The SEC’s wholesale rejection of nine crypto-backed ETFs wasn’t enough to curb bitcoin’s slow grind higher this week. The leading digital currency by market capitalization continues to eye a major breakout following the successful defense of a key technical threshold. Now that the market has established a firm price floor on bitcoin, the next move is likely to be higher.
Although bitcoin continues to exert a gravitational pull on the broader market, altcoins and tokens have struggled to make headway. As of Friday, all major coins in the top-ten were down compared with last week.
Bitcoin Poised for a Breakout
Bitcoin carved out a narrow trading range this week, as the bulls continued to muster support above $6,200. This level was defended on three occasions this week, a sign that bearish pressure was fading.
The bitcoin price peaked at $6,899 Tuesday night, though the sudden rally was largely attributed to a temporary shutdown of Bitmex, a popular derivatives trading platform. Since coming off its highs, the bitcoin price has managed to trade between $6,400 and $6,600.
At the time of writing, BTC is trading at $6,520, where it was little changed compared with last week. Price remains above the 50-day moving average, based on the 4-hour chart. Relative strength is above 50 and rising.
Bitcoin Volatility Plummets
A measure of bitcoin’s monthly volatility declined in July to the lowest in over a year, offering compelling evidence of a maturing market. According to Diar, a weekly cryptocurrency publication, the sharp drop in volatility coincided with the introduction of bitcoin futures in December. This rationale runs contrary to other studies, which have attempted to link bitcoin futures to increased volatility.
As volatility weakens, bitcoin could be charting a different price trajectory in the near future. This scenario could challenge the boom-and-bust narrative that has defined bitcoin since inception.
That said, bitcoin continues to exhibit unique price independence relative to other markets. As such, the digital safe haven could provide added security amid the recent meltdown in emerging-market currencies and stocks. The only saving grace for stock traders at the moment is the sharp divergence between Wall Street and global markets. As Hacked reported, the S&P 500 Index recently marked its longest bull market on record.
SEC Rejects Bitcoin ETFs
The U.S. Securities and Exchange Commission (SEC) on Wednesday issued wholesale rejections of nine bitcoin exchange-traded funds (ETFs), arguing that none of the applications addressed the agency’s fraud and manipulation concerns. As Hacked contributor James Waggoner recently pointed out, the SEC’s decision is probably justified given the liquidity constraints currently facing the bitcoin futures market.
A joint proposal submitted earlier this year by VanEck and SolidX seeks to address the agency’s concerns around fraud, manipulation and liquidity. Backed by CBOE, the two companies have submitted a proposal that links an ETF to physical bitcoin rather than the futures market. The proposed fund also purports to safeguard investors against the risks associated with sourcing and holding bitcoin (in other words, it is insured against theft or loss of funds).
The VanEck SolidX Bitcoin Trust is still under review by the SEC after the agency delayed its ruling on the matter. A decision is expected by Sept. 30.
The Week Ahead
Is this the week that bitcoin breaks out? The technical indicators seem to imply there is a strong chance. However, as we’ve seen repeatedly, cryptocurrencies don’t always move in the direction of technical analysis.
In traditional markets, investors can expect the final summer lull ahead of U.S. Labor Day. The summer doldrums are expected to give rise to higher trading activity beginning Sep. 4.source:hacked.com
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