- Bitcoin price has failed to capitalize on the bullish hammer candlestick plotted last week.
- Ethereum price holds the 2020 rising trend line, but price traction is fading as the week progresses.
- XRP price strikes heavy resistance at the weekly Anchored VWAP, putting $0.650 support back into play.
Resistance levels under the microscope this week as the cryptocurrency majors stumbled at established barriers. Bitcoin price retracted from crucial $35,500 level, Ethereum price stalled at the 50% Fibonacci retracement level at $2,237 and XRP price strength was paralyzed by the 200-day simple moving average (SMA) at $0.733. The constructive technical developments of last week have not released the momentum to confidently bust through higher resistance levels, putting attempts to disentangle from the recent churn on hold.
Bitcoin price fails to assemble a full band, loses bullish rhythm
Last week’s rebound from the dominant $30,000 price level was the third reminder over the previous six weeks of how vital the level is to Bitcoin’s outlook. The quickness of the rebound and solid weekly close communicated the presence and interest of prominent investors using the risk level to continue accumulating positions. Of course, the rebound involved retail investors, but only large investors can manifest significant outcomes like last week’s bullish hammer pattern.
The bullish close to last week generated a few pivotal moments, including the weekly hammer candlestick, a bullish momentum divergence on the daily Relative Strength Index (RSI), and a complete Elliot five wave down pattern. Adding to the credibility for the week is the Mayer multiple, a ratio of Bitcoin price to its 200-day SMA. It indicates that BTC is cheap relative to its long-term trend.
For sure, the weekly hammer candlestick pattern last week was an ideal conclusion for the volatile week, placing Bitcoin price above the strategically important 50-week SMA at $30,452. The hammer was triggered earlier this week with a trade and daily close above the hammer high of $35,741 on June 29. The bullish price action suggested a building momentum and pointed BTC towards the Anchored VWAP at $37,750 and the 50-day SMA at $38,220.
However, Bitcoin price has reversed the momentum over the last two days and knocked BTC below the hammer high and the noteworthy $35,500 price level, thereby putting bulls on the defensive once again and the flagship cryptocurrency in line for another test of $30,000.
At this point, Bitcoin price needs a daily close above the intersection of the Anchored VWAP with the 50-day SMA to reestablish a bullish trajectory for BTC.
BTC/USD daily chart
A further divergence from the positive outlook is that Bitcoin price did trigger the neckline of a head-and-shoulders pattern on June 22. The pattern remains active until BTC trades above the right shoulder high of $41,332. Moreover, the digital asset did confirm a bearish Death Cross pattern on June 19 when the 50-day SMA crossed below the 200-day SMA.
As the probabilities swing from one direction to another, the burden of proof still rests on the bulls moving forward.
Ethereum price trend outperforms other majors, but resistance levels still enforcing ETH
The positive response of Ethereum price to the outstanding support framed by the 200-day SMA at $1,878, the 2020 rising trend line at $1,793, the 61.8% retracement of the March 2020-May 2021 advance at $1,730 and the May 23 low of $1,728 created a hint of optimism for enthusiastic ETH investors and short term speculators on June 22.
On June 28, Ethereum price closed above the February high of $2,041, enlisting the first positive step towards higher prices. The positive step was followed by another two strong days, including a daily close above the relevant 50% retracement level of the March 2020-May 2021 advance at $2,237 on June 30. At the close, it appeared that ETH had attracted the momentum to pursue a test of the 50-day SMA at $2,567 and eventually, the apex of the symmetrical triangle at $2,730 and the daily Ichimoku Cloud.
Yesterday’s 7% decline relinquished the 50% retracement level and pushed Ethereum price below the critical February high of $2,041 in early trading today. ETH is still up 6% for the week, but the setback complicates the near-term price structure and the resulting forecast direction.
ETH/USD daily chart
If Ethereum price closes below the 2020 rising trend line at $1,831 and the 61.8% retracement level of the March 2020-May 2021 advance at $1,730, ETH may explore the support established by the 2018 high at $1,419, yielding a 33% decline from the current price.
Similar to Bitcoin price, ETH bull’s extraordinary claims still require extraordinary evidence to materialize in a cryptocurrency complex wrapped in indecision.
XRP price caught between a rock and a hard place
To review, at the June 22 low XRP price had declined 70% and a remarkable 50% from the June 1 high, liquidating the May 23 low of $0.652, a level fortified by weekly highs in late 2020 and February 2021. Nonetheless, Ripple realized three important technical milestones that provoked a 45% rebound into June 29: a test of the 78.6% retracement of the December 2020-April 2021 advance at $0.555, an undercut of the 50-week SMA at $0.540 and registered an oversold reading on the daily RSI for the first time since late December 2020.
The 45% rebound was noteworthy, but it lacked the impulsiveness that characterizes meaningful bottoms and the momentum to enable XRP price to conquer the massive resistance around $0.740-$0.760. The result was a bear flag formation triggering yesterday, quickly putting the support level of $0.650 in play. Ripple is trying to hold the level today.
The Ripple bear flag formation’s measured move is approximately 36%, suggesting XRP price will defeat the 78.6% retracement level of $0.555 and the June 22 low of $0.512 before bottoming around the measured move target $0.437.
It is important to note that XRP price has no support of significance below the measure move target, amplifying the pressure on bullish Ripple speculators.
XRP/USD daily chart
The bearish Ripple narrative is persuasive at this point, and only a daily close above $0.760, the neckline of a multi-year inverse head-and-shoulders pattern, would alter the outlook.
One possible scenario is for XRP price to fall into a trading range between $0.555 and $0.760, thereby creating ideal trading conditions for swing traders due to the hulking support and resistance levels and the resulting 30-40% profit opportunities that lie between. However, for long-term investors, Ripple is dead money under $0.760
Here, FXStreet’s analysts evaluate where Ripple could be heading next with a brief technical and on-chain analysis on XRP price.
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.