After the selling pressure in the market eased noticeably and spot buying volumes increased, the prices of most digital assets also rose, showing that fundamental volatility is still present. This provides good trading opportunities.
Thought of the week
The introduction of Ethereum spot ETFs in the US could trigger another wave of applications for further altcoin ETFs. However, these are unlikely to be approved as easily as those for Bitcoin and Ethereum.
Digital Asset News
According to a July 18 report by asset manager ARK Invest, Bitcoin was oversold in June after the German government made a multi-billion dollar sell-off of 50,000 BTC seized in a 2020 raid against illegal streaming platform Movie2k.
The sudden sell-off sent Bitcoin prices plummeting from a high of over USD 70,000 in early June to a low of less than USD 55,000 during a brief slump in July.
“Based on investors’ short-term realized gains/losses and miners’ outflows, Bitcoin appears to be oversold,” reads the report, which focuses on the period ending June 30 but also includes more recent data. “Current levels [of miner outflows] suggest that miners are capitulating, which is a harbinger of a bullish turnaround.
Continued investor appetite for Bitcoin exchange-traded index funds (ETFs) is another positive sign, according to ARK. The report notes that the sharp sell-off in BTC has not triggered a mass exodus from BTC ETFs. As of June 30, the decline in the BTC price still outpaced the 30-day percentage change in BTC ETF flows by 17.3%.
However, the Trump-Biden issue and the assassination attempt further changed the market sentiment into positive territory and supported the support and trend formation in the market.
Franklin Templeton’s Ethereum exchange-traded fund (ETF) will begin trading on the Chicago Board Options Exchange on July 23, “subject to regulatory approval,” the CBOE announced on July 19.
On May 23, the United States Securities and Exchange Commission (SEC) approved rule changes to allow the listing of several Ethereum-based ETFs. However, before the new financial products can begin trading, the supervisory authority must still approve the respective S-1 applications of the issuers.
In an effort to gain an early market advantage, virtually all ETH ETF issuers have announced plans to temporarily waive or reduce fees in order to be competitive once the products begin trading. Industry analysts have predicted to Cointelegraph that the new Ethereum ETFs could attract billions in capital inflows in the months following launch.
Increased demand from institutions looking to stock their exchange-traded funds with Ethereum could subsequently lead to a supply shortage. Meanwhile, the Ethereum Exchange Reserve, a metric that measures the amount of Ethereum available for purchase on crypto exchanges, is already at a multi-year low.
It is still unclear when the SEC will give the green light for ETH ETFs, but approval is expected soon.
European Union (EU) regulators have issued new guidelines to enable relevant market participants to classify cryptocurrencies and digital assets under the new Markets in Crypto-Assets (MiCA) regulation.
In July, three European Supervisory Authorities (ESAs) – the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) – published a corresponding consultation paper that aims to standardize and clarify the classification of said assets across the region.
The guidelines invite market participants to submit comments on the consultation paper by mid-October; a virtual hearing is scheduled to take place on September 23.
Patrick Hansen, Circle’s senior director of EU strategy and policy, described the guidelines as “very helpful” in a post on X, saying he has often seen “a lot of people misunderstand token classifications under MiCA”.
This follows the first MiCA regulations, which came into effect on June 30 and specifically targeted stablecoins and stablecoin issuers. The next MiCA regulations are expected to come into force in December 2024.
Digital Asset Market
Market report including trading idea
The majority of digital assets had a positive week and were thus able to further extend the rising trend channel and test the first resistance zones.
The change in sentiment in the US regarding the presidential candidates and the (fortunately) unsuccessful assassination attempt on Donald Trump led to a noticeable rise in the prices of most digital assets. This event increased the likelihood of Trump’s second term in office immensely and therefore also the likelihood of relaxed regulation with regard to digital assets. Biden’s withdrawal from the election campaign late on Sunday evening once again supported this development.
In addition, Bitcoin ETFs also recorded significant inflows, as market participants are already looking to price in this development and possible future prospects or take advantage of favorable buying opportunities, as sentiment in the market is noticeably more positive again than it was a few weeks ago.
Over the week as a whole, the market has risen by around 5.1%, establishing further positive trends in the market.
For the coming week, it is important to keep an eye on the American news situation, as this will influence the markets!
Chart technology
From a chart technical perspective, Bitcoin is now still in the strong trend channel between $60,000 and $70,000, with a bullish tendency and strongly ascending trend channels in the daily chart. Should further significant inflows take place this week, the upper end of the trend channel is likely to be tested and increased volatility expected. A healthy correction around these levels would be the healthiest thing for the market, but Bitcoin was quite uncorrelated to the global financial markets last week, which means that positivity in these markets could also further boost digital assets and thus force a breakout from the trend channel.
The next price targets in the event of a positive trend: ~$69,000, ~$71,500, ~$75,000
The next price targets in the event of a negative trend: ~$65,500, ~$63,000 ~$61,000
Trading idea
Existing positions should not be covered with too tight stop losses. The possible volatility could remain positive in the underlying trend, which means that closing positions too early would torpedo further gains. Smaller setbacks could represent good buying opportunities.
Weekly overview
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