The sentiment of the cryptocurrency market today is decidedly positive although Friday's session on Wall Street was decidedly weak, and indexes from Asia and Europe are trading under pressure today. In recent weeks, cryptocurrencies have been heavily oversold and sentiment - especially towards 'altcoins' has been decidedly weak.It seems that the improvement in sentiment may have to do with expectations for the Fed tightening cycle, which is slowly coming to an end - on Wednesday, markets will learn Jerome Powell's decision.
- Keeping rates unchanged could potentially fuel risk appetite and ignite 'pivot' sentiment as long as Powell's communication is not very hawkish. However, the market seems to have sold out of the current situation and may begin to ignore one or two rate hikes. Bitcoin market investors may be analyzing positioning for the period of the first reductions in advance as this one is likely to coincide with Bitcoin's halving in Q2 2024;
- It is worth keeping in mind that as data from the US economy remains strong, the Fed could signal another rate hike which in turn would potentially strengthen the dollar. However, if it fails to do so in a sufficiently decisive manner, the dollar could come under pressure. Since the ECB last week sotpy kept rates unchanged the market is starting to speculate that Fed rates may also no longer rise either if they remain unchanged in September (the market sees only a 1% chance of a hike in September);
- Today, Bitcoin is already trading near $27,400 and approaching a key resistance level, and among altcoins, Chainlink and Litecoin are trading at record highs. More than 6% are being recorded by Solana and Cosmos projects.Liquidations of futures positions of the entire crypto market were exceptionally small over the weekend, amounting to only $48 million according to CoinGecko data (the lowest since mid-August) - at the same time, the volume of the options market increased by only 4%, which illustrates the still low interest in cryptocurrencies (leverage ratios on Ethereum and Bitcoin are currently very low)
Bitcoin and Solana chart
Looking at BITCOIN, on the D1 interval, we see that the rebound is also following a downward wave, similar to the previous ones we have seen this year. If the move continues the RSI at 60 points still gives plenty of room for the bulls, and in a euphoria scenario we can't even rule out an attempt to break through $30,000. At the same time, however, this would require breaking several important supports, most notably the SMA200 (red line), the breakthrough of which could give the bulls a lot of trouble near $28,000. Further resistance is the 23.6 Fibonacci retracement of the upward wave from the fall of 2022 at $28,000. If very strong supply is triggered after reaching the SMA200, the base scenario could be a retest of the 38.2 Fibo near $25,500.
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Source: xStation5
After periods of dynamic declines, SOLANA may be heading for a breakout point - it is worth noting the so-called 'cross of death (the intersection of the SMA200 from above by the SMA50) on the D1 interval, which once again has a chance to prove to be a lagging indicator, and what is worth noting - it reappears after the potential drawing of a local low - in a very similar place to the previous one (June 2023, gray circle). The key zones to overcome for the bulls are definitely around $21 where we see previous price reactions and the SMA50 and SMA200 averages (yellow and red lines, respectively)
Source: xStation5
Comparing Bitcoin and the dollar index (USDIDX, yellow), we see that although today the price of BTC is rising - the negative correlation with the dollar index is still in play. However, the market is hoping that the Fed will not raise rates significantly again - it is pricing a 99% chance of holding rates in September, a 69% chance of a hike in November and a 58% chance of possibly another hike in December.
Source: xStation5
On-chain data![]()
Cqpital flows into the crypto market still appear to be severely subdued, even compared to previous years (when interest rates remained very low) - this is well illustrated by the Capital to Valuation ratio (capital flows adjusted for changes in Bitcoin's market capitalization). Source: Glassnode
Looking at the NUPL indicator (balance of unrealized losses and gains), we can see that there was an extremely negative streak for the entire market during the 2022 bull market (which, of similar intensity, turned out to be the bottom of the bull market in 2016 and 2018). Currently, the index is still far from the levels signaling overbought and euphoric conditions, during which usually powerful unrealized gains are recorded by both short (STH) and long-term investors (LTH). Source: Glassnode
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