The Good News In Crytpo Could Send This Stock and Altcoin Flying

July 9, 2023

Cryptocurrencies: Weekly Update

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Bitcoin has continued to make new 2023 highs yet again this week after briefly closing above $31,000 on Monday, however, a significant uptick in crypto-related news has introduced quite a bit of choppy price action over the short-term.

Good news has been piling on for the crypto market now that BlackRock has made it clear that institutional demand for cryptocurrencies is at an all-time high. BlackRock’s Bitcoin ETF application spurred a revival of interest from other major financial entities in establishing alternative vehicles for the purpose of trading cryptocurrencies in the stock market. You can see the list of all active applications for Bitcoin ETF products below:

With the exception of Cathie Wood’s ARK, the 7 other ETF applications that are currently pending approval will all be up for a decision in the first week of September. At this point, the SEC will have to either approve, deny, or delay each application, and the widely held belief as things currently stand is that if one application gets approved then they all will.

One of the best potential trades to consider as we get closer to the first week of September isn’t actually going to be any cryptocurrencies, but rather Coinbase (COIN). The majority of the aforementioned ETF applications have been revised and resubmitted in the past week to include a “Surveillance-Sharing Agreement” with Coinbase. The filing from BlackRock clarifies the purpose of this partnership with Coinbase by stating, “The Spot BTC SSA is expected to be a bilateral surveillance-sharing agreement between Nasdaq and Coinbase that is intended to supplement the Exchange’s market surveillance program.”

Even with the lawsuits from the SEC directed toward Coinbase at the beginning of June, the recent inclusion of the longstanding cryptocurrency exchange in all of the new Bitcoin ETF applications clearly cements the fact that Coinbase won’t be sidelined by the SEC or any other regulators anytime soon.

This week will confirm the third consecutive weekly close in which Coinbase has gained 10% or more, and the rally doesn’t look ready to stop anytime soon.

COIN has been flying ever since retaking both its 50-day and 200-day moving averages in one spurt at the end of June, and has now invalidated a long-term downtrend that has been active since last August. In the short-term, you can expect continuation to resistance at $84 which was the highest daily close of 2023 that took place in late March. Beyond the current resistance area, it wouldn’t be shocking to see COIN reclaim a 3-digit share price by the end of the summer.

On the other end of the cryptocurrency news cycle is Binance, which has continued to flail in the wake of its own SEC lawsuit from early June. The Binance exchange token known as Binance Coin (BNB) is currently down -23% since the SEC sued the crypto platform, and looks to be locked into a bear pennant which could result in an even deeper correction.

If you’re based out of the US then you’re unlikely to own or even have the ability to trade BNB, but if you do hold Binance Coin then you may want to consider exiting in the near future, especially if BNB loses the $231 support level from last December.

On top of Binance Coin taking a major hit, the reputation of the exchange itself has taken a significant blow this week as news broke that 4 executives have decided to leave the company in the past few days. It's becoming clearer each day that the SEC’s lawsuit against Binance may actually hold some truth in regard to potential fraudulent activities by the exchange. In the event that the ongoing regulatory troubles continue to snowball for Binance, the biggest beneficiary from their collapse would be Coinbase which would happily gobble up Binance’s market share across the globe.

Aside from COIN, if you’re looking to gain exposure to the cryptocurrency market you should take a look at our list of crypto-related stocks and ETFs. We’ve recently added two new symbols to this list including BITX which is a 2x leveraged BTC futures ETF, as well as Bitcoin Depot (BTM) which is one of the largest cryptocurrency ATM operators in the US.

Bitcoin has been the darling of the cryptocurrency market all year and it looks like this is still the case now, with all of the recent ETF applications being specifically focused on Bitcoin products. This is no real surprise given the fact that most regulators both in the US and throughout the world view BTC as the safest and most secure digital asset in existence, so if any of the institutions that are applying for ETFs want to get approved this time around then they’re best to stick to Bitcoin for the time being.

With that being said, BTC is now consolidating right beneath its 2023 highs and remains in a bullish phase.

In order for Bitcoin to continue higher we’re looking for a close above $31,250, but wouldn’t be surprised to see a bit of selling potentially down to $29,500 until a new catalyst arrives to propel the price of BTC once again. The worst case scenario for BTC would be a retest of the 50-day moving average, but there are several levels of support before it gets anywhere close to that point.

If you’re currently holding BTC then you’ll want to keep an eye on our RealMotion momentum indicator, which often provides an early signal for the direction that price will move in once it reaches key support/resistance levels.

If the red dots on the RealMotion indicator close beneath the blue 50-day moving average, theres a good chance that price will follow suit and retrace to its own 50-day moving average.

Ethereum doesn’t look anywhere near as healthy as Bitcoin in the short-term, especially when you look at it using RealMotion.

ETH failed to make new 2023 highs on the most recent rally and completely underperformed BTC on a relative basis. Now, ETH has invalidated its short-term positive trend and is resting at its 50-day moving average as support for the time being. The problem is that RealMotion is already showing that Ethereum’s momentum has dropped beneath both its 50-day and 200-day moving averages meaning that even though the price of ETH is still in a bullish phase, the momentum of ETH is now in a bearish phase and is potentially warning that price may follow.

The ratio of ETH vs. BTC has failed to recover from its new lows, and looks to be indicating that Bitcoin will continue to outperform ETH as well as the rest of the altcoin market for the foreseeable future.

Unless we see the ETH vs. BTC ratio reverse course, it probably isn’t the best idea to start buying altcoins again anytime soon.

The one exception to this recommendation may be Solana (SOL), which is currently breaking out and invalidating a more than year-long downtrend.

SOL is primed for further continuation of its current rally from a technical standpoint, especially now that it has retaken both its 50-day and 200-day moving averages for the first time since early May. If you’re buying SOL then you may want to wait for price to close above $22, which would then provide potential upside to as high as $28 in the short-term which served as the bottom of Solana’s 2022 trading range.

Another encouraging sign for SOL is seeing that its momentum according to RealMotion is now back in a bullish phase and is indicating that SOL is not even close to being overbought.

Just keep in mind that if you’re buying altcoins, you’re likely to be subject to far more volatility than you would be with Bitcoin. So far 2023 continues to be Bitcoin’s year, but once we start to get decisions on all of the BTC ETF applications at the end of the summer then we’re likely to see excitement for the crypto market as a whole pick back up which will be the boost that altcoins are waiting for.

If you’re not yet subscribed to either our CryptoPulse Quant model or the new CryptoPulse Sprint trading strategies and would like to learn more about our products then you can talk to our Chief Strategy Consultant, Rob Quinn, here.