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- Bitcoin holds up after finding support on key $58,400 level
Bitcoin holds up after finding support on key $58,400 level
Gerry Rafferty
June 26, 2024
Bitcoin holds up after finding support on key $58,400 level
The price of Bitcoin (BTC) surged to above $61,000 on Wednesday, recovering from a 2.6% gain on Tuesday. This upswing comes as the broader cryptocurrency market shows signs of recovery. Notably, Bitcoin spot ETFs saw a significant inflow of $31 million on Tuesday, ending a seven-day streak of outflows. This influx of capital may indicate growing institutional and retail interest in the cryptocurrency, which could impact its price dynamics and market behavior.
In the US, Congressman Matt Gaetz has proposed legislation that would allow federal income tax payments to be made with Bitcoin. This move could mark a significant step towards mainstream acceptance of the digital currency.
Meanwhile, the German Government transferred 400 BTC, valued at $24.34 million, to Coinbase and Kraken exchanges, sparking selling pressure in the market. This transfer activity may have contributed to Monday's 4.6% price decline.
According to Santiment's Defi liquidations data, the recent price decline has seen liquidations worth over $1 million in DeFi platforms. Historically, these spikes are followed by market recoveries due to forced selling and opportunistic buying from key stakeholders.
Technically, Bitcoin's price broke below the descending wedge on Monday but rebounded by 5.8% after retesting its weekly support near $58,375. The cryptocurrency is currently trading around $61,654 and may face resistance at several key levels if it holds above its weekly support. A breakout above these resistance levels could propel the price towards retesting its next weekly resistance at $71,280. However, if Bitcoin closes below its weekly support and forms a lower low on the daily chart, it may indicate bearish sentiment persists and trigger a 3% decline to its previous low of $56,552.
Ethereum’s supply has been inflating for 73 days straight
The Ethereum network has entered an extended period of inflation, with the supply of Ether (ETH) increasing by over 112,000 units since April 14. This surge in supply can be attributed to the Dencun upgrade implemented on March 13, which introduced nine Ethereum improvement proposals (EIPs). EIP-4844, in particular, has been responsible for the inflation, as it introduced "blobs," a mechanism that reduces fees paid for block data on Ethereum layer-2 networks.
The Dencun upgrade also introduced proto-danksharding, which increased data availability for block space on the Ethereum mainnet. While this has led to more efficient transactions on layer-2 networks like Arbitrum and Optimism, the total amount of ETH burned on the mainnet has decreased significantly. As a result, the total supply of ETH has turned inflationary.
Despite this recent surge in supply, the overall supply of ETH has still decreased significantly since the Merge. Over 1.5 billion ETH has been burned since September 2022, while 1.36 billion ETH has been added. This results in a net reduction of 345,000 ETH, equivalent to over $1.1 billion at current prices. The Ethereum network switched to a proof-of-stake consensus mechanism after the Merge, which has led to a decrease in overall supply.
The recent inflationary spell is expected to have a lasting impact on the Ethereum market. However, it remains to be seen how the network will adapt and adjust to this new dynamic. As the market continues to evolve, investors and traders will need to monitor the situation closely to make informed decisions about their Ethereum holdings.
Investor news: Mastercard targets crypto, Comerica to settle fraud suit
Despite facing challenges such as lawsuits, settlements, and adapting to changing payment technologies, banks have received a boost in confidence following a strong federal jobs report in early June. The report indicated a continued trend of low loan charge-offs, which has supported bank earnings and reduced concerns about credit deterioration.
The economy is also showing signs of growth, with the Bureau of Economic Analysis reporting a 1.3% annualized increase in gross domestic product in the first quarter of 2024. Analysts expect the second quarter to see growth of 3.1%. As a result, investors are shifting their focus from concerns about interest rate cuts to the benefits of a strong economy for banks.
Fed officials have kept interest rates flat since July and are expected to cut rates soon, which could benefit banks. Additionally, the Fed's focus on inflation data rather than job market weakness means that strong job numbers are unlikely to prompt rate hikes.
In the payments industry, companies like PayPal and Mastercard are working to expand crypto adoption beyond tech-savvy early adopters. One major obstacle to adoption is the user experience, as many people find it difficult to send and receive crypto correctly. Mastercard is addressing this issue by developing solutions that simplify the process and reduce the risk of errors. Visa and Mastercard are also focusing on stablecoin acceptance and working with governments on central bank digital currencies.
Overall, the combination of strong economic growth, low loan charge-offs, and efforts to improve the user experience could lead to increased adoption of crypto and digital assets. As the payments industry continues to evolve, it will be important for companies to address these challenges and provide solutions that make crypto more accessible and attractive to a wider range of users.
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