Market Wrap: Bitcoin Climbs Closer to 50-Day Simple Moving Average

Hi, I’m Jimmy He, here to take you through the day’s crypto market highlights and news.

Bitcoin (BTC) gains continued as the cryptocurrency pushed to a one-month high of $24,265.

BTC was trading at around $23,700, up 0.5% over the past 24 hours. The gains add to Monday’s 7.9% rise and Tuesday’s 4.3% advance.

Bitcoin is attempting to climb above its 50-day simple moving average (SMA) following ether’s breach of the average on Monday. Bitcoin’s 50-day SMA now sits at 24,862.

Alex Kuptsikevich, senior markets analyst at FxPro, wrote in an email that bitcoin’s price, when it’s near a key moving average, can be a reliable indicator of medium-term trends.

“Only a strong buy above this level can serve as a firm reversal indicator in the next few days,” Kuptsikevich wrote. “If the upside momentum stalls, as it did in February and March this year, we should be prepared for a sharp increase in selling.”

Many altcoins rose with Monero (XMR) leading the charts, up 3.8% over the past 24 hours.

Ether (ETH) was down 1.1%.

The S&P 500 was up 0.6%, and the Nasdaq rose 1.6%.

Today’s edition of “Market Wrap” was produced by Sage D. Young.

By Glenn Williams Jr.

On the macroeconomic front, there isn’t much in the form of price-changing catalysts.

Crypto investors, however, may wish to keep an eye on Wednesday’s weekly petroleum status report – the rationale being that it allows investors to get an early read on the potential direction of energy prices and their impact on inflation data.

The report for the week ended July 15 showed total motor gasoline inventories increased by 3.5 million barrels and remained 3% below the five-year average for this time of year.

The importance of gasoline inventory levels is one of supply and demand. Traditionally, an increase in supplies can be read as bearish for prices, and a decrease in supplies can be read as bullish. This is especially true if and when inventory changes move outside of the band of expectations. Wednesday’s expectations were for an increase of 71,000 barrels.

The relevance to crypto investors is tied to the extent to which energy prices will or will not prod the Federal Reserve to increase interest rates more than the 75 basis points currently priced in.

Crypto investors will probably examine any and all data points that affect the total macro environment, particularly given the correlation (0.77) between BTC prices and the S&P 500. Correlations range between 0-1.0. A “zero” indicates no correlation, and 1.0 shows perfect correlation.

In Wednesday’s trading activity, BTC moved higher on above-average volume, with increasing relative strength (RSI).

Investors may interpret this as bullish in nature, as more longs are moving into BTC at an increasing pace. There was a slight departure when examining ETH, however.

While BTC and ETH are strongly correlated (0.92 as of this writing), investors may note that the increase in ETH prices has come on lower than average volume. Moreover, ETH’s RSI level of 66.41 is approaching 70, which is often interpreted as indicating overbought conditions.

A quick look at futures perpetual funding rates indicates a slight distinction between BTC and ETH, as well. Investors should note that funding rates represent payments to traders who are long (or short) a particular crypto currency. Positive rates indicate strength among buyers wishing to go long (bullish), while negative rates indicate greater strength among short position traders (bearish). As it stands, BTC has seen positive funding rates the last four trading days and eight out of the last 10.

Comparatively, ETH funding rates (while currently positive) have managed to do so in five of the last 10 trading days. Moreover, the lower funding rate implies that traders expecting to go long ETH are willing to pay less to do so at the moment.

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 20 is a ranking of the largest digital assets by volume on trusted exchanges.