Bitcoin Pulls Back From $40K; Ether off 2-Month Highs

Everything you need to make sense of the crypto markets and beyond

By the CoinDesk Markets Team

Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets

August 5, 2021

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Bitcoin (BTC)

-0.1% $38,034

Ether (ETH)

+4.3% $2,615

(Price data as of August 5 @11:00 UTC)

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Good morning, and welcome to First Mover. Here's what's happening this morning:

Ether has rallied almost 60% in two weeks.

Initial support around $34K could stabilize the pullback.

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Market Moves

by Omkar Godbole

Bitcoin Again Falters at $40K as Ether Retreats From Two-Month High

Bitcoin and ether (ETH) erased Wednesday’s gains as Ethereum’s highly-anticipated London hard fork, or backward-incompatible upgrade, neared.

Having faced rejection at $40,000 early Thursday, bitcoin (BTC), the top cryptocurrency by market value is currently trading near $38,000. The 4% drop has nearly reversed Wednesday’s rally from $37,500.

Bitcoin prices, Aug. 4-5, 2021 (CoinDesk)

Ether is also down 4% near $2,600 at press time after having jumped 8% to $2,770 on Wednesday and hitting the highest level since June 7, according to CoinDesk 20 data.

The London hard fork, which includes four Ethereum Improvement Proposals (EIP), is scheduled for implementation around 12:30 UTC, according to etherscan.io. One of the proposals, EIP 1559, will introduce a mechanism to burn a portion of fees paid to miners, thereby curbing ether’s supply growth over time and bringing store-of-value appeal to the native token of Ethereum’s blockchain.

Ether prices, Aug. 4-5, 2021 (CoinDesk)

Some analysts have cautioned that the upgrade’s positive effect will be seen over time, and there may be little or no immediate price action.

Ether has gained nearly 60% in the two weeks leading up to the upgrade. As such, it looks prone to a “sell-the-fact” trade. “Buy the rumor, sell the fact” refers to a situation where some traders buy an asset in the run-up to a supposedly bullish event and sell after it occurs.

However, technical charts are painting a bullish picture. “A new oversold upturn in the weekly stochastics [indicator] suggests ether can clear a 38.2% Fibonacci resistance level near $2724 for a target of a 61.8% Fibonacci retracement level near $3356,” Katie Stockton, founder and managing partner of Fairlead Strategies, said in the weekly research note published on Monday.

As for bitcoin, Stockton expects consolidation for a while longer before extending the recent recovery rally from $30,000. Bitcoin jumped over 12% last week, its best weekly performance in three months. The momentum, however, has faltered this week, with prices falling to $37,500 on Wednesday.

“We expect the pullback to mature in 1-2 weeks near the 50-day MA (~$34,800), after which bitcoin is likely to clear $42,600 for a revised upside target of a secondary Fibonacci retracement level near $51,000,” Stockton noted, referring to the 50-day moving average.

The options market seems to agree with Stockton’s bullish view. While last week’s aggressive call buying has cooled, the demand for puts, or bearish bets, remains low. The put-call open interest ratio continues to slide, hinting at fading fears of a deeper price drop, as Delphi Digital noted in its daily analysis.

Newsflow continues to be positive, highlighting traditional investors’ growing appetite for cryptocurrency. JPMorgan has started pitching a passive bitcoin fund to private clients, CoinDesk reported early today.

Bitcoin’s immediate prospects will turn bleak if the 50-day moving average support at $34,800 is breached.

Read the original story here:

Bitcoin Again Falters at $40K as Ether Retreats From Two-Month High

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Technician's Take

by Damanick Dantes, CMT

Bitcoin Oversold Bounce Fades; Support at $34K-$36K

Bitcoin (BTC) sellers returned during Asia hours given strong resistance near the $40,000 level. The cryptocurrency was trading around $38,000 at press time and is down 5% over the past week. Initial support is seen around $34,000 and $36,000, which could stabilize the pullback.

Bitcoin four-hour price chart shows short-term support and resistance levels with RSI (Source: TradingView)

Read the original story here:

Bitcoin Oversold Bounce Fades; Support at $34K-$36K

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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