Daily News | Bitcoin Surges on Positive Sentiment and Short-Term Holder Profits; Global Markets Cautiously Optimistic

Crypto Daily Digest: Bitcoin Surges Amid Positive Sentiment and Profitable Moves by Short-Term Holders

Bitcoin (BTC), the world’s largest cryptocurrency, experienced a notable surge to its highest level in over two weeks, buoyed by positive investor sentiment resulting from a deal to raise the US debt limit. The cryptocurrency saw gains of up to 5.2% before retracing slightly to trade at $27,773.

The recent agreement on the debt ceiling between President Joe Biden and House Speaker Kevin McCarthy played a crucial role in boosting risk appetite in global markets. However, the deal still awaits swift approval from Congress to avert the possibility of a US default. Potential headwinds remain, such as the increase in Treasury yields and expectations of further US monetary tightening.

Despite recent challenges, including poor liquidity and regulatory measures in the US, Bitcoin managed to sustain a four-day streak of gains, providing some relief to investors. However, it’s important to note that the overall crypto market has not fully recovered from the previous year’s downturn, with Bitcoin still significantly below its all-time high of nearly $69,000 reached in 2021. As such, analysts caution against extrapolating a future rally solely based on this recent move, as Bitcoin continues to trade within a familiar range of $25,000 to $30,000.

In a separate development, the near-term outlook for Bitcoin appears promising, supported by blockchain analytics firm Glassnode’s data indicating profitable moves by short-term holders. The seven-day moving average of the short-term holder’s spent output profit ratio (SOPR) has surpassed 1, suggesting capitulation from short-term holders and implying potential bullish price action in the near future. Historically, during bull markets, the SOPR has typically stayed above 1 and has served as a support level during upward trends.

Data per Glassnode as reported by Coindesk.

This positive momentum extends beyond short-term holders, as long-term holders of Bitcoin turned profitable a month ago, reinforcing the optimistic outlook for the cryptocurrency.

Technical Analysis: Bitcoin (BTC) $29063 (+0.14%) - Neutral Outlook

Building upon yesterday’s analysis, we now incorporate the 4-hour chart to provide further insights into Bitcoin’s current situation. Presently, Bitcoin is undergoing a minor decline before preparing for another significant upward movement. However, it’s worth noting that the red candle on the 4-hour chart breached the daily supply zone (29096-27790), suggesting that the pullback might discover its true support within the range of the 38.2% (27343) and 50% (27062) Fibonacci Retracement levels. This retracement phase is commonly referred to as the Back Up Against Creek (BUEC) phase within the 4-hour accumulation structure.

Overview:

• Closest hourly support zone: 27660 - 27538
• Closest hourly resistance zone: 27790 - 27970
• Key Level: 28419 (Weekly High between Dec. 21-28, 2020)

Hourly Resistance zones

1. 27790 - 27970
2. 28019 - 28419
3. 29096 - 29300

Hourly Support zones

1. 27660 - 27538
2. 27343 - 27062
3. 26990 - 26781

Macro: Optimism Grows Over Debt Deal, Asian Equities Cautious

Global markets experienced cautious Optimism as investors welcomed the possibility of the US averting a catastrophic default following a tentative debt-ceiling deal reached over the weekend. While European stocks remained stable amidst light holiday trading, Asian equities approached the opening cautiously. Futures for Japan and Australia indicated minimal movement, while Hong Kong contracts suggested potential declines. Notably, Chinese shares continued to hover near bear market territory, weighed down by concerns over the economic recovery, geopolitical tensions, and a weaker yuan.

In the US, equity futures for the S&P 500 and Nasdaq 100 showed modest gains, rising by approximately 0.3% and 0.5% respectively as they opened in Asia. These gains followed marginal increases in holiday-thinned trading on Monday, with US markets closed for Memorial Day. The positive sentiment was also reflected in the stability of the dollar, which held its position after a decline at the end of the previous week.

European markets experienced lower trading volumes, with Spain’s benchmark underperforming due to Prime Minister Pedro Sanchez’s surprise announcement of a snap election following significant losses for his party in regional and local elections held on Sunday. The subdued holiday-affected trading in Europe was further compounded by the closure of markets in the UK and several other European countries due to national holidays.

While optimism prevailed regarding the debt-ceiling deal between President Joe Biden and Republican House Speaker Kevin McCarthy, concerns lingered over potential interest rate hikes by the Federal Reserve and increased bond issuance from the US Treasury Department. This uncertainty added a cautious undertone to the market outlook.

In other global developments, Turkish lira weakened after Recep Tayyip Erdogan’s victory in the presidential runoff election, extending his tenure as the nation’s longest-serving leader. Investors closely watched for any signs of a potential relaxation in the state’s tight grip over markets. Meanwhile, European bonds rose, with Germany’s 10-year yield falling by approximately 11 basis points, and Spain’s 10-year yield dropping by a similar amount.

Gold prices remained stable as demand for safe-haven assets waned, while oil held onto most of Friday’s gains.

Looking ahead, market participants remained cautious due to ongoing uncertainties surrounding the duration and severity of the earnings recession, as well as potential liquidity tightening resulting from the government’s debt issuance backlog. Despite the temporary relief provided by the debt-ceiling deal, challenges and risks persisted on the horizon.

As the focus shifted towards passing the debt agreement in Congress, President Biden actively reached out to lawmakers to garner support for the bill, which is scheduled for a vote in the House on Wednesday. However, the concessions made in the agreement drew criticism from various groups, including environmentalists, defense hawks, and conservative hard-liners.