Cryptocurrency Market Experiences Downturn Amidst Institutional Interest
A bearish wave swept through the cryptocurrency market on Friday, causing widespread declines across the sector. Bitcoin (BTC) extended its retreat from Thursday’s highs of $110,530, trading around $108,964 at the time of writing. Major altcoins Ethereum (ETH) and Ripple (XRP) mirrored the sluggish market sentiment, giving back some of the gains accumulated this week.
Market Overview: Institutions Bolster Bitcoin Near All-Time Highs
Corporate interest in Bitcoin remains robust as listed companies seek exposure through strategic crypto treasuries. Data from SoSOValue indicates that Bitcoin treasuries saw a net weekly inflow of $863 million up to June 30. This group of investors holds approximately 664,000 BTC valued at around $72 billion, representing 3.3% of the total circulating supply. This shows that institutions are still interested in Bitcoin.
Regarding institutional demand, BlackRock’s iShares Bitcoin Trust ETF (IBIT) has grown, becoming competitive on Wall Street as one of the top revenue-generating exchange-traded funds (ETFs) for the asset manager.
According to K33 Research’s “The Week in Crypto” report, IBIT surpassed the “flagship iShares Core S&P 500 ETF (IVV) in annual fees despite IVV’s much larger asset base.” The spot BTC ETF generates an estimated $187.2 million in annual revenue, compared to the $187.1 million generated by IVV. This is a significant achievement for the Bitcoin ETF.
Key Data: Bitcoin ETF Inflows Remain Steady
Spot Bitcoin ETFs recorded a total daily net inflow of approximately $602 million on Thursday, pushing the cumulative total of net inflows from the 12 authorized products in the United States (U.S.) near the $50 billion mark. This shows that investors are still putting money into Bitcoin ETFs.
Total net assets average $138 billion, with around $2.51 billion traded on Thursday. Fidelity’s FBTC ETF led the inflows with $237 million, followed by BlackRock’s IBIT with $225 million. None of the ETFs recorded outflows, underscoring institutional interest in Bitcoin as a strategic asset for corporations.
On the other hand, net inflows into spot Ethereum ETFs resumed on Thursday, with over $148 million flowing in. The surge follows an outflow of $1.82 million experienced on Wednesday. The cumulative total of net inflows stands at $4.4 billion, with total net assets of $10.83 million. This is good news for Ethereum investors.
Chart of the Day: Bitcoin Targets New All-Time Highs
Bitcoin’s price remains above the recent broken descending trendline as bulls seek stability before another attempt to rally towards the all-time high of around $111,980. The price of Bitcoin is still high, and investors are hoping it will go even higher.
Despite the correction from Thursday’s peak of $110,530, BTC’s technical structure appears stable. This bullish outlook can be attributed to a buy signal from the Moving Average Convergence Divergence (MACD) indicator, which has been sustained since Wednesday.
If the blue MACD line remains above the red signal line, risk sentiment will prevail, thus encouraging traders to seek exposure. Another break above resistance at $110,530 could see bulls expand their reach above all-time highs, favoring a price discovery phase.
Other bullish signals include upward-pointing moving averages, including the 50-day Exponential Moving Average (EMA) at $104,730, the 100-day EMA at $100,934, and the 200-day EMA at $95,126. In the event of an accelerated trend reversal, these levels could serve as tentative support.
Altcoin Update: Ethereum and XRP Recovery Stalls
Ethereum staged a recovery on Wednesday, which extended into Thursday but stalled at $2,634. The largest smart contract token has since retreated, trading at $2,552 at the time of writing. Ethereum’s recovery has slowed down.
The Relative Strength Index (RSI) shows signs of trend reversal after peaking at 57. Its continued decline could cast doubt on ETH’s bullish outlook and foster a risk-averse sentiment.
Still, the MACD indicator maintains a buy signal triggered on Wednesday. If investors heed the signal and buy Ethereum, the subsequent increase in demand could overshadow the current selling pressure.
Key areas to watch are $2,634, tested on Thursday, and the higher peak in June at $2,882. On the downside, the 200-day EMA at $2,471, the 50-day EMA at $2,444, and the 100-day EMA at $2,391 would serve as support levels should the decline extend.
As for XRP, the upward price movement remains capped below a long-standing descending trendline resistance, as observed on the daily chart below. Ripple’s focus on expanding its infrastructure of stablecoins on the XRP Ledger (XRPL) has failed to stabilize the recovery towards the $3.00 round target.
The minor intraday correction is testing support at $2.22 provided by the 100-day EMA, while the 50-day EMA sits slightly below at $2.21. Should bearish momentum build, a potential 5.8% drop to the 200-day EMA support at $2.10 needs to be prepared for.
Still, an immediate trend reversal from the 100-day EMA support at $2.22 cannot be ruled out. If overall market sentiment improves, XRP’s price could resume its recovery, targeting the peak reached in June at $2.65.
Cryptocurrency Metrics – Frequently Asked Questions
The developer or creator of each cryptocurrency decides the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted through mining, staking, or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its creation, a total of 19,445,656 BTC have been minted, which is the circulating supply of Bitcoin. On the other hand, the circulating supply can also decrease through actions such as token burning or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by its current market value. In the case of Bitcoin, the market capitalization in early August 2023 exceeds $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the price of Bitcoin, which is around $29,600.
Trading volume refers to the total number of tokens of a specific asset that have been traded or exchanged between buyers and sellers within a set trading schedule, for example, 24 hours. Used to measure market sentiment, this metric combines all volumes from centralized and decentralized exchanges. Increased trading volume often denotes demand for a certain asset, as more people are buying and selling the cryptocurrency.
The funding rate is a concept conceived to encourage traders to take positions and ensure that the prices of perpetual contracts match those of spot markets. It defines a mechanism of exchanges to ensure that future prices and periodic price payments converge regularly. When the funding rate is positive, the price of the perpetual contract is higher than the market price. This means that traders who are bullish and have opened long positions pay traders who are in short positions. Conversely, a negative funding rate means that the prices of perpetual contracts are lower than the reference price, so traders with short positions pay traders who have opened long positions.
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