Bitcoin - Time to Buy The Dip?

The cryptocurrency market is currently experiencing a notable phase of consolidation, with Bitcoin facing a significant resistance level at $65,500. This resistance level is proving to be a strong barrier, and Bitcoin's ability to break through it could potentially create a new wave of bullish sentiment in the market. However, there's also the possibility that the market remains in this accumulation phase for several months, especially leading up to the US election.

During this period, institutions are likely positioning themselves and keeping prices low to get better entries, evident by recent institutional buy-ins. For example institutions can discreetly suppress the price of Bitcoin by coordinating sells or shorts, using regulatory tactics, and using trade strategies to attempt to increase sell pressure.  For instance, the state of Wisconsin recently reported a substantial investment of $164 million in spot Bitcoin ETFs (Exchange-Traded Funds) at these prices. These institutions and key players are largely risk-averse and would not take positions in something they did not see opportunity in. This move also demonstrates the growing interest and acceptance of cryptocurrency investments among institutional investors and government entities.

Bitcoin Weekly Price Chart

Meanwhile, altcoins are seeing a decline in value, a trend that often accompanies periods of Bitcoin consolidation. Here is an overview of the recent decline in crypto narratives, based on the performance of the top 5 tokens in each sector:

The following outlines the average decline for the top 5 tokens in each narrative sector over the past 2 months:

Infrastructure (Layer 1 blockchains)

Down 27.35%

Layer 2 Scaling Solutions

Down 37.97%

Decentralised Finance (DeFi)

Down 39.65%

Artificial Intelligence (AI) Tokens

Down 26.11%

GameFi (Gaming)

Down 48.26%

Meme Coins

Down 13.48%

ATO Crackdown & Exchange Inflow

The Australian Tax Office (ATO) is seeking personal and crypto-transaction related details from 1.2 million crypto exchange users. This move is aimed at identifying users who may have failed to report their tax obligations related to cryptocurrency transactions. The ATO's actions highlight the growing regulatory scrutiny and the need for crypto investors to comply with tax laws. They will be targeting the large financial exchanges to gather this information.

Furthermore, exchange inflows, which represent the amount of cryptocurrency being deposited into exchanges, have dropped to 10-year lows after reaching an all-time high of $74,000. This trend could be interpreted as a sign of increased investor confidence, as they may be holding onto their cryptocurrency assets rather than selling them on exchanges. This also could be due to loss of trust in centralised exchanges and the desire of self-custody.

U.S. Bitcoin ETFs

Weekly ETF inflows have finally surpassed weekly outflows, indicating a renewed interest in cryptocurrency investments. This trend reversal suggests that investors are regaining confidence in the crypto market after weeks of negative outflows.

Additionally, the largest holder of BlackRock and Ark Funds has been revealed as Bracebridge Capital, highlighting the increasing institutional interest. However, despite this, the first four months of US spot Bitcoin ETFs have shown a strong start but slowing demand, indicating that the market may be entering a consolidation phase.

Bitcoin ETF Flow Table (US$m)

Meme Stocks Craze

The meme stock frenzy has reignited in 2024, with GameStop (GME) leading the charge once again. On Monday, GameStop shares skyrocketed over 130% in pre-market trading, after the return of Keith Gill, known as "Roaring Kitty," posted on social media after a three-year break. Keith Gill reportedly made over $50 million in 2021 during the first meme stock phase where he helped push GME up to $80 from $5. This resurgence has extended beyond GameStop which is now up 180%, with AMC Entertainment also surging 300%.

GameStop Weekly Price Chart - US Market

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