Bitcoin, the fear and greed index confirms the return of confidence
Bitcoin, the fear and greed index confirms the return of confidence
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Bitcoin, the fear and greed index confirms the return of confidence

By Federico Izzi - 9 Jun 2020

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Taking a look at the fear and greed index on Bitcoin, after having stood for over a month and a half at the lowest levels of the scale (the longest lateral movement in recent months), the rise in prices has also been accompanied by a return of confidence with the values of the indicator that have gone, for the first time since last February, beyond 50, the level of equilibrium. 

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The price fluctuations that have seen Bitcoin’s values trying to break the $10,000 last month have seen the fear and greed indicator clinging to the 50 point threshold. 

It is an indication that gives good signals from a general sentiment point of view. 

Since the beginning of May, the rise in prices has therefore been accompanied by a return of confidence from investors.

This is complemented by additional support coming from the positions taken by investors on Bitcoin options and adds further confidence in the market. 

Looking at the put-call ratio technical indicator, the ratio of put and call options reaches absolute historical lows, an indication of how statistically low areas are identified from where investors are looking for levels for an upcoming upward extension by the underlying asset. 

Moreover, volatility over the past month has fallen to average levels that were not seen in the six months prior to the sharp jump last March, a volatility that fell below 4%. 

These are all indications that Bitcoin is likely to expect a further bullish extension in the near future. 

When considering instead what is happening at a fundamental level and the adjustments of the hashrate, which has returned to absolute historical highs above 120 exahash/s, as well as the difficulty that has been adjusted downwards, it is evident that a month after the third halving, the miners’ network is balancing out, once again favouring the entry of miners who had switched off their machines and preferred not to participate in mining due to economic considerations. 

In fact, the third halving led to lower rewards for each block produced compared to those that were mined before May.

The network has been very efficient in recent weeks, to the extent that the average number of blocks mined on an hourly basis has exceeded the value of six blocks per hour (one block every ten minutes) and there have also been 8 blocks per hour in recent days. 

This shows how the Bitcoin mining network has remained decisively efficient, demonstrating its strength.

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Source: COIN360.com

On a technical basis it has to be said that today, like yesterday, there is a balance between red and green signs

Scrolling through the list of the top 10, a prevalence of negative signs emerges. Bitcoin, Ethereum and Ripple fluctuate slightly below par with a drop of -0.5%. 

In the top 20, there are still positive signs from Crypto.com (CRO), which continues to rise by 2.5% even today. Positive signs also for Chainlink (LINK) and Monero (XMR) which are close to 2% daily increase.

Beyond the 20th position, among the best rises, there is VeChain (VET). The agreement with the Chinese distribution chain Meijiada Fresh Food, comparable to the US Walmart in terms of national distribution capacity, to track pork distribution with prospects of tracking other products in the coming months, is definitely bringing glory to VeChain, which is also reflected in the rise in prices. 

These prices continue to rise in the last few hours and show an increase of over 20% since the announcement of this collaboration. 

VeChain returns to review $0.008, the highest levels recorded since last February, a step from the $0.0085 which in the last year have been the levels of resistance that have been felt every time that rises reached these levels. 

It will be very important to observe the testing of these levels in the coming days. VeChain climbs to 28th position with the rise of these days. Another full-bodied increase is that of Basic Attention Token (BAT), which rises by more than 6%.

The best of the day is Kyber Network (KNT) up 14%, followed by another token in the DeFi universe, Aave (LEND), +9%.

The market cap remains stable above $285 billion. Bitcoin dominance remains just under 65%. Ethereum holds well just under 10%, the highest level since late April. Slight reaction by XRP at 3.25% market share, the lowest levels in the last three years.

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Bitcoin chart by Tradingview

Bitcoin (BTC)

Bitcoin continues to confirm the bullish trend by maintaining prices above the dynamic bullish support that has accompanied prices since mid-March lows. Confirmations above $9,900 are required. 

In case the dynamic support breaks around 9,950 points, the first test of the next support is in the $9,200 area

A bearish signal for Bitcoin would only come with extensions below $8,500 while a push above the psychological threshold of $10,000 would attract new purchases.

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Ethereum chart by Tradingview

Ethereum (ETH)

Ethereum remains in the upper part of the bullish channel that has accompanied the rise since mid-March with prices close to $245, providing a signal of strong monthly stability. 

This is a signal that would be reinforced with pushes above $255, levels touched at the beginning of the month, the highest since the end of February. 

A signal of weakness would come with a return below $220, the lower neckline of the bullish channel. An extension above $254 would open the prospect of $274, the relative highs of mid-February.

 

Federico Izzi

Financial analyst and independent #trader – S.I.A.T. & Assob.it partner. He operates actively on stock and derivatives markets (futures and options) since 1997. A precursor of cyclic-volumetric analysis he is known for having identified the most important upward and downward movements in the financial markets of recent years. He participates annually as a speaker at the ITForum in Rimini since the 2010 edition and InvestingRoma and Napoli since the first edition of 2015. He is a guest and market expert on the "Trading Room" and "Market Driver" broadcasts of Class CNBC, Borsa Diretta.tv and on the evening news of Traderlink. Since July 2017 he is a permanent guest on LeFonti.TV, the only weekly national space dedicated to cryptocurrencies alongside the most important international experts in the field. He was interviewed as a cryptocurrency expert for Forbes Italia, Panorama, StartupItalia and DonnaModerna. He was recognized as the first Italian technical analyst to have published the first secular cyclic analysis on Bitcoin. Periodically publishes articles on ITForum News, Sole24Ore, MILANOFINANZA, TrendOnLine and Wall Street Italy. Federico Izzi is... "Zio Romolo".

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