Daily Crypto Signals: Bitcoin Surges Past $112K, Ethereum Faces ETF Outflows Despite Derivatives Recovery
Bitcoin extended its rally above $112,000 as bulls maintained control amid expectations of Federal Reserve rate cuts, while analysis praised
Quick overview
- Bitcoin extended its rally above $112,000, supported by expectations of Federal Reserve rate cuts and its status as a macro hedge alongside gold.
- Ethereum rebounded 4.7% to $4,465 despite facing significant ETF outflows, with strong derivatives data indicating continued institutional interest.
- The cryptocurrency market is experiencing mixed signals as regulatory changes and institutional involvement drive growth, particularly in the DeFi sector.
- While Bitcoin is seen as a hedge asset amid economic uncertainties, Ethereum's path to $5,000 may depend on broader economic conditions and market stability.
Bitcoin BTC/USD extended its rally above $112,000 as bulls maintained control amid expectations of Federal Reserve rate cuts, while analysis praised BTC’s status as a macro hedge alongside gold’s record highs. Ethereum ETH/USD recovered 4.7% to $4,465 despite facing $300 million in spot ETF outflows, with derivatives data showing resilience and institutional interest supporting the path toward $5,000.
Crypto Market Developments
On Wednesday, the cryptocurrency market sent mixed signals as regulatory changes and institutional involvement pushed the sector’s growth. The CFTC let Polymarket off the hook for event contract reporting rules, which meant that the prediction platform could work in the US market. CEO Shayne Coplan said they got “the green light to go live in the USA.” This clear regulation comes at a time when the DeFi sector as a whole is growing quickly. For example, the total value locked in decentralized lending protocols has gone up 72% this year, from $53 billion to over $127 billion.
This expansion is still being driven by institutions, especially through the rising demand for stablecoins and tokenized real-world assets. But as firms try to get larger returns on their bitcoin holdings, risks are starting to show up. Joseph Chalom, CEO of Sharplink Gaming, said that companies that use aggressive yield techniques on their Ethereum treasuries are at a lot of risk when the market goes down. He compared this to traditional finance, where companies “wanna get that last 100 basis points of yield.”
Bitcoin Reclaims $112,000
On Wednesday, Bitcoin showed tremendous resistance, rising beyond $112,000 as bulls defended key support levels and closed out short positions that were too leveraged. BTC briefly hit $107,270 earlier in the week, which analysts called a “false move” before the commodity pulled back from its bull market support channel. CrypNuevo, a well-known trader, pointed out the effort to get back to important support levels. BitBull, on the other hand, said that the bounce from the support band showed that “bulls are still in control.”
The macro situation seems better and better for Bitcoin as a hedge asset, especially because gold is also hitting fresh all-time highs at $3,567 per ounce. QCP Capital, a trading company, pointed out that Bitcoin is a “straightforward hedge” with gold because of uncertainties about US policies and the possibility of the US currency weakening. Traders now think there’s a 95% chance that the Federal Reserve will drop interest rates in September. They think this change in monetary policy might help risk assets like Bitcoin in the coming weeks.
Ethereum Bounces Above $4,400
On Wednesday, Ethereum made a big comeback, rising 4.7% to $4,465. This broke a seven-day downtrend, even though it was suffering a lot of headwinds from institutional outflows. Over two trading sessions, US-listed spot Ethereum ETFs saw $300 million in net withdrawals, snapping a six-day string of inflows. This was 1.3% of the total assets under management. Since late August, the volatility has caused $344 million worth of leveraged long bets to be liquidated, which has made people feel worse even though the underlying fundamentals are still strong.
Even if money is leaving ETFs, derivatives data shows that Ethereum’s market structure is still strong. The long-to-short ratio among top traders on key exchanges like OKX and Binance has stayed the same, and there hasn’t been a big rise in short interest. This strengthens support at the $4,300 level.
On Wednesday, options activity also became more positive. Demand for call options went up after put options activity rose earlier in the week. While institutions are still supporting projects like Etherealize’s $40 million funding round for wrapped financial assets infrastructure, the road to $5,000 may need more information about the state of the global economy and a solution to the current macroeconomic problems, such as trade tensions and a weak labor market.
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