Bitcoin recovery faces challenge at key resistance zone, gains likely temporary

Bitcoin (BTC) trades at around $59,000 on Tuesday after a slight recovery the day before. However, this rebound might be short-lived as it nears a crucial resistance barrier. Institutional interest is growing, driven by VanEck’s optimistic Bitcoin forecast, a strategic partnership between Metaplanet and SBI VC Trade, and increased wallet holdings. Despite these developments, the price action remains weak, and the Bitcoin Spot ETF recorded a $45.53 million net outflow on Monday.

Daily digest market movers: Few signs of optimism

• Metaplanet Inc., a Japanese investment and consulting firm, and SBI VC Trade Co. Ltd., a division of the SBI Group, have announced a strategic partnership to enhance Bitcoin trading, storage, and management, focusing on safety, security, and regulatory compliance, starting on Monday. 

This alliance supports Metaplanet’s “Bitcoin First, Bitcoin Only” strategy, focusing on Bitcoin’s scarcity and non-political monetary policy. Metaplanet accumulates Bitcoin through debt and equity financing and currently holds approximately 360 BTC. 

“Through our corporate customer service SBIVC for Prime, we are focusing on supporting and assisting with cryptocurrency trading, storage, and operation, as well as Web3-related businesses. In cooperation with Metaplanet, the SBI Group has been highly evaluated for its 1) safety and security, 2) utilization of crypto asset-backed leverage trading, and 3) exemption from the end-of-period mark-to-market tax.” said the SBI VC Trade firm in its notice.

• VanEck, an asset management company with positions in the largest cryptocurrency, predicts that Bitcoin could reach as high as $2.9 million per coin by 2050. This long-term bullish outlook is supported by Bitcoin’s hard cap limit of 21 million coins, which creates scarcity.

“It is conceivable that by 2050 Bitcoin could be used to settle 10% of the globe’s international trade and 5% of the world’s domestic trade. This scenario would result in central banks holding 2.5% of their assets in BTC. Using assumptions about global growth, investor BTC demand, and Bitcoin’s turnover, we apply a velocity of money equation to suggest a potential price of $2.9M per Bitcoin, translating to a total market cap of $61 trillion. Applying our existing framework for valuing Ethereum L2s, we estimate that Bitcoin L2s could collectively be worth $7.6T, approximately 12% of BTC’s total value.” said VanEck in its blog post.

• Sentiment’s BTC data shows wallets holding at least 10 BTC and their overall collective holdings. Over the past three months, it has looked quite strong. These wallets have accumulated 33,651 more Bitcoin since June 2, a 0.21% increase in this relatively short time.

However, a slight concern is seen in the amount of stablecoin holdings from key stakeholders between $100,000 and $10 million in USDT or USDC that have been sinking during this period. This signifies that during this period, there was a fair amount of swapping between stables and traditional crypto.

Bitcoin wallet holdings chart

Bitcoin Stablecoin chart

Technical analysis: BTC retest resistance level

Bitcoin price is retesting its 50% price retracement level at $59,560 (drawn from a high in late July to a low in early August) after recovering 3.5% on Monday. At the time of writing on Tuesday, it declines slightly by 0.35% to $58,899.

If the $59,560 holds as resistance, Bitcoin could decline by 6% from its current trading level to retest its daily support level at $56,000.

The Relative Strength Index (RSI) and the Awesome Oscillator (AO) on the daily chart are slightly below their neutral levels of 50 and zero, respectively. Both indicators suggest that neither bulls nor bears are in control.

BTC/USDT daily chart

In an upside scenario, Bitcoin’s price could break above the $59,560 resistance and close above $62,019, the 61.8% Fibonacci retracement level. In that case, the bearish thesis will be invalidated, and BTC could extend the positive move by 5.5% to revisit its daily resistance level at $65,379.