Bitcoin Knocking on $12K but Traders Show Growing Lack of Confidence — Futures Friday
Altcoins in the Spotlight as Bitcoin Volatility Reaches Yearly Low — Market Watch Weekly
Last week saw Bitcoin (BTC) rising from around $9,000 on Monday, recording a 4% gain in three days, and then hitting a weekly high of $9,470 as per OKEx Spot Price. However, it ran above $9,400 for less than half a day before dropping and has since traded in a narrow range of $9,100 to $9,350, ending the week at $9,275 with a 2.31% gain.
According to BTC.com, Bitcoin's hash rate continued to rise this week, reaching an all-time high of 123.46 EH/s. With new mining rigs getting to work, Bitcoin is once again experiencing a cycle of increasing mining power. In a few hours, Bitcoin’s difficulty is expected to rise by 9.52% as a result of this hash rate surge.
Meanwhile, Bitcoin’s one-month realized volatility reached a yearly low of 30% on Sunday — that, however, does not tell us anything about the direction Bitcoin is going to move. The last time we saw such low volatility was at the end of March 2019, followed by a 30% weekly increase. Prior to that though, in November 2018, Bitcoin fell nearly -50% in two weeks after a period of low volatility.
With Bitcoin running in a tight range, this is an opportunity for altcoins to take off again. All major cryptocurrencies outperformed Bitcoin last week. Cardano's Ada (ADA) pushed up another 32.84%, gaining for the fifth week in a row. XRP and Bitcoin SV (BSV) surged 13.59% and 19.65%, respectively, while Ether (ETH) was up a relatively modest 6.5%.
The price of oracle protocol ChainLink (LINK) surpassed $8 — another record high — up 67% in the last week. It has been up over 400% if we calculate from the mid-March crash when LINK fell below $2. ChainLink’s market capitalization ranking has also successively surpassed EOS and Litecoin today.
In the DeFi sector, Akropolis (AKRO) jumped over 70% last week while Aave (LEND) and Synthetic (SNX) saw double-digit increases. The total market value of DeFi tokens is approaching $8 billion, up from last Monday’s $7.35 billion, according to DeFi Market Cap. Two months ago, the total market cap of DeFi tokens was only around $1 billion.
There has been growing talk of an “altcoin season” on Twitter, as Bitcoin's dominance has dropped from May’s high of 69% to 63.5%, as per data from TradingView. There could be two reasons why market participants' attention has returned to alts. The first is that top cryptocurrencies are on track to hit their milestones, such as Cardano's Ada, which has been finalizing its much-participated Shelley upgrade. Secondly, the wealth-creating effect of DeFi and staking-related cryptocurrencies has led to an influx of retail traders. For example, Kyber Network (KNC) ranked fourth in June, in terms of spot trading volume on OKEx, only lagging behind BTC, ETH and BCH.
BTC is still running below its 60-day moving average, which is located around $9,380. The leading digital currency briefly rose above this moving average last Wednesday, but a bearish RSI divergence ensued on the four-hour chart, after which the price dropped to $9,150.
Random movements in this tight range may continue in the short term. Bitcoin does not present a clear trading opportunity for now, which gives more chances to altcoins.
LINK has been in a very bullish momentum since last week, jumping from $4.8 to an all-time high of $8.6. While we can see a bearish divergence on the 4-hour RSI indicator, as trading volume is surging, LINK’s move to $10 appears realistic, after a bit of correction in the short term.
Ada is forming a potential double-top pattern with a neutral RSI reading on the 4-hour chart. Since the price is running in the top range with declining trading volume, Ada may face a lot of selling pressure above $0.14. On the downside, $0.126 is a critical support level, which, if lost, could result in the price collapsing and testing $0.11.
Looking ahead this week
As Bitcoin's correlation with the stock market remains high, we still need to focus on traditional assets, which appear to be led by tech stocks.
The Nasdaq surged 4% last week and closed at a record high. But we have seen increasing institutional hedging demand ahead of the new fiscal quarter, as the Put-to-Call ratio on CBOE rose to 1.64 from 1.59 over last week. Bitcoin will likely face more pressure if the stock market enters a correction phase.
Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary.