Abstract

• This week, there has been a noticeable surge in greedy sentiment within the NASDAQ100 index, which leads us to anticipate a potential decline in tech stocks, particularly those associated with AI. Such a decline could potentially trigger a pullback in the cryptocurrency market.
• In the futures market long contracts has consistently maintained a positive funding rate for a considerable period of time. This suggests that the market might continue to experience a pullback in the near future.
• For BTC, we suggest considering prices from $24,000 to $26,000. For ETH, a price of $1,700 is very strong. We suggest using “Buy The Dip” product to purchase the assets after they have experienced a decline.
• US SEC sues Binance and CZ over breaking US securities rules and running an illegal exchange.

Macro Analysis

Beware of Tech Stock Pullback’s Impact on the Crypto Market

Last weekend, strong earnings from NVIDIA and other chip stocks highlighted the demand for AI. A preliminary agreement on the US debt issue boosted cryptocurrency traders’ sentiment. However, this week, the NASDAQ100 index closed above the upper Bollinger Band for two consecutive days, a rare occurrence since the millennium. Unfortunately, the outcome was unfavorable.

The NASDAQ100 index closed above the upper band of the Bollinger Bands for two consecutive trading days this week

The last occurrence was in July 2015 when the US stock market experienced a surge in technology stocks. Netflix rose by 140%, Activision Blizzard rose by 100%, and NVIDIA rose by 70%. However, after the NASDAQ index closed above the upper band of the Bollinger Bands for two consecutive trading days, the index plummeted by 20% within one month.

In July 2015 and December 2001, the NASDAQ index had two consecutive trading days of closing above the upper band of the Bollinger Bands, but it was followed by significant market turbulence.

During the dot-com bubble, we witnessed a significant event. The NASDAQ index, driven by the surge in technology stocks, went through a V-shaped rebound. It rose nearly 60% from its low point in September 2001, breaking above the upper band of the Bollinger Bands and closing above it for two consecutive trading days. However, the bubble eventually burst, resulting in a sharp decline of 53% for the NASDAQ index.

Considering the strong correlation between technology stocks and the cryptocurrency market, it’s important to exercise caution. A decline in technology stocks could potentially trigger a pullback in the cryptocurrency market, although the extent of this pullback is expected to be limited. In light of this, we continue to recommend taking advantage of lower levels to accumulate positions.

Fundamental Analysis

The Triumph of a Few Traders

The funding rate mechanism usually operates in a contrary manner to mainstream trading. If you, like most traders, take a long position on BTC, you are likely to incur funding fees paid to those who are shorting BTC. However, the market is primarily

influenced by a small group of prominent traders or major funds. Consequently, if the positive funding rate for BTC persists for an extended period, it often results in a situation where the majority of traders end up paying “tuition fees” to the minority. This scenario indicates a potential market pullback.

Currently, perpetual contracts still maintain a positive funding rate for a considerable duration, indicating that the market might continue to experience a trend of pullbacks.

Technical Analysis

BTC

Bitcoin broke over $27,500, the bottom of its current trading range. This told us that the breakdown and head & shoulders pattern are invalidated. The debt limit deal was the reason for this rally, as a deal was said to have been reached, and the risk of a U.S. default and global financial meltdown was avoided.

The target for this reclaim would’ve been at the top of the trading range, right at $30,000. However, just as the chart turned bullish, sellers stepped in and dumped Bitcoin right back under the bottom of the trading range. $27,500 is again the level to watch as we are under it again and have been rejected on the retest. The only possible support under is $26,500, and if we continue to go lower again, there is a high probability we will dump towards $25,000.

Before publishing due to the SEC coming after Binance and CZ over violations of security law and trading against customers BTC fell rapidly in price and broke under the $26,500 support we outlined above. Our view is still $24,000 – $25,000 for strong support and it seems that this will be reached due to the current developments.

To summarize, we finally have a morsel of strength in this market, and invalidation for bulls is both clear and nearby (i.e., failing the daily reclaim). We assumed it was bullish until proven. otherwise, but for now, the market shows it was another failed attempt. Our suggestion for trading this chop is to find a coin that has relative strength and has a fundamental narrative around it or just use structured products with a far-out strike to earn interest during this chop.

LTC

Recently, we shared a trade made on LTC, it’s annual return rate has exceeded his expectations thus far. The decision to enter this LTC trade was based on its bounce off a strong support level and the 200-day moving average from a technical perspective. Additionally, considering the upcoming LTC halving on August 3rd, we are taking into account the halving narrative and the possibility of a squeeze before the event.

Currently, LTC is displaying relative strength compared to the rest of the crypto market, with a 5% increase, while BTC is down for the day. This clear indication of strength further strengthens our confidence in this trade. It is important to note the significant level of $100, which has been tested multiple times in the past without success. Therefore, a break below $89.5, along with a prolonged time below it or a swift movement away from the level, or a clear failure at $100 with high volume and a price drop, would invalidate the trade. On the other hand, if LTC manages to surpass $100, it would open up potential upward momentum, with the next resistance level at $130.

Before publishing the cryptomarket had a big sell-off and the trade has been closed for a win at $89.5.

Trading Recommendation

Our view is that Bitcoin typically goes through a re-accumulation phase of approximately 12 months after reaching a bottom, with a macro volatility range between $36,000 and $24,000. As we have discussed in previous articles, the current electricity cost of mining one Bitcoin is approximately $18,000 and all in cost ~$25,000, suggesting that the maximum retracement could be within the price range of $23,000 to $25,000. Considering the ongoing oscillating trading within a downward trend, we recommend initiating buying positions at reasonable levels. In the medium term, we still believe that Bitcoin has the potential to reach the mid-term target of $35,000 to $36,000 this year.

• Due to the sudden increase in market volatility, the annualized return of our product has increased accordingly. We recommend investing in the BTC Buy-The-Dip with a parameter of $24,000 for a 3 or 11 day period, offering a 20% annualized return. If the Bitcoin price continues to decline, we will purchase the Bottom-Fishing Fund at target levels of $25,000 to $26,000. The more the price drops, the more Bitcoin we will continuously purchase to dilute the average cost. Overall, the Pi-Net traders plan to execute this plan over the next 7 days and reevaluate the strategy during price fluctuations.

• For ETH, we mentioned in the previous text that $1,700 is the suggested buying point for the maximum pullback. We recommend taking advantage of the high volatility and purchase the ETH Buy-The-Dip with a parameter of $1,700 for a 11- day investment period, to lock in the 25% return. ETH has a lot going for it right now in-terms of fundamentals and technicals. $1,700 is a very strong support level with lots of confluence.