Bitcoin (BTC) was in a downtrend for most of the day, with prices down 1%. If prices break into negative territory by the end of Tuesday, it will be the fifth consecutive day of declines, each with below average volume (based on a 20-day moving average).
The Average Real Range (ATR) of BTC movement has also declined during this period, indicating that Bitcoin is trading quite strongly.
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A narrow trading range, along with low trading volume, can indicate a lack of conviction, be it bullish or bearish. At the very least they may indicate that investors are taking a wait-and-see approach.
In traditional markets, the Dow Jones Industrial Average lost 0.9% on the day, while the Nasdaq Composite and S&P 500 indexes lost 0.5% and 0.7%, respectively.
Bitcoin-heavy company MicroStrategy (MSTR), which reports earnings after the US stock markets closed on Tuesday, was up 3% during intraday trading.
Ether (ETH) rose 1.4% on the day, reversing a 3% drop from the day before, and ending four consecutive days of declines.
Altcoins were also in decline on Tuesday, with Polkadot’s DOT token down 3%, while Polygon’s MATIC and Chainlink’s LINK fell 1.62% and 3.25%, respectively.
Bitcoin (BTC): $22,924 +0.1%
Ether (ETH): $1,635 +1.0%
S&P 500 daily close: 4,091.32 −0.7%
Gold: $1,779 per troy ounce +0.6%
Ten-Year Treasury Yield Closes Daily: 2.74% +0.1
Prices of bitcoin, ether and gold are taken at approximately 4 p.m. 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.
drop in prices in small quantities; Bond market still a sign of general market concern
Bitcoin price fell again on Tuesday as the market relented after last week’s rally.
On a technical basis, bitcoin broke above its 10-day exponential moving average (EMA), indicating short-term weakness. The 10-day EMA is a moving average of the recent 10 days of bitcoin price. A price movement below the EMA of an asset can be interpreted as a bearish signal. One thing to note, however, is that there has been a downside break from the average volume. A small amount of movement in either direction is often interpreted as a lack of conviction in the direction of the move.
Prices now sit between the 10- and 20-day EMAs, which may indicate a buying window for traders with a bullish outlook. BTC price is down 28% from the 200-period EMA and less than 1% below the 50-days EMA of $23,211. For context, BTC last closed above its 50-day EMA in April.
The Relative Strength Indicator (RSI) has retreated from the level of 69 on July 19 to the current level of 56.22. The RSI indicator is often used as an indicator of price momentum, and measures both the speed and magnitude of price movements. Levels above 70 indicate overbought conditions, while levels below 30 indicate oversold conditions. A level (current position) close to 50 is interpreted as “neutral”.
This often goes hand-in-hand with “range-bound” environments, where prices are relatively flat and the range of price movements is narrow.
BTC daily chart with a combination of RSI and Average True Range Indicator (Trading View)
Fixed income markets are showing signs of overall concern
As noted in Monday’s edition of “First Mover,” the yield between 10-year and two-year U.S. Treasury notes is at its most inverted level in more than 20 years. The significance of the inversion is that historically within the US, yield curve inversion has often occurred 12–18 months before an economic downturn.
One counterargument is that the flattening of the curve is a possible precursor for the US Federal Reserve withdrawing from its current tightening schedule, while focusing on more accommodative measures (i.e., lowering interest rates).
Another item of note is the potential inverse of 10-year Treasury bonds and three-month Treasuries. As shown below, the spread between 10-year and three-month Treasuries has declined sharply since May. While not currently reversal, the current spread of 0.04% is also at a 20-year low. The significance of this is that the markets are essentially valuing the risk of capital lending for three months, as they exceed the risk of lending capital for 10 years.
Current Spread Treasury Yield Between 10 Years and 3 Months (Federal Reserve Bank of St. Louis)
Bitcoin supply is gradually increasing in profit
While the 10-year and two-year spread pertains to all risk assets, the supply of BTC percentage in profit is tied only to the cryptocurrency. Given the recent increase in the price of BTC, it should come as no surprise that the percentage supply in profit indicator for BTC has increased even more. It should also be mentioned to what extent the metric coincides with the top and bottom of the BTC market.
Historically, readings above 95% have indicated a market upside, while readings below 50% have indicated a downside. As it stands, the BTC percentage supply in gains is 61%, up from 50.3% on July 18th. BTC price is up 22% over the same time frame.
BTC Percentage of Supply is currently in profit (Glassnode)
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Sector classifications are provided through the Digital Asset Classification Standard (DACS), developed by CoinDesk Index to provide a reliable, comprehensive and standardized classification system for digital assets. CoinDesk is ranking the largest digital assets by volume on 20 trusted exchanges.