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U.S equity markets saw a change of character this week. The Nasdaq 100 (@NQ), made up of large-cap technology stocks, cratered 5% on Thursday, suffering the first multi-percent losses since late July. Bitcoin (BTC) started the week higher and finished on a sour note, mimicking the price action seen in U.S equity markets and precious metals such as silver (@SI) and gold (@GC). BTC got as high as $12,000 before ending the week around $10,600. Ethereum (ETH), the leader from a relative strength perspective, briefly shot to new 2020 highs around $490, before giving up gains and ending the week slightly higher at $406. Though ETH was little changed on a weekly closing basis, the intra-week price action was volatile.
Ethereum (ETH) has ceded little ground since breaking out above $250 in late July. Prices have been range-bound for the last four weeks, signaling that bulls with large gains are unwilling to sell, even if at much higher levels. One potential reason for the strength in ETH is the recent success of Ethereum’s decentralized (DeFi) network. Blockchair data shows that both the average and median daily transaction fees hit new all-time highs for the third consecutive month.
Recently, it seems that in each passing week, cryptocurrency markets garner more attention and move closer and closer to the mainstream. Last week, the industry saw the first SEC approved token offering in the U.S while finance behemoth Fidelity filed papers for a new Bitcoin (BTC) fund. This week, the Singapore Stock Exchange (SGX) launched the iEdge Bitcoin Index. The launch is an important step for the cryptocurrency industry globally. Currently, asset management companies in Europe, the U.S, and the Middle East make up the bulk of assets under management in crypto markets. An influx of money from institutional investors in Asia could be a long-term catalyst for cryptocurrencies.
From a price action point of view, cryptocurrency investors will be keeping a keen eye on Bitcoin (BTC) next week. Bitcoin is now retesting old resistance from February and the July breakout zone at $10,500. Two old levels of resistance combining for support can increase the odds that prices will hold. Ethereum, now well above any resistance from 2020 is digesting in a sideways fashion. Technicians need to go back to 2019 to find support. The critical level to watch is the $364 highs from June of 2019.
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