Market Wrap: Bitcoin Pauses Losing Streak but the Trend Is Still Not Bullish

Price Action

BTC Pauses Its Recent Fall, Albeit Barely

Bitcoin’s price (BTC) increased 0.3% on Thursday, ending a streak of four consecutive negative days. Average trading volume was higher than usual. Prices initially declined 0.5% as U.S. equity markets opened in New York at 9:30 a.m. ET.

Ether’s (ETH) price rose 1.5% as the second-largest cryptocurrency by market capitalization, outperformed bitcoin. Altcoins were mixed, with EOS falling 7% while SOL and ATOM increased 0.1% and 4%, respectively.

This article originally appeared in Market Wrap, CoinDesk’s daily newsletter diving into what happened in today's crypto markets. Subscribe to get it in your inbox every day.

In macroeconomic news, 250,000 Americans filed initial jobless claims for the week ended Aug. 13, falling short of expectations of 265,000. The four-week average for initial jobless claims dropped 2% to 246,750, falling short of forecasts of 257,000 jobless claims. The unexpectedly strong job figures offer the latest evidence the U.S. economy remains strong, even as other indicators show growth is slowing. Investors have been hoping recent U.S. Federal Reserve hawkishness will lick inflation without setting off a dramatic recession.

In line with the positive economic news, traditional markets were higher, with the tech-heavy Nasdaq index up 0.4% and the Dow Jones Industrial Average (DJIA) and S&P 500 up 0.03% and 0.3%, respectively.

In commodities, crude oil’s price rose 2% while natural gas’ fell 0.1%. Gold, the traditional safe-haven asset, recently fell in price by 0.2%. Copper, often called “Dr. Copper” because of its correlation with the overall health of the economy, was up 1.8%

Latest Prices

●Bitcoin (BTC): $23,346 +0.3%

●Ether (ETH): $1,871 +1.7%

●S&P 500 daily close: 4,284.15 +0.2%

●Gold: $1,773 per troy ounce +0.7%

●Ten-year Treasury yield daily close: 2.88% −0.01

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Technical Take

BTC Maintains Break Below Trendline; Small and Large Speculators Hold Steady

Bitcoin has broken below its trendline and continues to trade below $24,000.

The decline in BTC’s ATR (Average True Range) shows the reduction in BTC volatility, despite this week’s downward price trend.

ATR is a market volatility indicator that measures the spread of the opening, high, low and closing price of an asset over time. An expansion of ATR indicates increased volatility while a contraction in ATR implies reduced volatility.

BTC’s current price moves cluster around a high-volume node when plotting prices against the Volume at Price (VAP) indicator. A “node” refers to a cluster of volume around a price level. The VAP allows users to view areas where prices have occurred the most over a period of time. High-volume nodes indicate areas of widespread agreement. Low-volume nodes, by contrast, illustrate areas where trades are less likely to occur. The VAP is used in the same manner as the Visible Range Volume Profile (VRVP) referenced in earlier Market Wraps this month.

High-volume nodes can also highlight areas where prices are prone to stay for extended periods, resulting in little overall price movement. They may signal that BTC is set to trade flat in the near future.

Overlaying this Tuesday’s Commitment of Traders (COT) report with today’s chart shows that speculators both small and large are in a holding pattern. Published by the Commodity Futures Trading Commission (CFTC), the weekly COT report provides a snapshot of positions held by traders in futures markets.

Positions of large speculators (i.e., asset managers) are denoted in green, while positions of small speculators (i.e., retail investors) are denoted in blue. In the July 11 Market Wrap it was noted that retail investors were becoming net long as they breached the center line (0.0). Large speculators became net short during that identical time period.

Since July 26, both speculator groups have shown little movement in their net positions. The market could be waiting for large speculators to add to their long positions as a sign BTC will rise again.

ETH continues to outpace BTC

While bitcoin, the largest cryptocurrency by market cap, generates the most attention, ETH’s price movement continues to outperform. The ETH/BTC price chart highlights a 45% move higher since July 13.

The increase stems partly from investor anticipation of The Merge, which will shift the Ethereum blockchain from “proof-of-work” to a faster, more energy efficient “proof of stake” protocol. Market participants also expect the conversion to have a deflationary impact on ETH, reducing its supply. Historically, the reduction of an asset’s supply leads to a higher valuation.

The increase has occurred on moderate volume, and ETH’s 10-day exponential moving average remains above both its 20- and 50-day EMAs, an indicator of bullish sentiment.

Arca Chief Investment Officer Jeff Dorman suggested in a note that ether’s price surge reflects investors’ belief in its wider usefulness.

“That ETH is the most pure play, generic way to express a ‘growth of blockchain’ theme, while BTC is now just a macro trade,” Dorman said. “Investors don’t care how blockchain succeeds, they just want to make money if it does – ETH gives exposure to smart contracts, [decentralized finance], Web3, [non-fungible tokens] and gaming.

Altcoin roundup

• Buzz Over Potential Ethereum Hard Fork Token Fizzles as Price Tanks: Data shows that ETHPOW’s daily trading volume dropped 66% to $4 million from $13 million after the first trading week. ETHPOW’s price fell to $50 from as high as $140. Read more here.
• Cash-Backed HUSD Stablecoin Loses Peg, Drops to 92 Cents: HUSD is trading as low as 89 cents against the USDC stablecoin on decentralized finance (DeFi) protocol Curve Finance. Read more here.
• Run-To-Earn Game Stepn to Release NFT Sneaker Collection: The Web3 lifestyle app is releasing over 1,000 digital soccer cleats compatible for run-to-earn in partnership with Spanish soccer club Atlético de Madrid and crypto exchange WhaleFin.Read more here.

Is Filecoin Network's Incentive Plan Sustainable? Crypto Analysts Want to Know

By Jimmy He

Filecoin is a blockchain project launched in 2020 to decentralize the data storage business, providing an alternative to industry giants like Amazon (AMZN) at nearly a thousandth of the cost.

At its core, the network connects storage providers with clients looking to stow their data. By offering storage space – ranging from extra capacity on desktop computers to large racks – and then running mathematical proofs to show that clients’ data is unaltered, providers can earn the network’s native FIL token as a blockchain reward.

Recently, activity has been increasing. According to a Messari report, active Filecoin storage deals between providers and clients surged 128% from the first quarter to the second quarter of 2022.

That has crypto analysts highlighting the incentive program offering storage providers 10 times the block reward that is linked to 99.7% of that growth – Filecoin Plus (Fil+) – and wondering whether it's sustainable.

Read the full story here.

Relevant insight

• Listen 🎧: Today’s "CoinDesk Markets Daily" podcast discusses the latest market movements and DeFi’s value for artists and musicians.
• Bitcoin Loses Bullish Trendline as Fed Sees Restrictive Rates Needed for Some Time:Increasing and elevated rates are headwinds for bitcoin, one researcher said.
• Helium Developer Nova Labs Buys FreedomFi to Accelerate Push Into Mobile Service:As part of the acquisition, FreedomFi team members will join Nova Labs to lead the network's expansion.
• Crypto Custodian Copper to Connect to Solana for DeFi Access:Solana co-founder Anatoy Takovenko said the link will create new ways for institutional investors to access decentralized finance and digital assets.
• CME Group Adds to Crypto Offerings With Ether Options:The exchange will allow traders to make bets and manage risk ahead of the Ethereum Merge.
• Crypto Exchange Gemini Offering Staking Support for US Investors:The company hopes to capitalize on rising user interest ahead of Ethereum’s upcoming shift to a proof-of-stake model.
• Tether Swaps Accounting Firms, Says It Will Publish Monthly Attestation on Stablecoin Backing:BDO Italia will take over from MHA Cayman.
• US Tribal Nation Economic Zone Publishes Draft Rules for DAOs: The Catawba Digital Economic Zone proposes allowing DAOs to be organized as unincorporated non-profits or limited liability companies.
• South Korea's Money Laundering Watchdog Flags 16 Crypto Firms for Operating Without Registration: Crypto exchanges KuCoin and Poloniex are among the foreign firms accused of conducting "illegal business activities" without proper registration, and could face fines or imprisonment.
• Bitcoin Mining Rig Maker Canaan Sees 'Prolonged Headwinds' After Challenging Quarter:CEO Nangeng Zhang cited a slumping bitcoin price and COVID-19 lockdowns in China.

Other markets

Biggest Gainers

Asset Ticker Returns DACS Sector Ethereum ETH +1.7% Smart Contract Platform Cosmos ATOM +0.4% Smart Contract Platform Bitcoin BTC +0.3% Currency

Biggest Losers

Asset Ticker Returns DACS Sector Shiba Inu SHIB −7.2% Currency Gala GALA −4.8% Entertainment Dogecoin DOGE −4.7% Currency

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.