Market Wrap: Bitcoin Rallies Ahead of $50K Resistance

Cryptocurrencies are ending the week on a strong note as bitcoin broke above $48,000 for the first time since May. The world’s largest cryptocurrency is up about 4% over the past 24 hours and could face resistance near $50,000-$55,000 heading into the weekend.

On Thursday, Coinbase announced that it will purchase more than $500 million in cryptocurrencies to add to its holdings. The crypto exchange’s CEO, Brian Armstrong, also tweeted that Coinbase will invest 10% "of all profit going forward in crypto."

The Coinbase announcement encouraged bitcoin buyers to return at the $45,000 support level. Bitcoin’s price jump also coincided with stabilization in equity markets after a pullback earlier this week.

Latest prices

Cryptocurrencies:

• Bitcoin (BTC) $48,634, +4.1%
• Ether (ETH) $3,248. +4.2%

Traditional markets:

• S&P 500: 4441.7, +0.81%
• Gold: $1782.5, +0.2%
• 10-year Treasury yield closed at 1.259%, compared with 1.245% on Thursday.

Several analysts noted that extreme overbought conditions have unwound since April, which is providing support for the crypto rally.

“Right now, bitcoin and other cryptos have enjoyed technical support (as they were becoming mildly oversold),” Santiago Espinosa, a strategist at MRB Partners, wrote in an email to CoinDesk.

“At this juncture, some cryptos can continue to do well if policymakers neglect inflationary pressures and regulatory issues don’t become a mainstream problem,” Espinosa wrote.

Bitcoin correlations

Bitcoin’s negative correlation with gold intensified over the past few months as inflation expectations eased. Gold is down roughly 6% year to date, compared with a 65% gain in bitcoin over the same period.

The correlation between bitcoin and the iShares long-duration Treasury bond exchange-traded fund (TLT) briefly turned positive in July as the crypto selloff stabilized. Lately, bitcoin’s relief rally has coincided with a pickup in the 10-year Treasury bond yield, which stalled near the 1.40% resistance level.

Growing futures volume

The growth in bitcoin futures volume relative to spot volume could reflect greater participation from sophisticated traders. “Over the last year, futures and perpetual swaps have become the most popular financial instruments in crypto,” tweeted Delphi Digital. Futures and perpetual futures account for over 60% of total daily bitcoin volume.

Perpetuals are gaining ground relative to spot market activity and are quickly becoming the prime source of price discovery, according to Delphi.

Bitcoin perpetual swaps are a type of derivative in cryptocurrency markets similar to futures contracts in traditional markets.

Delphi also noticed a similar trend in ether, although spot markets still play a larger role than futures markets with that crypto.

Miner positioning

The bitcoin miners’ positioning index (MPI) has flattened over the past two weeks. The MPI tracks whether miners are shifting their BTC positions higher or lower.

The sideways movement in MPI suggests that “profit-taking by miners is clearly slowing along with the stagnation of the price increase,” CryptoQuant wrote in a Friday blog post.

CryptoQuant expects a downward price adjustment in BTC before a decisive move above the $50,000 price level. A breakout in price could encourage miners to build positions.

Altcoin roundup

• Cardano hits all-time high: Cardano (ADA), the native cryptocurrency powering the Cardano public blockchain, has hit a fresh all-time high and has surpassed Binance’s native token in total market capitalization, CoinDesk’s Sebastian Sinclair reports. It would appear the Alonzo upgrade is having a significant impact on investor sentiment. The upgrade seeks to usher in smart-contract functionality and address what critics have described as one of the network’s most glaring deficiencies.
• Solana’s Luna Yield goes dark: Decentralized finance protocol Luna Yield has gone offline. Luna’s website and all of its social media accounts have been taken down, according to SolPad, an initial digital offering (IDO) platform for the Solana blockchain. Some are attributing the move offline to a rug pull. A rug pull occurs when the creators of a project take off with investors’ funds. While no official confirmation has been given, the move would mark the first rug pull of its kind on Solana. An anonymous source told CoinDesk over $6.7 million in assets had been taken. The amount has been verified by CoinDesk via the SOL scan block explorer.
• OKEx establishes $10 million fund for GameFi projects: Crypto exchange OKEx said it is launching a $10 million fund to help develop GameFi, or “play-to-earn,” projects. The cash will come from the exchange's $100 million OKEx BlockDream Ventures fund, which invests in blockchain projects, the company said. GameFi introduces financial mechanisms into video games, allowing users to make money by playing.

Relevant news:

• Coinbase to Add Over $500M in Crypto to Current Holdings
• VanEck, ProShares Abruptly Withdraw Ether Futures ETF Proposals
• Argo Blockchain Files for Nasdaq Share Listing
• NFT-Focused Topps Abandons Plan to Go Public in SPAC Merger
• BlackRock Has Almost $400M Invested in Bitcoin Mining Stocks: Report
• Liquid Exchange Attack: Can a Crypto Wallet Ever Be 100% Safe From Hacks?
• Binance Tightens Customer Verification Requirements

Other markets

All digital assets on CoinDesk 20 ended up higher on Friday.

Notable winners of 21:00 UTC (4:00 p.m. ET):

polygon (MATIC) +7.63%

the Graph (GRT) +7.42%

algorand (ALGO) +7.27%