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Bitcoin is Defending a Crucial Macro Level as Bulls Show Signs of Strength

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  • It is growing increasingly clear as to just how important $10,000 is for Bitcoin’s macro price action, as this level has been ardently defended by bulls on multiple occasions
  • BTC has been trading around the level for the past several days, with each dip below it proving to be highly short-lived
  • Bulls’ slight displays of strength whenever the crypto dips below this level are a positive sign for its near-term outlook
  • One analyst is now noting that this price action has allowed Bitcoin to remain above its 128-day moving average
  • The defense of this level seems to indicate that upside may be imminent in the near-term

Bitcoin and the entire cryptocurrency market are beginning to stabilize after facing some turbulence over the past few days.

Much to the chagrin of bears, the selling pressure around $10,000 has not been enough to spark any type of sustained dip below this key support level.

The continued defense of this level is a positive sign that indicates upside may be imminent.

It has also allowed BTC to remain above a key moving average. This is an overwhelmingly positive sign for its near-term outlook.

Bitcoin Bears Struggle to Shatter $10,000 Support

Over the past few days, analysts and investors alike have been growing incredibly bearish, widely noting that the sharp descent BTC saw from highs of $12,200 to lows of $9,900 struck a lethal blow to its market structure.

It is important to note that this decline has firmly ended, with buyers absorbing the selling pressure each time it dips below the five-figure price region.

Where it trends next may depend largely on its continued reactions to this support level.

Following a test of $9,950 yesterday afternoon, bulls stepped up and sent the crypto surging up to highs of $10,250 that were tapped earlier this morning. It has been consolidating ever since.

BTC Continues Defending Crucial Technical Support Level 

Another analyst explained in a recent tweet that Bitcoin has been testing its 128-day moving average.

Although it has been defended thus far, he notes that a continued defense of it is required in order for it to catalyze bullish momentum.

“BTC testing the 128 DMA – historically often a level of support/resistance on trending price. Also testing HTF support – the LTF doesn’t have me convinced yet. If LTF can show strength I want more longs – until then I’ll sit in spot,” he explained.

Image Courtesy of Bitcoin Jack. Chart via TradingView.

How BTC continues reaction to both its $10,000 horizontal support and its 128-day moving average should offer some insight into its mid-term outlook.

Featured image from Unsplash.
Charts from TradingView.





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Just HODL! Bitcoin and Ethereum outperform ‘lower risk’ crypto index funds

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In the past two decades, index and exchange-traded funds (ETF) have become some of the most popular forms of investing because they offer investors a passive way to gain exposure to a basket of stocks as opposed to investing in individual stocks which increases risk of loss. 

Since 2018, this trend has extended to the crypto sector and products like the Bitwise 10 Large Cap Crypto Index (BITX) tracks the total return of Bitcoin (BTC), Ether (ETH), Cardano (ADA), Bitcoin Cash (BCH), Litecoin (LTC), Solana (SOL), Chainlink (LINK), Polygon (MATIC), Stellar (XLM) and Uniswap (UNI).

The ability to access multiple top projects through one weighted average market cap index sounds like a great way to spread out risk and gain exposure to a wider range of assets, but do these products offer investors a better return in terms of profit and protection against volatility when compared to the top-ranking cryptocurrencies?

Hodling versus crypto baskets

Delphi Digital took a closer look at the performance of the Bitwise 10 and compared it to the performance of Bitcoin following the December 2018 market bottom. The results show that investing in BTC was a more profitable strategy even though BITX was slightly less volatile.

Bitcoin price vs. Bitwise 10. Source: Delphi Digital

According to the report, “indices aren’t meant to outperform individual assets, they’re meant to be lower-risk portfolios compared to holding an individual asset,” so it’s not surprising to see BTC outperform BITX on a purely cost basis.

The index did offer less downside risk to investors as the market sold-off in May but the difference was “trivial” as “BTC’s max drawdown was 53% and Bitwise’s was 50%.”

Overall, the benefits of investing in an index versus Bitcoin are not that great because the volatile nature of the crypto market and frequent large drawdowns often have a larger effect on altcoins.

Delphi Digital said:

“Crypto indices continue to be a work-in-progress. Choosing assets, allocations, and re-balancing thresholds is a difficult task for an emerging asset class like crypto. But as the industry matures, we expect more efficient indices to pop up and gain traction.”

Ethereum also outperforms DeFi baskets

Decentralized finance (DeFi) has been one of the hottest crypto sectors in 2021 led by decentralized exchanges like Uniswap (UNI) and SushiSwap (SUSHI) and lending platforms like AAVE and Compound (COMP).

The DeFi Pulse Index (DPI) aims to tap into this rapid growth and the DPI token has allocations to 14 of the top DeFi tokens, including UNI, SUSHI, AAVE, COMP, Maker (MKR), Synthetic (SNX) and Yearn.finance (YFI).

When comparing the performance of DPI to Ether since the inception of the index, Ether significantly outperformed in terms of profitability and volatility, as evidenced by a 57% drawdown on Ether versus 65% for DPI.

Ether price vs. DeFi Pulse Index price. Source: Delphi Digital

While this is an “imperfect comparison” according to Delphi Digital due to the fact that “the risk and volatility of DeFi tokens are higher than Ether’s,” it still highlights the point that the traditional benefits seen from indices are not mirrored by crypto-based baskets.

Delphi Digital said:

“You could’ve just HODL-ed ETH for a superior risk-return profile.”

For the time being, Bitcoin and Ether have proven to be two of the lower-risk cryptocurrency plays available when compared to crypto index funds that offer exposure to a larger number of assets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.