A set of fundamental and technical data speak to a narrative that puts bitcoin on the path of a big move which is set to happen this month (while nobody’s watching). Meanwhile, China just rolled out a restrictive policy in an attempt to quell any possibility of another bank run. Finally, it looks like the famed “alt-season” has arrived, and with it come all sorts of reasons to be very cautious of splashing your capital into meme-coins and dead projects.
Let’s dive right in!
China imposes withdrawal restrictions over bank run fears
The People’s Bank of China (PBOC) has imposed new restrictions to significantly limit large transactions ahead of its digital Yuan launch as bad debt begins to burst at the seams.
The two-year program will be expanded to Zhejiang and Shenzhen in October, encompassing over 70 million people.
Lenders in China are facing a surge of bad debt with the economy expected to grow at the slowest rate in four decades. Last month, authorities stepped in to stop bank runs at two local lender in Hebei and Shanxi, which came on top of an already fragile situation which saw China bail out several struggling banks.
The restriction is pitched as a program which aims to stop “ unreasonable demands of large amounts of cash” in a bid to keep systemic risks in check. Naturally, this means that at any moment, Chinese banks can make it difficult for business owners to withdraw money for any arbitrary reason that falls under the purview of “unreason”, at least according to the very people who have a vested interest in keeping money tightly sealed in the bank.
The news comes as China’s stock market hit a five-year high last week, on hopes of an economic recovery and no-doubt aided by unlimited central bank fiat backing.
One , showed service sector activity rising rapidly to meet the resurgence of consumer demand. However, the rapid recovery sparked fears of a bubble similar to 2014–2015, when China’s equity market fell off a cliff after a debt-induced rally which ultimately wiped out $5 trillion off the market.
Full story linked below!
Bitcoin network fundamentals remain strong
Bitcoin’s aggregate hashrate has printed a new all-time high, revealing that the underlying network strength continues to improve.
At the same time, the number of addresses with 0.1 bitcoin continues to make fresh all time highs, and shows no signs of stopping
Finally, USDT continues to dominate the stable coin trading volume across the board. Some divergence is notable but by and large — nearly 80% of the total trading volume is in dollars (and is growing as we speak).
Altcoins skyrocket as bitcoin continues to consolidate
There’s no other way to put it — altcoins are booming as bitcoin remains stable and its dominance slides — signalling the start of the so-called “alt season”. Notably, the official ubiquitous coverage of “alt season” is often an announcement of its imminent demise — at least in the immediate short term.
In any case, Chainlink, DOGE-coin, Cardano and VeChain are just some of the coins which have seen upwards of 10% gains in a few hours in what could only be characterized as a Russian roulette-style casino frenzy (without ammunition). While it’s good to see a project like ChainLink pumping its numbers, the same cannot be said for other alt coins. Indeed, XRP’s 7% pump came out of nowhere (as they often do), and happened in spite of the fact that the there is no use-case for the coin.
Back in March Brad Garlinghouse himself even said in an interview that Ripple relies on selling XRP to remain profitable:
“(Without selling XRP) we would not be profitable or cash flow positive. Well XRP is one source. I don’t know how to answer that because if you took away our software revenues, that would make us less profitable. If you took away all our XRP, that makes us less profitable. So I don’t think about it as one thing.”
He effectively said that the reason for the coin’s existence is to fund Ripple development. Still, the XRP army is relentless and who knows, perhaps the dream of the tokens providing dividends at some point in the future is a lucid one — and perhaps it isn’t.
Meanwhile, the meme-coin, DOGE, has pumped dramatically after going viral on TikTok — a social media app mostly used by generation Z (or zoomers) — who have taken it upon themselves to attempt to pump the coin to 1$. The coin has since retraced most of its 2-day 143% gains and the chart looks like 2017 pump and dump schemes — which is mostly likely what it is.
At the same time, bitcoin dominance has continued its downtrend apparent since 2019 as per the below chart. Given the institutional backing, liquidity and general maturity of the digital asset, it’s very likely that this downtrend (in a broader uptrend) will reverse as mass market piles in.
Should the so-called alt-season continue, it’s conceivable that bitcoin dominance will continue to slide, at least until altcoins get the rug pulled out from under them at which point everyone will retreat back into bitcoin.
In any case, it’s good to see that some coins are making moves given bitcoin’s insistence on stagnating for months on end.
However, this could be about to change!
Bitcoin daily (HTF) poised to finally break out
Unfortunately, not much has changed since the last update, as bitcoin stubbornly continues to rest under the $9,300 pivot point at the time of writing.
Having said that, however, both the Stoch-RSI and MACD reversal signals played out since the last newsletter, and resulted in a modest 5% move from the $8,900 lows to about $9,300. Both technical indicators are in bullish territory and speak to an imminent breakout on the daily time frame. However, external factors like stock market volatility are still relevant (until they’re proven not to be). Given recent historical relevance, if the S&P slide lower, one should reasonably expect bitcoin to slide with it.
As the big move inches closer, July is shaping up to be an uncharacteristically important time, as bitcoin’s price coils in two structures which dictate different timelines for a bullish breakout. Effectively, bitcoin could either maintain this parallel channel and test the bottom of the trend at $8,600, or it could respect the multi-month uptrend to retest the upper limit of the ascending triangle at $10,000. The thesis is crystal clear when seen in the context of declining volumes (across the board) as well as the Historical Volatility indicator — the latter of which is at lows not seen since January 1st of this year.
Either way, the time to pay attention is when nobody’s looking. As I write this, interest in bitcoin has plummeted as the sleeping giant nears the end of its hibernation.
Interesting times are afoot!
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Originally published at https://mailchi.mp.