GB Market Commentary 23/07/2021 by Marcus Sotiriou
After losing the key support of $30,000 earlier this week, Bitcoin has bounced back, following Musk’s endorsement of the industry at the B word conference on Wednesday. Currently, Bitcoin is testing resistance at the $32,500 level approximately and technically remains in a downtrend, as it is still below every relevant moving average. However, some indicators suggest the market could be due for a short term reversal. The short term holder MVRV shown by Glassnode is showing very low levels (as shown below), indicating that short-term holders are holding coins significantly below their acquisition cost. We can see from the chart that typically this has coincided with market bottoms in a bearish trend.
In addition, CME’s open interest doubled from $1.25 billion on July 19th to $2.5 billion on July 20th. After an extended period of being net short, CME’s trades are showing that institutions are now positioned slightly net long.
There has also been a flood of positive news this week surrounding the industry, some of which discussed below, which could be the start of a change in narrative from the mainstream media. Generally, the sentiment in the market has been very bearish the past few months, shown by the fear and greed index remaining below 25 for the most part. Although, sentiment can change very suddenly in this market. An announcement like a Facebook or Apple Bitcoin purchase could remove a lot of this pessimism. I think the Bitcoin ETF could be the spark to fuel the next BTC rally. So far, Canada and Brazil have approved ETFs and there are now 14 applications for one in the US, after another was announced yesterday from fund management firm Global X. The Gold ETF being launched, as an example, commenced a 7 year bull run with a 400% gain.
J.P. Morgan has become the first major US bank to open cryptocurrency trading to all of their clients. This will be available for any retail customer of the bank, using their wealth management service, expanding its scope beyond its ultra- wealthy clients. Four funds will be included in the offering: Grayscale’s Bitcoin Trust, Bitcoin Cash Trust, Ethereum, Ethereum Classic Trust and Osprey Funds’ Bitcoin Trust. This move from JP Morgan is ironic as the CEO Jamie Dimon has previously touted Bitcoin as a scam and that he would fire any of his employees seen to be owning it. Furthermore, JP Morgan have increased their blockchain related job openings.
BankProv, who are a Massachusetts based crypto friendly bank, announced yesterday that it was launching a payment network for its institutional Crypto customers called ProvXchange. This will enable real time payments to be sent 24/7 between customers and therefore aid the mass adoption of the cryptocurrency industry. The CEO claims they ‘continue to listen to the needs of our community, particularly in the cryptocurrency space, to hear how their businesses can be made more productive using better banking technology’. This reiterates the notion that demand for digital assets continues to soar, as indicated by Goldman Sach’s survey from yesterday’s market commentary. BankProv will be competing with the likes of Silvergate and Signature real-time payments that are available on nights and weekends. Coindesk reported this week that Silvergate customers deposited $4.3bn in digital currency across Q2 this year.