Daily News | Macro Uncertainty, Mixed Bitcoin Whales; Fed Speculation, Inflation Concerns Impact Global Market
Crypto Daily Digest: Central Bank Uncertainty, Bitcoin Whales, AI Integration, and BlackRock’s Bitcoin ETF Filing
Uncertainty looms over the global economy as the recently released Federal Open Market Committee (FOMC) minutes reveal cautious predictions of a possible economic recession within the next six months, followed by a gradual recovery. This uncertainty has the potential to impact the crypto markets, which are already witnessing interesting trends among Bitcoin whales.
Bitcoin whales, referring to investors holding over 1,000 BTC, have increased in number, signaling continued interest in the cryptocurrency. However, their distribution of holdings has undergone a significant shift. While some whales have grown in size, indicating confidence in Bitcoin’s future, others have reduced their BTC holdings, reflecting a more cautious outlook.
The varying levels of confidence and risk perception among whales could provide valuable insights into the evolving macroeconomic environment - Data per Glassnode
In the midst of a bullish market, Bitcoin mining stocks have outperformed Bitcoin itself by a substantial margin. The top nine public Bitcoin mining firms have recorded an average year-to-date stock price gain of 257.14%, nearly three times higher than Bitcoin’s own gain during the same period. This leverage effect suggests that mining stocks tend to outperform Bitcoin during market upswings, but face greater downside risks during downturns.
The performance of mining stocks remains closely tied to Bitcoin’s price movement. While mining companies are expanding their operations and improving mining conditions, on-chain data indicates that miners have been selling off a significant portion of their holdings, potentially signaling an impending downturn. Furthermore, the level of accumulation in mining stocks has not yet reached the levels observed in previous bull markets, suggesting a potential slowdown in their upward trajectory in the medium term. Some mining stocks, such as Marathon Digital Holdings, Riot Blockchain, and Cipher Mining, are facing challenges due to high short interest and debt concerns.
While miner holdings are still near a two-year low, they’ve sent an ATH of revenue to exchanges, likely intended for the purpose of selling - Data per Glassnode
In a significant development, Lightning Labs, a Lightning infrastructure firm, has introduced tools that enable artificial intelligence (AI) applications to hold, send, and receive Bitcoin (BTC) through the Lightning Network. Previously, AI platforms relied on outdated payment methods like credit cards, limiting their use cases and accessibility. By integrating Lightning into popular AI software libraries, the deployment of AI software becomes more cost-effective, expanding the possibilities for AI-driven applications.
This integration opens up new avenues for AI technology. For example, AI software can now charge for application programming interface (API) access, enabling transactions based on satisfactory responses. This advancement not only enhances the capabilities of AI applications but also offers potential revenue opportunities for developers.
Among hopeful news, BlackRock Inc., the world’s largest asset manager, has filed for a Bitcoin exchange-traded fund (ETF), adding to the growing Optimism surrounding the potential approval of a Bitcoin ETF after years of rejections. BlackRock boasts a near-perfect track record with ETF filings, having been rejected only once out of approximately 550 applications. This impressive success rate has raised hopes that the asset manager’s Bitcoin ETF filing may receive regulatory approval.
The filing by BlackRock has already stimulated a rally in cryptocurrency prices and prompted other issuers to follow suit. While approval is not guaranteed, the possibility of a Bitcoin ETF has generated optimism among investors. Such approval could broaden the investor base and potentially lead to a significant price rally in the cryptocurrency market.
In summary, central bankers’ cautious predictions, along with the shifting behavior of Bitcoin whales, highlight the importance of monitoring the evolving macroeconomic environment. While the outcomes remain uncertain, these developments signify the growing significance of cryptocurrencies and their expanding role in various aspects of the global financial eco.
The current trajectory of BTC on the 4-hour timeframe is in line with our previous projection, which reinforces the observed accumulation structure. We now expect BTC to potentially reach the 4H 200EMA (29300-29100) as its lowest point, but more likely within the range of 29680-29475, before experiencing another upward surge towards the Creek zone (30545-30720). This will likely be followed by a period of uncertain duration where BTC remains stagnant before another decline towards the 200EMA. However, it is important to consider the possibility that instead of an accumulation structure, there might be a prolonged distribution structure on the 4-hour timeframe, which we may have misinterpreted. If this is the case, there is a chance that BTC could experience a sharp drop towards the daily 61.8% Fibonacci level of 28000 as it breaches the 200EMA.
Overview:
- Closest daily support zone: 30025 - 29475
- Closest daily resistance zone: 30690 - 31015
- Key Level: 28420 (Weekly High Between Dec. 21-28, 2020)
Daily Resistance zones
- 30690 - 31015
- 31530 - 32255
- 33100 - 33600
Daily Support zones
- 30025 - 29475
- 29095 - 28420
- 27970 - 27265
Learn more: Market News | Daily Main Token Trends Overview
Macro: Fed Speculation and Inflation Concerns Drive Stock Market Downturn
Global markets faced a downturn as US stocks declined for the second consecutive day, triggered by robust private hiring data, leading to a rise in Treasury yields. The ADP Research Institute’s report revealed that US companies added a significant number of jobs in June, suggesting a strong labor market. Consequently, market participants speculated on the Federal Reserve’s next moves, with swap contracts indicating a potential interest rate hike.
Data per ADP Research
This positive job market raised concerns about inflation and prompted calls for further rate hikes. Dallas Fed President Lorie Logan emphasized the need for additional rate increases, citing persistent inflationary pressures. These developments have contributed to ongoing uncertainties in the market, challenging hopes of a soft landing for the global economy.
2-Year treasury yield approaching Fed Funds target rate - Data per Bloomberg
Looking ahead, the focus turns to the upcoming US nonfarm payrolls and unemployment reports, which are anticipated to provide insights into the Federal Reserve’s future actions. Economists surveyed by Bloomberg expect figures to moderate, but the outcome will play a crucial role in determining the central bank’s policy path.
Economic calendar in UTC timezone - Data per Tradingeconomics
In the Asian markets, futures contracts indicate an expected decline, following the trend set by Wall Street. Investors in Chinese assets will be closely monitoring the meeting between US Treasury Secretary Janet Yellen and Premier Li Qiang in Beijing, hoping for signs of progress in the strained trade relations between the two economic powerhouses.
Amidst the uncertainties, investment strategists recommend concentrating on quality-based factors in equity allocation. Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, suggests focusing on growth and value factors within equity portfolios.
Furthermore, the strengthening of the US dollar has been observed, while gold prices have declined.
