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Market Wrap: Bitcoin Holds Over $19K, Continues Wild Ride

Price Action

Bitcoin pushed higher on Wednesday, reversing course after a roller coaster day of trading on Thursday.

  • Bitcoin’s (BTC) rose 4.5% on Thursday, following a 2% decline on Wednesday. The relatively mild 2% Wednesday loss obscures a wild ride as bitcoin traded in a $1,600 range (8% of the current price) over approximately six hours. As markets digested the totality of Tuesday’s interest rate increase, initial optimism related to the hike only being 75 basis points yielded to the reality of the Federal Reserve’s increasingly hawkish long-term outlook.

  • Ether (ETH) rose 6.9%, trading in concert with bitcoin and surpassing the $1,300 mark. Despite the differences between the two assets, ether is still highly correlated to bitcoin. Following the increase in interest rates, ETH prices ranged from a high of $1,407 to a low of 1,218, a $189 swing that equates to 14% of current ETH prices.

The CoinDesk Market Index (CMI), a broad-based market index that measures performance across a basket of cryptocurrencies, rose 3%.

Economic Calendar: The U.K.’s central bank took the interest rate stage Thursday, raising its key interest rate by 50 basis points. This marks its seventh consecutive rate hike and pushed U.K. borrowing costs to a 14-year high.

Countries worldwide are in a phase of aggressive monetary tightening policy; the central banks of Canada, Switzerland and the eurozone have recently taken similar actions.

The broader concern is the extent to which restrictive monetary policy suppresses economic output, which is likely to have a negative impact on the prices of risk assets like bitcoin and other cryptocurrencies.

U.S. Equities: Traditional equities declined, with the Dow Jones Industrial Average (DJIA), tech-heavy Nasdaq composite and S&P 500 down 0.4%, 1.4% and 0.8%, respectively.

Commodities: WTI crude oil rose 0.8% while natural gas fell 7%. European Brent crude increased 0.8%, while gasoline (RBOB) rose 1.5%. In metals, traditional safe haven gold rose 0.4%, while copper futures increased 0.09%.

The Dollar Index (DXY) was relatively flat, declining 0.04%.

Latest Prices

Bitcoin (BTC): $19,292 +1.8%

Ether (ETH): $1,333 +1.4%

CoinDesk Market Index (CMI): $958 +1.3%

S&P 500 daily close: 3,757.99 −0.8%

Gold: $1,680 per troy ounce +0.9%

Ten-year Treasury yield daily close: 3.71% +0.2

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Technical Take

Bitcoin indicators don’t paint a rosy picture yet

Bitcoin/U.S. dollar daily chart along with RSI metric (Glenn Williams Jr./TradingView)
Bitcoin/U.S. dollar daily chart along with RSI metric (Glenn Williams Jr./TradingView)

Technical indicators aren’t giving those investors long bitcoin a lot to be excited about.

Bitcoin’s 10-day exponential moving average (EMA) crossed below its 20-day EMA. Measuring the RSI (Relative Strength Index) between the negative candle on Sept. 13 to the negative candle on Sept. 21 implies a bearish confirmation, highlighted by increased volume into the 18% price decline.

“Candle” refers to the representation of an asset’s open, high, low and closing price on a given day. The RSI is a technical indicator that measures price momentum. An increase in negative trading volume following a greater than 10% decrease in price implies that bearish sentiment of an asset remains.

In a bearish confirmation, both price and RSI slope downward in tandem. Should the RSI slope begin to flatten as prices decline, that is an indication that the downturn is weakening.

There are early signs this is occurring, as Thursday’s RSI is up slightly. Its overall value of 40, however, implies that BTC is fairly priced at the moment.

On-chain metrics show that potential room to the downside still exists. The percentage of unique BTC averages in profit has fallen to 52.05%, per blockchain analytics firm Glassnode.

The metric reached a 2022 peak of 82% in March, when BTC was trading near $48,000. The lowest the metric has reached in recent history was 41% in March 2020, when BTC was trading at $5,000. Still, at the current 52% level, it's beginning to approach the sub-50% range, where BTC would be considered oversold.

The supply of BTC held by addresses with a balance between 1,000 and 10,000 coins has dropped 8% since this February, and 12% since its peak in February 2021. Those coins are likely being absorbed by smaller investors as supplies for addresses holding less than 1,000 BTC have increased over the identical time period.

On a more promising, on-chain note, “Whale Net Volume” on exchanges has turned negative, signaling that addresses that hold 1,000 or more coins are moving coins off centralized exchanges. The significance of this trend is that large deposits onto exchanges often signal that investors are looking to sell bitcoin.

Altcoin Roundup

  • As XRP Rallies, Some Traders Buy Year-End Bullish Bets in the Options Market: Investors are snapping up bullish bets in anticipation of a resolution of Ripple's legal tussle with the U.S. Securities and Commission. Read more here.

  • Helium Ditches Own Blockchain in Favor of Solana After Community Vote: Voter turnout showed overwhelming support for moving Helium’s native network to Solana, with 80% of voters in favor in early Asian hours on Thursday. The migration will see HNT, MOBILE and IOT issued on the Solana network, which will continue to be the tokens in the Helium ecosystem. Read more here.

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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 Market Index (CMI) is a broad-based index designed to measure the market capitalization weighted performance of the digital asset market subject to minimum trading and exchange eligibility requirements.