Market Wrap: Bitcoin Reverses Course, Pushes Higher, $21K Is ‘Point of Control’

Bitcoin (BTC) rebounded on Wednesday, advancing 1.7% to above $23,300, ending a streak of five consecutive negative days.

The largest cryptocurrency by market capitalization has surpassed its 50-period exponential moving average (EMA) of $23,214.50, and is within earshot of its 10-period EMA as it crossed above the 50-period EMA as well.

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Prices going above a moving average and moving average crossovers are seen as bullish signals.

BTC prices held firm despite a bit of industry turmoil, as solana (SOL) wallets were exploited in a multimillion-dollar hack. It appears that the negativity around the exploit has been contained to just SOL, as the token’s price fell 3% on Wednesday.

In traditional markets, the S&P 500 rose 1.6%, while the Dow Jones Industrial Average and tech-heavy Nasdaq Composite Index gained 1.4% and 2.6%. Traditional markets are being pushed higher by an unexpected increase in July services PMI, as well as by a strong earnings report from vaccine marker Moderna.

On the altcoin front, avalanche (AVAX) rose by 4%, and polkadot (DOT) increased by 3%.

Bitcoin pushed higher albeit on lower-than-average trading volume. Volume last exceeded its 20-period moving average on July 29. The importance of trading volume is connected to evaluating the “strength” or conviction or both behind a price move. Higher volume often indicates more confidence in what direction an asset's price is headed.

BTC appears to have entered an uptrend after it hit lows on July 13. An extension of the trendline implies a move higher to $25,000, though that shouldn’t be interpreted as a price target in isolation. As mentioned above, BTC prices have moved above both their 10- and 50-period moving averages, while the moving averages themselves appear to be poised to “cross.”

Meanwhile, the Visible Range Volume Profile tool provides insight into where volume has clustered, specific to individual price points. This tool illustrates trading activity over a period of time and across specific price levels, while highlighting “points of control.”

The point of control, which is illustrated by the red line in the chart below, represents price levels where a substantial amount of price agreement exists. That in turn is often interpreted as showing levels of support or resistance. BTC is showing the largest amount of price agreement at about $21,000, with the next high volume node at $30,000.

BTC’s relative strength index (RSI) advanced slightly to 59, and is often used as a proxy for price momentum. There is also a visible uptrend in RSI since it hit a bottom in June.

On-chain data indicates a decline in the put-call ratio for BTC below 0. The put-call ratio shows the volume of puts divided by the volume of calls traded in options contracts over the most recent 24 hours.

Because puts represent the option to sell bitcoin, and BTC calls represent the option to buy, a decline below zero implies that more calls than puts are being purchased. More calls being purchased is viewed as a bullish sign.

Despite what appears to be growing sentiment that the Federal Reserve may slow the pace of rate increases this year, San Francisco Fed President Mary Daly stated Tuesday that inflation is “nowhere near” almost done, and that she was “puzzled” by bond market activity that implies that rates will be reduced.

Chicago Fed President Charles Evans offered similar thoughts, indicating that he would be on board for a large rate hike at the Fed's meeting in September.

Evans, however, appears to hold that view only if inflation wasn't improving. He also indicated that 50 basis points would be a “reasonable assessment.”

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.