Market Wrap: Bitcoin and Ether Kick Off Week in Positive Territory

Bitcoin and ether showed continued resiliency Monday, both starting the week in positive territory.

Bitcoin’s (BTC) price rose 2.7% on Monday on low trading volume, continuing its recent range-bound trajectory. The largest cryptocurrency by market capitalization was recently trading just north of $19,000, and 3% below the psychologically important $20,000 level.

Ether’s (ETH) price increased 3.2% on Monday, on low trading volume when compared with its 20-day moving average for volume. Ether’s recent trajectory has been flat, with prices moving an average of just 1.2% over the prior 10 trading days. Since the Ethereum Network’s transition from proof-of-work to the more energy-efficient proof-of-stake mechanism, ETH’s price has declined 20%. The supply of ETH has increased by 11,000 ETH since the transition, but would have increased by more than 228,000 had the Merge not occurred.

The CoinDesk Market Index (CMI), a broad-based market index that measures performance across a basket of cryptocurrencies, increased by 2.33%.

Economic Calendar: September ISM Manufacturing PMI data led off the week with an unexpected decline to 50.9 versus estimates of 52.8. Manufacturing PMI data measures inventory, supply, production, employment and pricing info within the manufacturing sector.

An ISM Manufacturing PMI report that exceeds 50 implies that manufacturing is expanding. A reading below 50 indicates that manufacturing is declining. Today’s reading of 50.9 represents the slowest increase in manufacturing activity since 2020.

The ISM Manufacturing index fell to 51.70 from 52.5 in August, and slightly below the consensus estimate of 51.9.

U.S. Equities: Traditional equities increased across the board, with the Dow Jones Industrial Average (DJIA), tech-heavy Nasdaq composite and S&P 500 rising 2.6%, 2.3% and 2.6%, respectively.

Commodities: In energy markets, WTI crude and European Brent crude rose 4.7% and 4.1%, respectively. Both increases were likely due to the Organization of Petroleum Exporting Countries (OPEC) announcing a possible reduction in supply of one million barrels of crude oil.

OPEC will not make a formal decision until its meeting Wednesday in Vienna, so the price could reverse if the group does not follow through on the production cut.

In metals, traditional safe-haven asset gold rose 2.2%, while copper futures declined 0.2%.

BTC trades flat while ‘whales’ remove bitcoin from exchanges en masse

The Sept. 29 Market Wrap discussed a potential uptrend because bitcoin had been reaching a series of “higher lows,” implying that buyers are willing to acquire BTC at higher prices.

Subsequent lows retraced on both Oct. 1 and Oct. 2, although this moderation occurred on the weekend when trading volume is lighter than during the week.

Monday’s volume was 40% of the 20-day average, where Saturday and Sunday trading volume was 14% and 21% of the trading volume average. The extent to which volume exceeds or falls short of its average often signals the degree of conviction behind a move.

Investors may not have to abandon hope for a resumption of an uptrend, although price action seems to favor sideways trading.

A look at BTC’s hourly chart on Monday shows the price pushing past the upper range of its Bollinger Band. Bollinger Bands are a technical indicator that plots an asset’s average price and subsequently calculates two standard deviations above and below that average.

Statistically, an asset’s price stays within two standard deviations of its average 95% of the time, making the breach of an upper or lower bound meaningful to watch.

While prices on the hourly chart have breached the top end of the Bollinger Bands, BTC’s daily chart shows its price is situated within a close range of the median price. Today’s activity may be merely pushing BTC back to a recognized average and is not providing a catalyst to push it significantly past its current level.

Derivative and on-chain activity implies an underlying support that could prevent prices from falling significantly. Funding rates for BTC have been positive for seven consecutive days, and for 16 of the last 20.

Funding rates can serve as a measure of sentiment, as investors who wish to be long BTC pay investors who wish to be short. In conjunction with this is a sharp decline in “whale” net volume to exchanges.

The graph below shows that “whales” (entities holding at least 1,000 BTC), have moved BTC off exchanges to the largest extent in four years.

BTC movement off exchanges is often viewed as bullish, or at least supportive, because it suggests investors are moving assets into cold storage and not designating them for trading.

Centralized exchanges have also seen significant BTC outflows.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk Market Index (CMI) is a broad-based index designed to measure the market capitalization weighted performance of the digital asset market subject to minimum trading and exchange eligibility requirements.