Bitcoin buyers are in profit-taking mode as the cryptocurrency tests the $40,000 resistance level. Sentiment has significantly improved over the past week, although some analysts think it’s time for a pause before another leg higher.
“BTC easily broke through $35K, but I think it will probably have a harder time going through $40K this time,” Justin Chuh, a senior trader at Wave Financial, wrote in an email to CoinDesk.
“Miners & sellers are coming in to cash out once more and buyers unable to push it higher after absorbing that hit,” Chuh wrote.
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- Gold: $1808.1, +0.5%
- 10-year Treasury yield closed at 1.233%, compared with 1.238%
Moving average watch
Sentiment can easily shift from bullish to bearish as bitcoin remains in a consolidation phase with strong overhead resistance.
“BTC was already rejected again by its 200-day moving average, just like in early June, but it should try again after a breather, and hopefully not crawling lower than $35K,” Chuh wrote.
“If (and when) bitcoin does cross the 200-day, this will signal confidence in the market and demonstrate to many players that the bulls have regained control of the market,” Alexandra Clark, a trader at U.K.-based digital-asset broker GlobalBlock, wrote in an email to CoinDesk.
For now, trading activity is sharply higher compared with June. Short-dated call options were actively traded Wednesday morning as bitcoin approached $40,000, according to data from Skew.
GBTC discount narrows
Grayscale Bitcoin Trust (GBTC) shares have narrowed their discount relative to the underlying cryptocurrency held in the fund – possibly a sign that buyers are using the vehicle to bet on the recent recovery rally in digital-asset markets.
The GBTC shares traded at a discount of 6.6% to net asset value (NAV) on Tuesday, the smallest margin since June 22, based on data provided by the crypto derivatives research firm Skew. The discount had widened to 15% in mid-June.
Some investors may have snapped up GBTC shares in hopes that the discount will evaporate with a bull revival in bitcoin. In that scenario, the buyers would reap any price gains on bitcoin while pocketing extra profit from a narrowing of the discount. (Grayscale Investments, which manages the trust, is a unit of Digital Currency Group, which also owns CoinDesk.)
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Read more:Market Wrap: Bitcoin Expected to Pause Before Next Rally - CoinDesk