Macro crypto currency market outlook

Bitcoin has seen a healthy retracement out from the yearly low, with the price trading back above $50,000 and through the 50% fib retracement off the record high-yearly low move. We’ve since seen another bout of consolidation kick in, and the market will now need to establish above $50,000 on a weekly close basis to set the stage for the next major upside extension towards a retest of the record high. Look for any setbacks to be well supported down into the $40,000 area.

We’re back to seeing healthy activity after a bit of a lull in June and July. Volumes started pushing up in the second half of July and have continued to push up through August, with the market looking to make its way back towards record volumes from earlier this year. Total notional volume throughout August exceeded $1 billion on a consistent basis.

The market has been finding its stride as worry around the regulatory climate is mitigated by the fact that there has indeed been progress out of the US. While there is still plenty of uncertainty around how exactly things will play out, it’s become quite clear that the crypto lobby’s voice is being heard loud and clear.

Institutional adoption has been a major theme in 2021, and while a lot of this has been around moves from large players into bitcoin, we’re also seeing a notable push into Ethereum. Ether has benefitted greatly from all of this, with the cryptocurrency up over 300% YTD, as compared to bitcoin’s more modest YTD gains around 65%. The corporate exposure has even extended beyond just simple eth exposure and into the world of NFTs.

Looking out to the rest of Q3 and into Q4, we see the market very well supported, with more adoption from institutionals expected. At the same time, we also recommend exercising a degree of caution, with the potential for some short-term downside risk from a well overdue period of correction in the US equities market. Any signs of a sooner than later Fed taper, will likely act as the trigger to such an event.