Crypto Trends: Markets Higher on Optimism for SEC’s Bitcoin ETF Decision

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Bitcoin

Bitcoin traders have witnessed some impressive gains over the last few last weeks, but recent sessions have displayed a stalling, bearish tone.  Amongst the cryptocurrencies, Binance has been the standout performer in recent sessions. Parts of the downside reversal in Bitcoin can be attributed to SEC news with regard to pending Bitcoin ETF applications. But the broader trends in these areas seem to support optimism for the crypto space and this has been the main driver sending valuations higher.

As traders come into important resistance levels, profit taking is likely to have more of an impact on the near-term trends. Interestingly, market sensitivity with regard to Bitcoin ETF applications and the pending SEC decision has significantly diminished. The financial media wires and geopolitical regulators, in most cases, have been much friendlier to the crypto space of late. When paired with rising legal adoption, trader sentiment in the market has substantially improved relative to last year.

Evidence of this can be found in the material increase in daily market volumes visible over the last few months.  Daily trading volumes increased from $11 billion back near the beginning of the year to $80 billion in recent sessions.  Bullish trends across the broader cryptocurrency market have even produced volumes reaching year-high of 103.09 billion (from May 16th).

Long-time crypto enthusiasts have been supported by traditional investors that were sitting on the sidelines and are now returning into the fold.  The market capitalization of the total crypto space has also witnessed a substantial increase. Holding just shy of prior year-highs at $262.11 billion, the total market cap for the space currently stands at $244 billion which is well above where markets were positioned at the start of a year (at $125.71 billion).

Near the beginning of 2019, the urgency for the SEC to make its approvals for pending Bitcoin ETFs was actually much greater than it is currently.  Market enthusiasm over a potential approval (for at least some of the ETF selections) should continue to support the broader Bitcoin market after breaking $8,000.  Prospects calling for a more material inflow from institutional funds could be another potential positive.

One issue that should be noted, however, might be the effect on inflows in the event that Bitcoin breaks through the closely watched $10,000 level.  The market loves to monitor psychological levels, and it can be argued that this would apply even more to the crypto markets (relative to stocks, commodities, or foreign exchange).  

Until that happens, however, Bitcoin traders will need to contend with more immediate resistance levels (which can currently be found $8,480).  More than likely a break here would send prices to a quick test of the $10,000 level as a significant batch of stop orders would likely be tripped in the process.  The bulls have a chance to take the reins here should the broader market (i.e. equities) see losses after posting their own record highs. Market volatility continues to pick up, and the swings may help the crypto space work as an alternative safe haven asset.  Rising volumes have given crypto investors incentive to jump back into the markets on this type of technical price event.

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