Market Consolidation and Revised GDP Data
The broader cryptocurrency market consolidated on Wednesday following Tuesday’s Grayscale-inspired rally that brought fresh momentum to an otherwise lackadaisical market and lifted Bitcoin back above $27,000. Stocks spiked at the open, but quickly fell under pressure after revised GDP data was released that showed the US economy grew slower than previously estimated in the last quarter. The market managed to stabilize shortly afterward, allowing prices to creep higher for the remainder of the trading day.
Bitcoin Traders Take Profits
Data provided by TradingView shows that Bitcoin (BTC) traders took profits on Wednesday following the increase in price the day prior, which resulted in the top crypto sliding to support at $27,200. Kitco senior technical analyst Jim Wyckoff said, ‘September Bitcoin futures prices [were] slightly lower in early U.S. trading Wednesday, after posting solid gains Tuesday and producing a bullish upside breakout from the recent sideways trading range.’ Wyckoff added that while a price downtrend line remains in place on the daily chart, the bulls have momentum on their side and more upside this week would likely negate the downtrend line.
Showdown Between Treasury Yields and Cryptocurrency
In the latest edition of the Trade Letter from MN Trading, CEO Michaël van de Poppe made the case for rising Treasury yields signaling that a turnaround in the crypto market is imminent. Poppe pointed out that a sweep of the recent high on the 10-year Treasury was followed by a substantial fall in the value of the yields, indicating a potential Monthly bearish divergence and a likelihood of a turn-around. Poppe also mentioned a similar move on the 2-year Treasury chart, suggesting that a reversal is increasing. He compared the chart with Bitcoin’s price action and noted that in previous instances where yields fell substantially, the Bitcoin markets experienced more strength. Therefore, Poppe believes that a potential reversal in Treasury yields would be beneficial for Bitcoin markets.
Fed’s Decisions and Bitcoin’s Outlook
The outlook for the crypto markets also depends on the decisions of the Federal Reserve. Mike McGlone, Senior Macro Analyst at Bloomberg Intelligence, sees the Fed’s decisions moving forward as being a key catalyst for developments in financial markets. He stated, ‘The inevitable approval of a Bitcoin exchange-traded fund in the U.S. is moving closer, but the elephant in the room for all risk assets remains – the Fed is still tightening despite the tilt towards economic contraction.’ McGlone warned that Bitcoin may be anticipating a decline in equities typical for a recession, especially considering the unfavorable liquidity and central banks still tightening.
Altcoin Market Performance
The broader altcoin market traded in the red on Wednesday, with roughly 90% of the tokens in the top 200 recording losses. However, CyberConnect (CYBER) stood out with a gain of 58%, while Merit Circle (MC) increased by 16.4% and Sei (SEI) climbed by 13.55%. The biggest loser was Akash Network (AKT), declining by 11.45%. The overall cryptocurrency market cap now stands at $1.09 trillion, and Bitcoin’s dominance rate is 48.9%.