have made a more optimistic forecast. They predict that monthly capital inflows into Ethereum ETFs will range from $800 million to $1.2 billion. This suggests that by the end of the year, at least $6-7 billion will be invested in ETH-based exchange-traded funds, significantly exceeding the figures provided by Wintermute's analysts.

– The pace of Ethereum's potential bull rally will heavily depend on the capital inflow into ETH-ETFs shortly after trading begins. However, the launch of these products has not yet generated significant excitement in the cryptocurrency market, with investors responding cautiously to the event. Experts from QCP Capital reminded that after the launch of similar BTC-ETFs, bitcoin's price initially dropped to $38,000, but then hit historical highs two months later. (Although, it should be noted that the BTC halving may have played a significant role at that time.)
Currently, the options market suggests a potential decline in Ethereum's price in the near term. This expectation is reinforced by news of pressure from the U.S. government and the situation surrounding Mt.Gox. These factors add uncertainty and create additional challenges for ETH's growth. "As a result, ETH's price may remain stagnant or even decline until a new catalyst emerges," QCP Capital analysts suggest.
Experts also caution against underestimating the impact of political factors. As the U.S. elections approach, cryptocurrency market volatility may increase. Statements and actions by key political figures can create new opportunities or threats. Therefore, investors should be prepared for price swings and closely monitor news developments.


Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.

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[Stan NordFX]

CryptoNews of the Week

– Another bearish bitcoin cycle started on 29 July after the BTC/USD pair reached a high of $70,048. The primary cryptocurrency continues to be pressured by the potential sale of coins returned to creditors of the bankrupt exchange Mt.Gox, as well as those assets confiscated by law enforcement agencies, including the US.
The decline in quotations is occurring amidst investors fleeing risks and a global stock sell-off triggered by concerns about the prospects of the world economy in general and the economies of countries such as Japan and the US. Negative sentiments are further exacerbated by tensions in the Middle East, uncertainty regarding the Federal Reserve's monetary policy, and the policy of the new US president to be elected in November.
On Friday, 02 August, bitcoin spot ETFs experienced the largest outflow of funds in the past three months. The head of cryptocurrency investments at Evergreen Growth, Hayden Hughes, believes that digital assets have become victims of the unwinding of carry trade operations using the Japanese yen after the Bank of Japan raised interest rates. However, the more apparent driver for the sell-off was the publication of extremely disappointing data from the US labour market.
The US Bureau of Labor Statistics (BLS) report showed that the number of non-farm payrolls (NFP) increased by only 114K in July, lower than both the June figure of 179K and the forecast of 176K. Additionally, it was revealed that the unemployment rate has been rising for the fourth consecutive month, reaching 4.3%. These data have raised concerns about a possible recession in the US, triggered a fall in Treasury bond yields, panic on Wall Street, and a sell-off of risky assets, including stocks and cryptocurrencies.
On "Black Monday," 05 August, bitcoin temporarily fell to $48,945, and ethereum to $2,109. The drop was the sharpest since the collapse of the FTX exchange in 2022. Long leveraged positions worth almost $1 billion were liquidated. In total, from Sunday evening, the overall market capitalization of the crypto market fell by more than $400 billion.

– At the opening of stock exchanges on Monday, 05 August, MicroStrategy shares, the largest corporate holder of BTC, immediately fell by 22%. (It is worth noting that just last week, MicroStrategy increased its bitcoin reserves to 226,500 BTC, and the company's founder, Michael Saylor, announced that bitcoin quotations would reach $13 million per coin by 2045).
Metaplanet securities, which calls itself the "MicroStrategy of Japan," fell by 18% – from 820 yen to 670 yen. "Black Monday" also affected the crypto exchange Coinbase, whose shares lost 18.5% in value. Public miners' shares also suffered significant losses: the three largest US companies by market capitalization – MARA, CleanSpark, and Riot Platforms – fell by 19.1%, 24.9%, and 16.7%, respectively.

– Disappointing macroeconomic statistics indicate the need for active measures to support US economic growth. According to several analysts, the current situation should push the Federal Reserve to start easing monetary policy and lowering interest rates as early as September. Recent shocks in traditional markets "increase the likelihood that less restrictive monetary policy will come sooner rather than later – which is good for cryptocurrency," claims Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors.

– According to Jan3 CEO and former Blockstream head Samson Mow, evaluating the situation with bitcoin during periods of market financial turmoil is challenging. However, an analyst under the pseudonym Rekt Capital believes that the first cryptocurrency could see a price surge as early as October. He says the forming chart creates a bullish flag, which inspires optimism. "While bitcoin shows the possibility of a downward deviation in the near future, [however] the first cryptocurrency is slowly approaching its historical breakout point 150-160 days after the halving," notes Rekt Capital. He believes that although a price breakout will occur, it is not worth expecting an update to the historical maximum reached in March in the medium term.
The expert also emphasized that the current position in the crypto market suggests that BTC is unlikely to fall to $42,000, as buyers show strong support for the asset.

– Renowned analyst and trader, head of Factor LLC Peter Brandt noted that as a result of the market collapse, the situation has become similar to that recorded in 2016. Eight years ago, bitcoin fell by 27% after the halving that took place in July, and this year the coin's price dropped by 26%.
After hitting a low of $465 in August 2016, the price of bitcoin rose by 144% by early January 2017. Drawing an analogy between trends, Brandt suggests that an upward trend may soon emerge, and the BTC price could update its all-time high (ATH) in eight weeks (i.e., in early October). If this time digital gold appreciates to the same extent as in 2016, its price will be $119,682.
However, ITC Crypto blockchain project founder Benjamin Cowen holds a different view and believes that the bitcoin exchange rate dynamics will reflect the trend seen in 2019 when the coin appreciated in the first half of the year and depreciated in the second. In this case, the downward trend will continue, and BTC will see new lows.

– Analysts at Bernstein believe that bitcoin's reaction as a risky asset to general macroeconomic and political signals is not surprising. "A similar situation was observed earlier during the sudden collapse in March 2020. However, we remain calm," explained Bernstein. The experts noted that the launch of spot BTC-ETFs helped simplify investments in the first cryptocurrency and prevented its price from falling to $45,000. This time, the crypto industry's response to external factors will also be restrained, and the recovery of stock market indices will allow cryptocurrencies to show a slight but noticeable growth.
The company's analysts also warn that the "Trump factor" will influence the first cryptocurrency's price. "As the gap between Trump and Kamala Harris narrows, bitcoin and altcoins have traded weakly. We expect bitcoin and cryptocurrency markets to remain in a narrow range until the US elections, changing in response to catalysts such as presidential debates and the final election result," said Bernstein experts.

– Back in December 2022, the Reserve Bank of India launched a digital version of the rupee (CBDC), stating that transactions in such currency would be more confidential than in fiat. Initially, only Indian banks could conduct transactions with it through their mobile apps. The implementation process of the national CBDC was quite slow, and by the end of June this year, just over 1 million retail transactions had been recorded. This figure was achieved only after local banks began offering customers bonuses for using the virtual rupee and started paying part of employees' salaries in CBDC.
Most likely due to the low popularity of the novelty, the regulator announced in April 2024 that any financial companies with payment services could participate in the project. It was recently revealed that companies such as AmazonPay, GooglePay, and Walmart-backed PhonePe have expressed their desire to join the testing of the electronic rupee. Besides these US payment giants, Indian fintech companies Cred and Mobikwik plan to join the project.

– QCP Group has proposed a rather unexpected version regarding the cause of the crypto market crash. "The drop in cryptocurrency quotations to more than a five-month low was mainly caused by the sale of ethereum by the Jump Trading team," QCP Group believes. According to their information, Jump Trading unlocked 120,000 wETH tokens on Sunday, 04 August. Most of the coins were sold on 05 August, negatively impacting ethereum and other assets' prices. QCP Group suggests that the market maker either needs liquidity urgently on the traditional market or has decided to exit the market entirely due to reasons related to LUNA tokens.
For reference: On 21 June 2024, the US Commodity Futures Trading Commission (CFTC) launched an investigation into Jump Trading's activities, as the company acquired LUNA tokens at a price 99.9% below market value, and the subsequent sale of the coins caused a collapse in the asset's quotations. On 24 June, Kanav Kariya, president of Jump Crypto, a subsidiary of Jump Trading, resigned.