Looking back on last Friday’s trading in traditional markets, one can see a clear risk-on session.
Equities rose and closed at record highs, the dollar fell, yields fell, but gold steadied. With August closing, investors will probably now look at year-end sentiment, as there are only four more months to go. The S&P is up 20%+ already, but it’s worth noting that markets are absorbing a significant amount of stimulus.
On the crypto side, while BTC might be up 70% since January 1, investors are probably still looking for much higher returns. On the session, prices dropped since Sunday to just below the 50K mark. Are those whales teasing us, or is this a fundamental inability to push through and back to higher grounds?
Looking at exchange data, the support and bullishness are there. A chart by CryptoQuant shows funding rates and open interests rising simultaneously. Now, when those two are extended, it can be seen as a bearish sign, but it feels positive at these levels and in that breadth.
Another CryptoQuant chart shows the stablecoin reserves, and those are just powering higher. This is interesting, especially as prices are higher now than, say, a month ago. It suggests a ramping up of capital, ready to be deployed to buy more cryptocurrencies, which is undeniably bullish.
Looking at other coins, the BTC Dominance index seems to be stabilizing at 43. This is good and bad. It’s not a bad level to be at for alts holders, but the stabilizing suggests we’ve been unable to go lower and might not for a while.
Currently, alts are following BTC down with a few notable exceptions: STX and SOL up 4%, ADA and XTZ up 1%, and NANO just staying in the green.
Looking at recent news and probably the only narrative driving prices in the short term, mainly for BTC, is the comment by the IMG that: “Making them equivalent to a national currency is an inadvisable shortcut.” The Bank of China then piled on, saying that BTC has no value.
I’m guessing a good chunk of us disagree.
It looks like crypto isn’t correlated to traditional markets, at least not during this past session.
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