Market Wrap: Attempts to push Bitcoin above $40K stall

Some analysts are optimistic while others prefer to see stronger signs of upside momentum before calling a bottom.

Bitcoin stalled for most of Monday before making another run at $40,000 as of press time. The world’s largest cryptocurrency by market valueis holding support above $36,000 and remains up about 20% over the past seven days. 

Some analysts are optimistic about a decisive break above $40,000 while others prefer to see stronger signs of upside momentum before calling a bottom in bitcoin.

Latest prices

• Bitcoin (BTC): $39752.7, -0.3%
• Ether (ETH): $2523.88, -0.85%

“Bitcoin is at its highest level since May, a notable recovery, but the crypto asset has yet to convincingly break through – and most importantly, close above – the $41,000 mark,” wrote Simon Peters, analyst at multi-asset investment platform eToro, in an email to CoinDesk.

“I would really need to see a stronger increase to feel optimistic about the price recovering and possibly pushing onto $50,000 and beyond,” wrote Peters.

“After a timely correction, we see positive sentiment and market trends with bitcoin stabilizing in the $40,000 range and positioned for a relief rally,” wrote Steve Ehrlich, CEO of Voyager Digital, in an email to CoinDesk. 

“We expect bitcoin to see strong support over the next several months above $40,000, which is double the 2017 all-time high,” wrote Ehrlich.

Institutional developments
Below the surface, institutions have been carving out the future of crypto finance – a reminder of how fast the industry is evolving beyond daily price swings, although some 81% of fund managers believe bitcoin is in a bubble, even after May’s 35% price crash, according to a recent Bank of America survey.

The integration of cryptocurrencies into the existing financial services industry could boost sentiment despite frequent episodes of price volatility

On Monday, CoinDesk reported that Bitwise Asset Management, a crypto investment firm with $1.2 billion in assets under management, raised $70 million at a $500 million valuation. Several hedge fund giants such as Stanley Druckenmiller and Daniel Loeb’s Third Point LLC participated in Bitwise’s Series B funding round.

Crypto is gradually making its way into the multi-asset universe, evidenced by Bitwise’s plans to grow and establish ties with financial advisory firms. Also, last week State Street, a U.S. custody bank that oversees $40 trillion in assets, launched a cryptocurrency division.

But these institutional developments will take time given the regulatory hurdles and pace of mainstream adoption. For now, traders and analysts are waiting for a catalyst to drive crypto prices higher or lower. 

Bitcoin dominance threshold

Bitcoin’s dominance rate – the top cryptocurrency’s share in total market capitalization – remains below 50% at press time, having peaked above 70% in early January.

According to analysts at JPMorgan, that dominance rate is still quite low, which is a bearish sign. 

BTC dominance rate below 50% threshold. Source: TradingView

“We believe that the share of bitcoin in the total crypto market would have to normalize and perhaps rise above 50% (as in 2018) to be more comfortable in arguing that the current bear market is behind us,” JPMorgan analysts led by Nikolaos Panigirtzoglou said in a note published June 9.

Others see the recent stabilization in the dominance rate as a bullish sign.

After an initial capital rotation from altcoins into bitcoin, we expect bitcoin to continue to consolidate sideways until the re-accumulation is complete, scarcity kicks in, and price action,” said Ehrlich in an email to CoinDesk.

Bitcoin futures open interest rise

Outstanding bitcoin futures contracts have climbed to a one-month high, suggesting a rebound of speculative activity surrounding the cryptocurrency after a string of positive headlines that appear to have stabilized the market. 

The aggregated dollar value of open interest – bitcoin futures contracts traded but not settled  – has climbed to $13.1 billion, the highest since May 19, data from Skew shows. For the past month, open interest mostly stood in the range of $10.5 billion to $13 billion. 

Open positions in bitcoin futures rise to 1-Month high. Source: Skew

Meanwhile, research by Glassnode shows that short liquidations in bitcoin futures occur when the perpetual funding rate turns negative, during the consolidation for the past month.

Futures Short Liquidations vs. Future Perpetual Funding Rates. Source: Glassnode

Altcoin roundup

• Though gas fees on the Ethereum blockchain have dropped, an increasing number of decentralized finance (DeFi) users and developers are still flocking to layer 2 solution Polygon, primarily due to the cheap transaction costs and fast block times. 
• The World Economic Forum in its report mentioned several scalability features of blockchain networks including Algorand, Cardano, Celo, XRPL, Solana and Stellar. 
• The chiliz (CHZ), keep network (KEEP) and shiba inu (SHIB) tokens have been listed on Coinbase Pro and will begin trading starting 9 a.m. PT on Thursday although CHZ and SHIB will not be available to New York residents.
• The Algorand blockchain is getting a network provided by fintech infrastructure provider Six Clovers. The network will use fully regulated stablecoins in connecting banks, merchants and payment providers to make transactions globally.
• Switzerland’s Sygnum Bank is launching custody and trading across a range of decentralized finance (DeFi) tokens including aave, aragon, curve, maker, synthetix, uniswap and 1inch network.