Market Wrap: Bitcoin Stabilizes Ahead of Biden's Executive Order on Crypto

Bitcoin (BTC) has held above its $37,000 support level over the past 24 hours, albeit within a tight trading range and with low volume.

Still, later this week, an executive order by U.S. President Biden that will outline the government’s strategy for cryptocurrencies could be a source of volatility for bitcoin.

"The executive order has been known about before the war in Ukraine and was originally intended to mainly address stablecoins and central bank digital currencies (CBDC)," Marcus Sotiriou, an analyst at U.K.-based digital asset broker GlobalBlock, wrote in an email to CoinDesk.

 "However, due to the increased concerns of Russia using crypto to evade sanctions, many are worried that the order will impose strict regulatory changes that will hinder the crypto industry."

Elsewhere, Bloomberg reported that European officials are planning a joint bond sale to finance energy and defense spending. 

For now, talks are informal, but analysts expect a the spending could reduce investor concerns about an economic slowdown stemming from inflation and geopolitical woes. News of the potential bond sale contributed to an uptick in the euro versus the U.S. dollar during the London trading day.

On a positive note, regulatory filings show that large institutions such as ARK Investment Management and Morgan Stanley have been buying shares in Grayscale Bitcoin Trust (GBTC), which is trading at a record 30% discount.

Demand from investors, plus million dollar buybacks from Digital Currency Group, which is the parent company of both Grayscale and CoinDesk, could mean that stakeholders are still hoping that the trust will receive regulatory approval to convert the close-ended fund into a spot-based exchange-traded fund. Read more from CoinDesk's Omkar Godbole here.

Bitcoin is 43% off its all-time high of nearly $69,000 in November and is down about 8% over the past month. 

Typically, extreme price declines encourage buyers to return in hopes of catching a bargain ahead of the next market rally.

Support levels can help traders identify price levels where a downtrend can be expected to pause because of a concentration of demand or buying interest. Once a support level is held and a break above resistance is confirmed, upside momentum tends to accelerate, setting the stage for an upcycle.

The chart below estimates the average cost basis (realized prices) among bitcoin investors, which aligns with key technical support levels.

Most short-term bitcoin holders are at a loss, having a cost basis of around $46,400, according to data compiled by Glassnode. Long-term holders, however, have an estimated break-even point of about $39,200, which, if broken, could yield further downside toward $24,000.

Sell-offs are typically driven by short-term holders, whereas long-term holders are likely to accumulate along major support levels, similar to what occurred during the 2019 and 2020 price bottoms. So far, it appears that BTC is roughly halfway through a bear market phase

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