GB Market Commentary 12/07/2021
by Marcus Sotiriou
Bitcoin bounced back over the weekend to close an 8th consecutive week above $34,000 since the drop in May. This shows the significant demand for the first cryptocurrency in the low $30k levels. Bitcoin also continues to hold the 50-week exponential moving average as support.
Looking at the bigger picture, Bitcoin remains in a range between $29,000 and $42,000 approximately, and until it can reclaim the $42,000 level, it technically remains in a downtrend. The Bollinger Bands (shown on the right), which forecast volatility when constricted, suggest a big move and a potential break of this range is coming soon. The bands are the tightest they have been since September 2020, which preceded the run up from $10,000 to $65,000.
There are some technical indicators which suggest that this big move will be to the upside. Firstly, Bitcoin is breaking out of a downtrend on the daily RSI (Relative Strength Index) which started in January 2021 (shown on the left). If there is a pick-up in volume and some positive price action in the next few days, this could give Bitcoin a good chance of retesting the range high at $42,000.
Bitcoin is showing further positive signs on the daily RSI as a bullish divergence continues to be in play (shown on the right). This shows that, because the RSI is trending up whilst price is trending down, bearish momentum is dying out.
In addition, a report from Coinshares has shown that institutional managers have become net buyers of cryptocurrencies for the first time in 5 weeks, after a sustained period of profit taking – Coinshares reported that this was the longest institutional selling streak since February 2018.
Over the weekend, the FBI issued an industry wide warning surrounding potential attacks to cryptocurrency holders and exchanges. The institution stated that the threats could be accomplished by sim swapping, account theft and tech support staff.
Australian based blockchain company Power Ledger have announced that they will migrate to Solana from Ethereum. Power Ledger have developed a software platform that allows houses and organisations to trade renewable energy with each other. The firm has taken note of the higher speed and scalability of the Solana blockchain, as well as the lower energy output of Solana’s Proof of History (POH) and Proof of Stake (POS) mechanisms. The Co-Founder stated that the limitations of Ethereum’s Proof of Authority were always apparent, such as low transactions per minute.