market-wrap:-bitcoin-back-above-$48k,-expect-consolidation

Market Wrap: Bitcoin Back Above $48K, Expect Consolidation

Bitcoin is back above $48,000 as buyers responded to intraday oversold signals. The world’s largest cryptocurrency is up about 9% over the past week, compared with a 7% rise in ether and a 30% rise in Cardano’s ADA. The bounce in cryptocurrencies occurred alongside gains in stocks on Wednesday.

Despite lower trading volume, analysts expect cryptocurrencies to consolidate near highs before buyers return for the next leg up. 

EToro, a multi-asset brokerage, released second-quarter earnings Wednesday, reporting $362 million in trading commissions, a 125% year-over-year increase. Yoni Assia, eToro’s co-founder and CEO, told CoinDesk that traders have been diversifying across cryptos and stocks this year.

Related: Crypto for Advisors: Why Are Digital Assets Different?

The platform’s retail customers never really dropped out of the market during the price correction a few months ago, Assia said. “The majority held through and continued to hold/add to cryptos,” he said.

Latest prices

Cryptocurrencies:

Traditional markets:

  • S&P 500: 4496.2, 0.22%

  • Gold: $1790.8, -0.67%

  • 10-year Treasury yield closed 1.347%, compared with 1.289% on Tuesday

Bearish bitcoin bets

Hedge funds and other large traders continued to pile into bearish bets on bitcoin last week. The tally of short positions has increased by 6,000 since July 20 to hit the highest in three months. But the data doesn’t necessarily indicate that the traders are betting on outright price declines.

Related: Crypto for Advisors: Your Clients May Already Own Crypto. Here’s How to Hold It

The spike in leverage funds’ short bets might have stemmed from a return of the so-called carry trade, which involves buying the cryptocurrency in the spot market against a short position in the futures market. 

That means bitcoin market makers may be short on the Chicago Mercantile Exchange (CME) and hedged on native exchanges, reports CoinDesk’s Omkar Godbole. 

Subdued trading volume

The seven-day average real BTC trading volume is still around $5 billion, less than half of what the market witnessed the last time bitcoin was at $50,000, Arcane Research analysts wrote Tuesday in a report

If trading volume continues to be relatively flat and bitcoin prices push higher, the market could become exhausted and the rally won’t be sustainable, the analysts said.

Cardano vs. ether

ADA is pulling back from an all-time high around $3 and could find lower support between $2.40-$2.60. The cryptocurrency remains in breakout mode after successfully holding the 200-day moving average in July. 

Some analysts view Cardano, Solana, Terra and others as direct competitors to Ethereum.

“These blockchains are dubbed ‘Layer 1’ as they provide two main functionalities – settling on-chain financial activity and launching decentralized applications,” digital asset manager 21Shares wrote in a newsletter Tuesday.

“We believe this rise of Layer 1 [cryptos] outside Ethereum is predominantly driven and hyped by retail investors since institutional-grade investment products on these underlying assets are only available in our product suite, except for Luna, which no issuers offer at the moment,” 21Shares wrote.

ADA also broke out relative to ETH on Aug. 17. The ADA/ETH ratio appears overbought, but will likely hold support given renewed upside momentum in ADA.

DeFi stablecoin lending rates rise

The stablecoin lending rates in the decentralized finance (DeFi) market is ticking up, according to crypto data analytics firm Skew. 

The increase could be short term but is worth watching closely, said Dan Weiskopf, co-portfolio manager of the Amplify Transformational Data Sharing ETF at Toroso Asset Management. 

“If the doubling of the yield from the 3% to 4% range continues, there could be an issue in the promised land; nothing is free and getting paid a lot for something that is stable could be a sign of something to come,” Weiskopf wrote to CoinDesk. 

”This increase is also curious after July’s lull in trading activity, so we will be watching for volatility,” Weiskopf noted. 

Altcoin roundup

  • Pyth launch to bring quant firms’ market data to Solana: Pyth Network – a key trading data pipeline set to service DeFi projects on the Solana blockchain – will go live on Thursday. Known as an “oracle” in crypto lingo, the data distributor will shortly begin pumping price quotes for crypto assets, foreign-exchange markets, futures and equities into nodes supporting Solana. There, developers can use it to build DeFi tools like lending projects. 

  • Osprey readies SOL fund: Osprey Funds has readied a private SOL fund for wealthy investors, signaling growing institutional interest in the Solana network’s booming native token. The fund, called the Osprey Solana Trust, was registered with U.S. securities regulators Tuesday. It didn’t have any sales as of press time and is open only to accredited investors, which means that retail traders are shut out for now. That could change, though. Osprey is “seeking approval” for its Solana Trust to trade on the same over-the-counter marketplace that its bitcoin trust does, documents reviewed by CoinDesk show. The trust appears to be the first private SOL investment vehicle in the U.S.

  • Budweiser buys Beer.eth domain name for 30 ETH: Budweiser USA changed its Twitter profile picture Tuesday to that of a rocket ship designed by NFT artist Tom Sachs. Crypto watchers says the beer company also purchased the Beer.eth domain name for 30 ether, or roughly $95,000. “Budweiser is taking its first steps into the NFT universe,” an Anheuser-Busch InBev spokesperson told CoinDesk via email. “We’re excited to support Tom Sachs and his Rocket Factory project and join this incredible community.” A link to the DNS (domain name system) address on NFT marketplace OpenSea shows the rocket displayed in Budweiser’s Twitter profile was bought for 8 ETH ($25,000).

  • Facebook is considering NFT support in Novi digital wallet: Facebook is “definitely thinking about” using its Novi digital wallet to support non-fungible tokens, David Marcus, the company’s head of financial services, said. Facebook is in a good position to explore supporting NFTs through its new digital wallet, though it is too early to talk about specific plans, Marcus said in an interview with Bloomberg on Tuesday.

Relevant news:

Other markets

Notable winners of 21:00 UTC (4:00 p.m. ET):

filecoin (FIL) 3.62%

polkadot (DOT) 3.08%

the graph (GRT) 1.58%

Notable losers:

dogecoin (DOGE) -1.87%

cardano (ADA) -1.77%

algorand (ALGO) -0.75%

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