- Bitcoin price triggers a Death Cross signal as 50-day SMA falls below the 200-day SMA.
- Ethereum price tests the 200-day SMA for the first time since April 22, 2020.
- XRP price drives below several key support levels in a rush to test the May 23 low of $0.652.
Bitcoin price is currently trading with the largest daily loss since the May 19 drop of 14.29%, touching the symmetrical triangle’s lower trend line. Ethereum price flashing double-digit decline for the first time since May 29. XRP price exposes the worst trading day since the correction low on May 23.
Bitcoin price not confirming BTC as the ultimate store of value
Up until June 15, Bitcoin price manufactured one of the better rallies in the first half of June, lifting the flagship cryptocurrency 33% and within 260 points of a substantial range of resistance. The range is constructed by the 50-day SMA at $41,946, the 38.2% Fibonacci retracement of the April-May correction at $43,331, the 200-day SMA at $43,120 and the 38.2% retracement of the 2020-2021 advance at $41,581.
For some background, in March 2020, a death cross signal was a miss as it occurred after BTC was in a new uptrend. In October 2019, a death cross signal was followed by a 30% decline that endured until December 2019. And a death cross signal in March 2018 was immediately followed by a big bounce before turning lower gain and printing the eventual low in December 2018, showing a 50% loss from the day of the signal.
With the unsuccessful test of the omnipresent resistance around $41,581-$43,331, the resulting sharp reversal and the death cross, it is imperative to consider a larger head-and-shoulders pattern near that is completion.
A daily close below $30,000 would trigger the head-and-shoulders pattern and expose Bitcoin price to a collapse to the 200-week SMA at $13,388, based on the measured move of 54% for the topping pattern.
BTC/USD weekly chart
Bitcoin price is enveloped by a key area of support between $30,000 and $32,000, possibly preventing further BTC deterioration. It could be a superior risk level to target new long positions if investors are tilted bullish.
A daily close above $35,741 would be the first alert that a BTC bounce is materializing, but it isn’t easy to lean heavily on the long side until a daily close above $43,331.
Bitcoin price is at a short-term pivotal point in the continuing corrective process that began in April. The more prominent technical pattern forecasts a bold decline that would leave the cryptocurrency market in shock and awe. Still, the presence of contagious support around the psychologically important $30,000 may prove enough to overcome the downward pressures.
Ethereum price has crypto traders searching for answers
From the May 23 low, Ethereum price sketched an uneventful path, with a progressively narrow range in the form of a symmetrical triangle. However, the June 16 break of the symmetrical triangle’s lower trend line forced ETH investors to consider a test of the May 23 low of $1,728 and potentially a much more significant sell-off.
The measured move of the symmetrical triangle is approximately 43% from the break lower on June 16, taking Ethereum price to $1,357.
Today, Ethereum price has struck support at the 200-day SMA, the first test of the strategically important moving average since April 22, 2020. ETH must hold the tight range between the May 23 low of $1,728 and the 200-day SMA at $1,872 on a daily closing basis. A failure to hold leaves the smart contracts giant vulnerable to a test of the 2018 high at $1,419, equaling a 28% decline from the current price. If selling pressure fails to subside at 2018 high, then the probabilities rise that the altcoin will sweep the measured move target of $1,357.
ETH/USD daily chart
A bullish reversal in Ethereum price and a daily close above the tactically important price level of $2,041 would be a starting point to evaluate swing trading opportunities from the long side. A bounce above $2,280 would be further confirmation of a new trading opportunity.
Ethereum price dislocation is not unlike most altcoins. ETH failed to show any impulsiveness or accumulation for almost a month. Despite being down 40-50% at different times, market operators were not motivated to enter the market with any commitment, leaving the digital asset locked in a tightening technical noose.
XRP price surprises investors with a meaningful drop below $0.76
XRP price has displayed a similar passiveness and lack of direction as many altcoins. Ripple was not inspired by the 30% rally in Bitcoin price, instead favoring to be range-bound between two imposing levels, the neckline of an inverse head-and-shoulders pattern at $0.76 and the psychologically important $1.00.
The range had not been accompanied by any signs of accumulation or distribution, raising the probability that XRP price would remain locked in the governing price range for the foreseeable future.
Within three days, XRP price is trading below $0.76, the anchored volume-weighted average price (anchored VWAP) of $0.742 and the 200-day SMA at $0.728. Ripple is on pace to close today, with the largest daily decline since May 21 and the lowest daily close since April 4.
It is essential to mention that XRP price formed a bear flag from May 23 until June 5. The pattern has a 55% measured move, staking a target price of $0.415. Based on the current price, it would be a 37% loss for faithful Ripple investors.
XRP/USD daily chart
Only a daily close above $0.76 would ignite a rethink of the cautious to negative view for XRP price.
Ripple investors need the May 23 low of $0.652 to hold on a daily closing basis, or XRP price could be destined to continue the notable selling. Whether it reaches the measured move target is difficult to discern at this moment, but it should be considered in any trading plan moving forward.
Bitcoin Futures Heating Up, Why BTC Traders Should Expect Volatility
Bitcoin has been moving sideways during the day as it was rejected north of $63,000. As of press time, BTC’s price trades at $62,698 with a 1% profit in the weekly chart.
However, Bitcoin could see some action in the short term. The benchmark crypto has been rallying on the back of an increase in institutional demand and the launch of the first BTC-linked ETFs in the U.S.
As a consequence, Bitcoin went from the lows at $40,000 to a new all-time high in less than a week. This caused a FOMO effect most notoriously visible in the derivatives sector.
As CryptoQuant showed, the amount of leverage positions in this sector has been on the rise since the end of September. Moving to a year high with BTC’s price, the leverage ratio points to an excess which could be reflected on the price action.
The CEO of CryptoQuant Ki Young Ju believes this excess in leverage is caused by new players, as it is has happened historically when Bitcoin enters price discovery. Usually, the market reacts with a sudden move to the opposite direction of the majority of the overleverage position.
Whales and other major players try to shake out these new traders and take advantage of the liquidity in the market to make their own moves. In response to the possibility of the current high leverage in Bitcoin futures been driven by Chicago Mercantile Exchange (CME) futures Open Interest, Young Ju clarified:
This data doesn’t take into account CME futures. I think CME users are new players joining this industry, which indicates the market is over-leveraged by *existing* investors who are using crypto exchanges. Folks who use CME might not have over-leveraged positions.
New BTC ETFs, Same Bitcoin Price Action
The recently launched Bitcoin ETF are backed by CME futures. Therefore, some expects believe the platform could gain more relevance in the future and have a bigger impact in BTC’s price.
In case of volatility, Bitcoin could find critical support at $60,000, as $840 million in futures contracts were purchased when BTC’s price was hitting this mark, Young Ju said.
As noted by research firm Glassnode, the OI for the CME futures has increased by over 265% in just a month. This points towards a moment of euphoria which has favored the bears over the past months
However, the general sentiment around Bitcoin remains positive as Glassnode reported. This demonstrated by the amount of long-term investors that have stopped taking profits during BTC’s most recent price rally.
Bitcoin Funding Rates Touch Same Level As Early September, More Correction To Come?
Data shows Bitcoin funding rates right now are at the same level as they were in early September. This means the coin may see another flush out similar to how it happened back then.
Bitcoin Funding Rates Float Around Similar Levels To Early September
As per this week’s on-chain report from Glassnode, the BTC futures perpetual funding rate of all exchanges is currently at the level similar to what it was back in early September before the crash.
The “funding rates” is an indicator that shows the premium that traders have to pay each other while holding on to their positions in the perpetual swap futures markets.
When the metric has negative values, it means that short traders are paying longs, and that many traders are bearish on Bitcoin right now.
Opposite to that, positive funding rates imply that the overall market sentiment is leaning towards bullish and longs are currently paying shorts to keep their positions.
Now, here is a chart that highlights the trend in the value of the indicator over the last six months:
Looks like the metric is currently showing highly positive values | Source: Glassnode's The Week On-Chain, Week 43
As the above graph shows, when Bitcoin made its new all-time high (ATH) some days ago, the indicator reached positive local highs.
This means traders started opening many leveraged long positions so that they don’t miss out on the wave of BTC making new ATHs.
However, the price had a correction, which has often been the case during periods of high leverage, and a lot of the excess leverage was flushed out.
Nonetheless, the funding rates are still at similarly high levels right now as in early September. What followed then was the El Salvador crash that took the rates to negative values.
It’s possible another correction can take place now in order to flush out more of the currently high leverage in the market. Though it’s not a certainty that it will be how it plays out.
At the time of writing, Bitcoin’s price floats around $62.5k, down 0.4% in the last seven days. Over the past month, the crypto has gained 44% in value.
The below chart shows the trend in the price of the crypto over the last five days.
BTC's price seems to be recovering somewhat from the dip | Source: BTCUSD on TradingView
Over the last few days, Bitcoin has shown some effort to bounce back from the correction, but in the last couple of days, the crypto has only moved rather sideways. If the futures funding rates are anything to go by, the market may be heading towards another correction soon that will wipe out the excess leverage.
South Korean pension fund to invest in Bitcoin ETF: Report
South Korea’s public pension fund, the Korean Teachers’ Credit Union (KTCU), is reportedly looking to gain exposure to Bitcoin (BTC) via a crypto exchange-traded fund (ETF).
KTCU, one of the largest institutional investors in South Korea, is considering investing in a pure Bitcoin ETF or Bitcoin-linked ETFs in the first half of 2022, local news agency The Korea Economic Daily reported Monday.
According to the report, KTCU is considering investing in several Bitcoin ETF products, including those by South Korean asset management firm Mirae Asset Global Investments. The company launched two ETFs tracking the value of Bitcoin futures via its Canadian subsidiary, Horizons ETFs, in April 2021.
“As there are some well-made cryptocurrency-linked ETF products by asset managers such as Korea’s Mirae Asset Global Investments, we plan to invest in the ETF products after consultation with domestic asset managers,” an executive at KTCU reportedly said.
The official also mentioned potential investment in a Bitcoin ETF by Mirae Asset’s subsidiary, Global X ETFs, which filed for a Bitcoin ETF with the United States Securities and Exchange Commission in July.
According to the report, KTCU is the second-largest institutional investor in South Korea, with $40.2 billion in assets under management. The pension fund has allocated 40% of its investments in alternative assets, 10% domestic and 9% international stocks. KTCU has yet to determine the size and other details of its potential Bitcoin ETF investment.
The news comes amid global pension funds getting increasingly interested in gaining exposure to cryptocurrencies like Bitcoin and major companies in the industry. Last week, the Houston Firefighters’ Relief and Retirement Fund reportedly purchased $25 million in Bitcoin and Ether (ETH). Canada’s Ontario Teachers’ Pension Plan Board participated in a $420-million funding round for major crypto exchange FTX, the firm announced on Thursday.