By Frances Yue
Bitcoin buyers are in profit-taking mode as the cryptocurrency tests the $40,000 resistance level. Sentiment has significantly improved over the past week, although some analysts think it’s time for a pause before another leg higher.
“BTC easily broke through $35K, but I think it will probably have a harder time going through $40K this time,” Justin Chuh, a senior trader at Wave Financial, wrote in an email to CoinDesk.
“Miners & sellers are coming in to cash out once more and buyers unable to push it higher after absorbing that hit,” Chuh wrote.
Sentiment can easily shift from bullish to bearish as bitcoin remains in a consolidation phase with strong overhead resistance.
“BTC was already rejected again by its 200-day moving average, just like in early June, but it should try again after a breather, and hopefully not crawling lower than $35K,” Chuh wrote.
“If (and when) bitcoin does cross the 200-day, this will signal confidence in the market and demonstrate to many players that the bulls have regained control of the market,” Alexandra Clark, a trader at U.K.-based digital-asset broker GlobalBlock, wrote in an email to CoinDesk.
For now, trading activity is sharply higher compared with June. Short-dated call options were actively traded Wednesday morning as bitcoin approached $40,000, according to data from Skew.
Grayscale Bitcoin Trust (GBTC) shares have narrowed their discount relative to the underlying cryptocurrency held in the fund – possibly a sign that buyers are using the vehicle to bet on the recent recovery rally in digital-asset markets.
The GBTC shares traded at a discount of 6.6% to net asset value (NAV) on Tuesday, the smallest margin since June 22, based on data provided by the crypto derivatives research firm Skew. The discount had widened to 15% in mid-June.
Some investors may have snapped up GBTC shares in hopes that the discount will evaporate with a bull revival in bitcoin. In that scenario, the buyers would reap any price gains on bitcoin while pocketing extra profit from a narrowing of the discount. (Grayscale Investments, which manages the trust, is a unit of Digital Currency Group, which also owns CoinDesk.)
The ether market grew three times faster than the bitcoin market did in the first six months of the year as large investors diversified into the native token of Ethereum’s blockchain, according to crypto exchange Coinbase’s half-yearly review published on Monday.
Crypto investors have just endured one of the toughest quarters on record. Despite a recent rebound, fears of overregulation, a clampdown on mining in China and environmental concerns have all contributed to negative sentiment in the sector. Most CoinDesk 20 assets, which constitute about 99% of the crypto market by verifiable volume, finished the second quarter with negative returns.
The CoinDesk Bitcoin Price Index (XBX) fell 40%, its third-worst quarter ever. Conversely, the CoinDesk Ether Price Index (ETX) ended the quarter up 18.7%. While bitcoin has recovered some of its losses, the level of optimism is far from what it was at the start of the second quarter.
Some crypto CEOs, however, still expect a six-figure bitcoin price, saying that the medium-term outlook for the crypto market is positive, even if sentiment is not, CoinDesk’s Will Canny reports.
Stablecoins have existed for roughly seven years, but talk about them has never been as heated as in recent weeks, not only within the crypto community but also among regulators and traditional market investors.
Much has been going on the world of stablecoins recently, and some of it can be overwhelming. Here are the three big things happening now:
Most digital assets on CoinDesk 20 ended up higher on Wednesday.
Notable winners of 21:00 UTC (4:00 p.m. ET):
xrp (XRP) +12.51%
eos (EOS) +6.43%
uniswap (UNI) +4.77%
the graph (GRT) -0.31%
yearn Finance (YFI) -0.23%
USD Coin (USDC) -0.06%