Market Wrap: Bitcoin Rally Expected to Pause

Bitcoin traded in a choppy range on Monday as buyers appear to be exhausted ahead of the $50,000 resistance level. The cryptocurrency was trading at around $46,000 at press time and is roughly flat over the past 24 hours.

On Monday, the total crypto market cap surpassed $2 trillion for the first time since mid-May, according to CoinMarketCap data. Ether and cardano are standouts in the recent crypto rally, with strong rallies month to date, rising 26% and 62% respectively, compared with a 16% rise in bitcoin during the same period. XRP is also up 70% so far this month.

The rapid rise in crypto prices has some analysts expecting a pause. Katie Stockton, managing director of Fairlead Strategies, highlighted signs of upside exhaustion in bitcoin in her Monday newsletter.

Upside exhaustion signals could “support a brief period of consolidation as gains are digested and short-term overbought conditions are relieved,” Stockton wrote.

“Even though the trend has flipped bullish, a pullback is to be expected before continuation. This is because there has been declining volume with an increase in price,” Marcus Sotiriou, a trader at the U.K.-based digital-asset broker GlobalBlock, wrote in an email to CoinDesk.

Latest prices

Cryptocurrencies:

• Bitcoin BTC$89,435.00 $45867, -1.1%
• Ether ETH$3,047.54 $3156.3, -1.6%

Traditional markets:

• S&P 500: $4479.7, +0.26%
• Gold: $1787.9, +0.45%
• 10-year Treasury yield closed at 1.27%, compared with 1.29% on Friday.

Bitcoin mining reserves rise

Bitcoin miners have added more of the cryptocurrency to their reserves in the past few weeks.

“The reserves are now close to this year’s all-time high of May 9, recovering the outflows in June,” Jan Wuestenfeld, an analyst at blockchain analysis firm CryptoQuant, wrote in a blog post.

Miners "appear to be unimpressed by the most recent price moves (likely expecting higher prices),” Wuestenfeld wrote. “The fact that miners are not under pressure to sell their BTC at these prices is a testament to the health and resilience of the miners and the network.”

Ether options

Total ether options open interest exceeded $4 billion last week, which reached a two-month high, according to Skew, a provider of data on cryptocurrency derivatives markets. The options market is bullish on ether after a decisive break above $3,000 last week.

Skew data also shows a decline in ETH options volume over the past few weeks, which coincided with short-term overbought signals. Option traders have assigned a 64% probability of ether remaining above $3,000 this month, which is near technical support.

Digital-asset fund outflows

Investors redeemed a net $22.1 million from cryptocurrency funds last week, the sixth consecutive week of outflows, even as bitcoin and many other digital assets rallied, a new report shows.

It’s the longest streak of outflows since January 2018, according to the report Monday by the digital-asset manager CoinShares.

Investors have seen an outflow of $22 million from bitcoin, even though the largest cryptocurrency has recently traded up to $48,200 from a low of $29,608 last month.

Coinbase exchange volume

Last week, the volume of ICP$3.4975 on Coinbase went up significantly as the price rallied 50%, according to a report by the crypto exchange. Dogecoin's (DOGE) volume on Coinbase also climbed higher as the price rose as retail investors became engaged again. Volume of FARM, the token of the automatic yield farming protocol Harvest Finance, rose 70%.

Meanwhile, volume in ETH on Coinbase continues to surpass BTC, with Aug. 7 being the most extreme, as the ratio of ETH and BTC volumes was 67:33.

Altcoin roundup

• Solana, Terra hit all-time highs: Prices for Solana’s SOL and Terra’s LUNA tokens hit all-time highs on Monday, as the total market capitalization of cryptocurrency broke $2 trillion for the first time since May, CoinDesk’s Muyao Shen reports. The price rally for the tokens representing two projects that are built for the decentralized finance (DeFi) sector, shows that investors remain confident about the industry, especially in layer 1 protocols, despite security risks exposed by the biggest DeFi hack ever in monetary value last week.
• Figment raises $50M to build up proof-of-stake infrastructure: Blockchain infrastructure provider Figment raised $50 million in a Series B funding round that was led by institutional investors Senator Investment Group and Liberty City Ventures. Anchorage Digital, Galaxy Digital and 10T Ventures also participated in the funding, Figment said Monday. The company plans to use the funding to expand its infrastructure across the proof-of-stake (PoS) industry supporting the services it provides "up and down the Web 3 stack."
• Huobi revenue took a hit in July, token burn suggests: The amount of Huobi token that Huobi Global burned in July indicates the crypto exchange’s revenue probably fell last month. The total value of HT burned dropped 54% from June to $22.3 million, the exchange said. The burn is correlated to revenue, and so a decrease in burned tokens indicates a fall in revenue. Token burning is a process by which crypto coins are taken out of circulation, often aimed at reducing the total supply of the tokens and thus theoretically increasing their value.
• Watford F.C. Sports Dogecoin Logo: Watford F.C. players sported the dogecoin logo on their shirt sleeves as the soccer team returned to England’s top-tier Premier League on Saturday. The Shibu Inu meme-inspired crypto's logo appeared on Watford's shirts as part of the club's sponsorship deal with crypto-betting platform Stake.com. The deal is worth about £700,000 ($970,000), according to a report by The Athletic on Saturday.

Relevant news:

• Retail Giant Walmart Seeking to Hire Digital, Cryptocurrency Lead
• Twitter Picks Crypto Developer Jay Graber to Run Decentralized Social Media Wing
• NYDFS Hiring New Deputy Superintendent for Virtual Currency
• What Does Liquidation Mean and How to Avoid It?

Other markets

Notable winners of 21:00 UTC (4:00 p.m. ET):

polkadot (DOT) +8.54%

aave AAVE$187.72 +6.43%

chainlink LINK$13.98 +6.19%

Notable losers:

xrp (XRP) -5.25%

ethereum classic (ETC) -4.78%

bitcoin cash (BCH) -1.37%