Decisive moment for crypto market: recovery or decline

BitvavoSep 17, 2024

The crypto market is at an exciting turning point. After weeks of recovery since hitting a low on Sept. 6, Bitcoin seems poised for another move. Will the price break upward through resistance or will it stall? Find out more in this edition of Bitvavo Market News where we take a closer look at current trends and what they mean for the coming weeks.

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The crypto market has rebounded in recent weeks after its low on Friday, Sept. 6. The price of Bitcoin rose 15% to €54,800, just above the 50-day average, which serves as a key indicator for short-term trends, distinguishing between downward and upward movements.

The chart below shows the structure of the correction after the high of €67,500 on March 14. The 50-day average and the descending trend line from the past two months now converge around €54,000, as marked by (1). This is a tough hurdle to overcome. The decline in recent days suggests an initial unsuccessful attempt to break through.

Should a strong market cause the price to break upwards, the next stop would be the horizontal level at €58,000, as shown by (2). Above this point would signal the first higher high after a series of lower highs, which nicely aligns with the initial higher low observed on September 6. Should we get above that, it would likely lead us to the top of the structure, as indicated by (3).

Looking at the rest of the crypto market, we can observe a similar scenario: a modest recovery after the September 6 low. However, there are no higher highs yet, and there is still a significant effort needed before another upward trend can be established.

Below is a graph which shows the total value of the crypto market, excluding bitcoin and ether — i.e. the sum of all altcoins. The dominant average here is the 20-week average, which previously supported the upward trend but now acts as resistance for the current downward trend. Also visible is a clear trend line connecting the progressively lower highs. A breakout above this trend line and above this average would be an important signal.

Meanwhile, the crypto market continues to be sensitive to external factors. Macroeconomic data could have a significant impact. Next Wednesday at 8 p.m., the U.S. Central Bank will announce the new policy interest rate. Half an hour later Jerome Powell, Chairman of the U.S. Central Bank, will provide an explanation of the decision. We'll be watching closely to see which way this pushes the financial markets.

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Mega profit for Tether

Some technologies don't take rules too seriously. They emerge, conquer the market, and only later do lawmakers attempt to catch up. Uber did this with cabs: they hit the road without any permits, quickly gaining popularity before regulations were introduced. Airbnb followed the same path with home rentals, leaving cities to adapt once the platform was already widespread.

But not every technology endures. Take Napster, which shook up the music industry in the early 2000s by offering free music downloads without industry approval. Although it was eventually shut down due to lawsuits, it laid the groundwork for platforms such as Spotify and iTunes. Napster may have failed, but it had a lasting impact on the music industry.

So now we have Tether, the world's largest stablecoin. Tether created a digital currency linked to the U.S. dollar without the strict regulations that apply to banks. They didn't ask for permission, and this is part of their success. Tether is now a behemoth in the crypto world, with a market capitalization of $118 billion and a profit of $6.2 billion in 2023 - which is more than BlackRock, the world's largest asset manager.

So how has Tether accomplished this? First, by working more efficiently. They don't need vast offices or thousands of employees to manage their currency. They’re also succeeding because they operate in a legal no-man's land. There are no clear rules or regulations for stablecoins in the U.S. yet, and this gives them room to scale quickly.

But how long can this continue? The question is whether Tether will eventually end up like Napster - a pioneer that will have to abandon ship once the rules become stricter - or perhaps they will go the way of Uber, forcing the rules to bend to their success.

Crypto economy continues to grow

It may be that you sometimes feel that the crypto market has peaked. If this is the case, take another look at the latest report from Chainalysis. Last week, the analytics firm released its latest report on cryptocurrency adoption worldwide. And what did it find? That the crypto market has been making a strong comeback since late 2023, growing at a pace that exceeds even the peaks of 2021.

So what has caused this acceleration? The long-awaited launch of Bitcoin ETFs in the United States, which acted as something of a starting pistol for a new wave of institutional interest. Particularly in affluent regions such as North America and Western Europe, billions have been circulating in Bitcoin ever since. Big players have entered the scene making transactions on a scale comparable to buying a chateau in the south of France.

In other news

PayPal and Venmo now supporting ENS addresses. ENS stands for Ethereum Name Service, a protocol that converts a readable name - vitalik.eth - into a complex blockchain address. In popular payment apps, all you have to do these days is enter the readable name to send someone cryptocurrency. Behind the
scenes, ENS matches it to the correct blockchain address. Some analysts believe improvements like this are crucial for mass adoption of cryptocurrencies.
MicroStrategy buying another 18,300 BTC, spending a total of $1.11 billion. The company paid an average of $60,408 per bitcoin. In total, the company now owns 244,800 BTC, valued at just under $14 billion. The latest purchase was funded by proceeds from the sale of 8 million shares. The average purchase price of all the bitcoins owned by MicroStrategy is just under $39,000. According to bitcoin company River, thousands of companies purchase bitcoin daily.
British bill gives bitcoin owners extra security. If the widely supported bill is passed, it will create a third category of personal property. Included in this will be digital assets, such as cryptocurrencies and NFTs. The new classification removes uncertainties in the legal realm, such as how to handle bitcoin assets in the event of a divorce. "Changes will keep English and Welsh law at the forefront of the global tech industry," gov.uk states.