Financial markets were relatively calm on Friday. U.S. stocks fluctuated in early trading before closing higher in the afternoon. At the close of the day, the S&P, Dow Jones and Nasdaq rose 0.47%, 0.13% and 0.51% respectively.
The crypto market is slightly consolidating. Bitcoin broke through the resistance level yesterday and soared to nearly $63,000 in the rebound. On Friday, Bitcoin hovered below $62,000 for most of the time. As of press time, BTC was trading at $60,224, up 0.98% in the 24 hours.
Altcoin were mixed this week, with Celestia (TIA), Cronos (CRO), and Zcash (ZEC) leading the gains among the top 200 tokens by market cap, up 16.6%, 16.3%, and 16.1%, respectively. Meme coin cat in a dogs world ( MEW ) led the decline with a 7% drop, followed by Galxe (GAL) down 6.9% and XRP (XRP) down 6.5%.
The current overall market value of cryptocurrencies is $2.11 trillion, with Bitcoin accounting for 56.6%.
Stablecoin supply surges
On-chain data platform Lookonchain noted that the supply of two major stablecoins, Tether (USDT) and Circle ( USDC ), increased by nearly $3 billion in a week, indicating that investors rushed to buy cryptocurrencies at lower prices after Monday's plunge.
Lookonchain noted that Tether has transferred $1.3 billion worth of USDT to exchanges and market makers since Monday, and with the latest issuance, USDT's market value climbed to over $115 billion, a new high. The market value of the second-largest stablecoin, USDC, also increased by about $1.6 billion this week to $34.5 billion, the highest level since March 2023.
The crypto market’s recent rebound coincides with the resumption of inflows into U.S. spot Bitcoin ETFs. As of August 9, these funds managed approximately $54.31 billion worth of BTC, up from $48.43 billion on August 5.
Data from Farside Investors showed that after these investment products saw outflows for three consecutive days, spot Bitcoin ETF flows turned positive in the past two days, recording net inflows of $45.1 million and $194.6 million on August 8 and August 9, respectively.
Bear or bull? Opinions vary
Despite a slight extension of Friday’s gains, investors remain wary. After Bitcoin’s flash crash below $50,000 on Monday, market analysts are divided on what to expect going forward, with some calling the drop and reversal a bear trap, while others see it as a hint of a possible pullback to the $40,000 support level ahead.
“It’s bearish on the weekly timeframe right now and unless we reclaim $60,000, the bearishness will continue… I think $60,000 is the key level right now,” market analyst DonAlt said in a recent YouTube update.
While Bitcoin is currently trading above $60,000, DonAlt said that Bitcoin needs to close above that level on a weekly basis to confirm support and overturn the bearish view. Nevertheless, he pointed out that Bitcoin's ability to hold the $52,000 support level is a positive sign, and we should be wary of a return to the $52,000 support level in the coming days.
“ If we start to plummet [below $52,000] in the next few days… I would be surprised, probably retest lower lows easily, but I think $50,000 is a very good chance that we’re trading at unless there’s some catastrophic black swan event on the macro front,” he said.
But according to Michaël van de Poppe, founder of MN Trading, as long as Bitcoin closes above $57,000 on a weekly basis, it is likely that the bottom has been reached.
“I would prefer to see it stay above $57.5K, and as long as that happens I expect the bullish momentum to continue and new all-time highs to be set in September/October,” Michaël van de Poppe noted in a tweet.
TradingView analyst TradingShot found a correlation between Bitcoin and the Gold/Russell 2000 ratio, which confirms van de Poppe’s point and suggests that Bitcoin’s parabolic run is imminent.
TradingShot analyzed: “Bitcoin has been under tremendous pressure recently, basically pausing the upward trend that started at the end of 2022 in the past 5 months. We found that there is a significant correlation between gold (XAUUSD) and Russell 2000 (RUT), which is shown as the gold/RUT ratio (blue trend line). This correlation is negative (that is, when BTC rises, the gold/RUT ratio falls, and vice versa), and exists cyclically.”
TradingShot explains that Bitcoin tends to begin its parabolic rally (green arc) of a bull cycle when the GOLD/RUT ratio peaks and begins to decline and form lower highs, above the previous all-time high, which usually happens before a halving. It now appears that it happened at the last halving (mid-April), assuming we see the ratio form lower highs from now on, and if that is the case, BTC is likely to kick off the most intense part of its bull cycle. The sine wave tracking the GOLD/RUT peak suggests that the April high may indeed be the new peak, and whether lower highs will be formed remains to be seen.”
In addition, market sentiment will continue to be affected by political uncertainty. According to investment advisor Two Prime, while BTC price holds support at $54,000, the bias is bullish, while geopolitical issues and Fed policy are key to the next major price move.
“We continue to view $54,000 as a major support area, followed by $50,000,” Two Prime said in a Telegram note to clients. “So far, these levels have remained intact and there has been sustained demand every time Bitcoin has reached this area.”
Two Prime added: “Now we wait to see whether the conflict between Israel and Iran will escalate, whether the U.S. government will step in to contain geopolitical risks, and the direction of the Federal Reserve’s monetary policy.”
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