Market Wrap: Bitcoin Stalls at $23K but Sits Above Cost for Average Investor’s Purchase Price

Hi, I'm Jimmy He, here to take you through the day's crypto market highlights and news.

Bitcoin (BTC) returned recent gains as the largest cryptocurrency by market capitalization declined 2.9% to $22,850.

Thursday’s decline followed an 11% increase over the previous seven trading days.

Bitcoin’s price remains stubbornly close to its 50-day exponential moving average (EMA), but has yet to surpass that level. Ether’s price, by contrast, remains above the 50-day EMA, but remains below the average ETH investor’s purchase price. Ether was recently down 0.9% over the past 24 hours.

In traditional equity markets, the S&P 500 and Nasdaq were up 0.4% and 0.8%, respectively. West Texas Intermediate (WTI) crude oil is down 3%, while gold’s price has advanced by 1.1%.

Alternative coins (altcoins) have been mixed, with Avalanche’s AVAX up 1.5% but Polkadot’s DOT token down 3.7%.

Today’s edition of "Market Wrap" was produced by Sage D. Young.

By Glenn Williams Jr.

Job data was the agenda Thursday for risk assets.

Initial jobless claims (pictured below) hit 251,000, 4.5% higher than the consensus forecast of 240,000. Continuing jobless claims were 1.38 million (versus expectations for 1.34 million), while the four-week moving average for claims increased 1% to 240,500.

As the U.S. central bank attempts to tame inflation without stalling economic growth too severely, we expect bitcoin investors will view today’s data as a net positive for prices, the rationale being that any data point that increases the probability of a higher-than-expected rate hike will depress prices. The CME FedWatch tool shows that expectations for a higher than 75 basis point rate hike have declined to 27.3%. For context, when we referenced this tool in Monday’s “Market Wrap,” the probability stood at 33.2%.

BTC was down on the day, albeit on lower-than-average volume. It’s worth noting that BTC breached overbought levels on July 19, using the 10-period relative strength indicator (RSI) as a proxy for measurement. The RSI is a technical tool that measures the speed and change of price movements, and is often used as an indicator of momentum. Levels of 70 and higher often indicate “overbought” conditions, while levels of 30 and below imply “oversold” conditions.

Additionally, the Average True Range (ATR) for BTC prices has been in decline since mid-June, indicating a narrower trading range. Also of note is BTC’s 10-period moving average crossing above its 20-period MA, as well as BTC prices themselves briefly touching the 50-period moving average. The decline in volume, however, implies uncertainty, and we expect that investors are viewing the $23,000 range as an area of potential resistance.

We see similar behavior with ether price action, the distinction being that ETH prices have surpassed their 50-day EMA, while the 10-period EMA looks poised to cross it as well. We would view this as a distinctly bullish sign if viewed in a vacuum. The upward move on lower volume however, indicates a decrease in investor conviction.

On-chain data reveals a distinction between BTC and ETH prices as well, most notably as it relates to realized price. For context, realized price can be viewed as the cost basis for a digital asset. Viewing this metric in comparison to current prices indicates whether the average investor is operating at a profit, or at a loss. As it stands, BTC is currently trading above its realized price of $21,947. Oftentimes realized prices are viewed as another area of potential support.

Conversely, the average ETH investor is currency operating at a loss, as ETH remains below its realized price of $1644. We expect that investors will view this price point (7% above current prices), as a potential area of resistance.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.