Crypto market consolidates as Bitcoin holds above $29,300

(Kitco News) – Consolidation remains the name of the game for the crypto market as prices traded sideways on Thursday while investors continue to digest the recent downgrade of the U.S. debt rating.

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Stocks traded in the red, unable to recover from Wednesday’s downgrade-inspired sell-off, as economic concerns continue to mount amidst rising oil prices, which caused gas prices in the U.S. to hit a 2023 high on Thursday. The national average for a gallon of gas now sits at $3.82, up $0.29 from one month ago.

At the closing bell, the S&P, Dow, and Nasdaq finished lower, down 0.25%, 0.19%, and 0.10%, respectively.

Data provided by TradingView shows that Bitcoin (BTC) continued to trade in the range of $29,000 to $29,600, with bears and bulls evenly matched in strength, resulting in flat price action.

BTC/USD Chart by TradingView

The stagnant price action was also reflected in the futures market, as “August Bitcoin futures prices [were] near steady in early U.S. trading Thursday,” according to Kitco senior technical analyst Jim Wyckoff.”

Bitcoin futures 1-day chart. Source: Kitco

“Recent price action has negated a price downtrend line on the daily bar chart, to give the bulls a bit of momentum,” Wyckoff said. “Still, bulls and bears are on a level overall near-term technical playing field at present. That suggests more sideways and choppy trading in the near term.”

Addressing the recent decline in price action for Bitcoin, Mike McGlone, senior macro strategist for Bloomberg Intelligence, said, “Bitcoin 180-day volatility is the lowest ever at about 46% at the start of August, which is typically bullish for prices.”

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“Compared to the same risk measure of the Nasdaq 100 Stock Index, the crypto’s volatility is about 2x that of the gauge and was first reached in 1Q20, which shows Bitcoin maturing into the mainstream,” McGlone said. “Our main concern is that divergent Bitcoin price weakness vs. the index since the end of 1Q may imply pressure on all risk assets.”

Bitcoin liquid index vs. volatility. Source: Bloomberg

“We expect the digital version of gold to eventually trade more like the metal or Treasury bonds,” he wrote. “But Bitcoin’s underperformance may make more sense if the stock market succumbs to volatility typical in 2H after an exceptional 1H, the Fed still tightening and recession expectations swinging to unlikely at the start of August from likely when 2023 began.”

Market analyst Rekt Capital warned a bearish divergence is potentially forming for Bitcoin, and stressed the need for it to hold above $29,250, or risk flipping that support level to resistance.

#BTC Weekly Bearish Divergence potentially forming

Meanwhile, $BTC is teetering at the ~$29250 Monthly level

If this Bear Div validates, it would likely coincide with BTC flipping ~$29250 into resistance#Crypto #Bitcoin pic.twitter.com/qMepEr2SYc

— Rekt Capital (@rektcapital) August 3, 2023

Altcoins consolidate

The altcoin market traded mixed, with an even split between gainers and losers in the top 200 tokens.

Daily cryptocurrency market performance. Source: Coin360

Unibot (UNIBOT) led the gainers with an increase of 11.46%, followed by an 11.38% gain for XDC Network (XCD) and a 7.88% gain for TomoChain (TOMO). Bitgert (BRISE) suffered the biggest loss, declining by 9.22%, while the price of Compound (COMP) fell by 4.34%

The overall cryptocurrency market cap now stands at $1.17 trillion, and Bitcoin’s dominance rate is 48.7%.