Cryptocurrencies Digest Recent Gains

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Summary

  • Bitcoin (BTC) and Ethereum (ETH) drifted lower after multi-week gains.
  • Precious metals and cryptocurrencies continued to trade in lockstep.

Market Trends This Week

Bitcoin (BTC) and Ethereum (ETH) saw some selling pressure early this week before rallying to finish mostly unchanged. The pause in price was warranted after both cryptocurrencies saw moves higher in recent weeks. Since breaking out in July, BTC has risen from $10,000 to $12,000, while ETH has shot from $250 to $400.

Economic indicators in the United States suggest that the recent recovery has been swift, while Corona Virus numbers have dropped steadily over the past few weeks. Though U.S. markets are hitting new highs and jobs numbers have shown gains, the Federal Reserve continues to have a Dovish stance. At the Federal Reserve meeting in Jackson Hole, Wyoming, Thursday, Fed Chairman Jerome Powell announced a new plan to allow inflation to run higher than the standard 2% target. When inflation runs high, investors tend to move to assets such as precious metals and cryptocurrencies.

This Week’s Topics

  • The first SEC-approved token offering in the U.S. raises over $20 million.
  • Crypto-lender Block Phi raises $50 million in most recent funding round.
  • Fidelity files for new Bitcoin (BTC) fund.

Next Week’s Market Forecast

With the spread of Covid-19 slowing and economic indicators improving, funds have moved into equity markets in a dramatic fashion, especially the tech-heavy Nasdaq Composite. Meanwhile, cryptocurrencies and precious metals such as gold (@gc) and silver (@si) have shown a strong correlation to each other after rising and pulling back recently. The action in gold and silver next week could be a potential tell for crypto markets. Gold is pulling into the 50-day moving average while silver has formed an inside week (lower high and higher low). If gold shows support and silver eclipses the high of the inside week, it could mean the next leg higher in cryptocurrencies is around the corner.

The cryptocurrency market as a whole continues to show increased interest. This week, Blockstack announced that it was able to bring in more than $20 million in the first SEC approved token offering in the U.S. Finance giant Fidelity also filed papers for a new Bitcoin (BTC) fund. When institutional investors enter a market, it can provide legitimacy.

Ethereum (ETH) finds support at 2019 highs

So far, BTC has run into resistance at 2019 highs while ETH has found support. These levels remain the key focus for investors.

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