Risk Appetite Returning in Bitcoin Market While Large BTC Holders Are Growing
Unlike the euphoria in the US stock market, the digital asset market remains completely stable.
With all the money flowing into the stock market, the US dollar which stayed strong during the March sell-off has been declining steadily since mid-May. In contrast to USD, the price of oil is going up but gold is on a decline.
The madness in the stocks however, is reminding crypto enthusiasts of the 2017 bull run. According to analyst Mati Greenspan, the main perpetrator of these “ridiculous” moves is the unwavering support from the Fed which has injected trillions of dollars into the market.
“The thing about infinity is that it doesn't differentiate between good companies and bad companies. In fact, once we remove all risk, there's arguably more upside potential in an asset that has little inherent value,” wrote Greenspan in his daily newsletter.
In this week’s two day meeting of the Fed, strategists are expecting Chairman Jerome Powell to soothe markets and reveal its first forecast for the economy.
With the recent market exuberance combined with the latest job data, there is a dilemma ahead for the Fed. If the Fed announces further stimulus, it would risk making the market even crazier and if they withdraw stimulus, the risk is even greater, Greenspan said.
Bitcoin between crucial support and resistance levels
In the bitcoin market, “risk appetite is returning” with open interest on CME Bitcoin options nearly entirely in calls.
In a call option, the holder gets the right to buy an asset while in case of put option it’s the right to sell an asset.
Also, total bitcoin options open interest has surpassed $1.5bln, only one month after crossing $1bln, reported Skew.
Currently, bitcoin is trading just above $9,700 and keeping within the tight range it has been trading in since early June. According to trader Crypto Michael, the current range is a no-trade zone and it is time to be patient.
The leading digital currency is currently between crucial support and resistance levels. As per IntoTheBlock IOMAP Model, around 2.2 million dresses bought over 1.4 million bitcoin between $9,400 and $9,700. Also, about 861,000 addresses bought 560k BTC in the price range of $9,750 and $10,000.
Meanwhile, altcoins are enjoying a rally. Today it’s Maker’s day which is up 23%. Other altcoins recording substantial gains are Loopring (21.54%), Zilliqa (15.38%), and Kyber Network (13.77%).
“We have seen a major re-rating in many of the smaller altcoins (esp DeFi ones) in the past 4-5 weeks while BTC has been range bound. At some point, the valuation of these alts will start to look frothy and the capital will flow back to BTC,” said SpartanBlack of the crypto hedge fund The Spartan Group.
Interestingly, over the past five days, 43 new addresses joined the 100+ Bitcoin club, seeing an uptrend after declining at the beginning of the month.
“Over the past few months, the growing number of large BTC holders has coincided with short-term price rallies for the top coin, and vice versa: short-term whale drop-offs typically signaled an incoming price correction as well,” observed Santiment.