(Kitco News) – It was another day of volatile trading across financial markets as investors hesitated to increase their risk exposure ahead of Nvidia’s earnings report on Wednesday and Friday’s Personal Consumption Expenditure (PCE) index reading, which could play a pivotal role in the Fed's interest rate decision.
“Investors are keenly awaiting earnings from Nvidia on Wednesday, a key player in the artificial intelligence sector,” said analysts at Secure Digital Markets. “Nvidia's results will be closely watched as a barometer for the broader tech and AI markets.”
After falling 30% from its record high set on June 20, Nvidia rallied back to within 5% of that figure over the course of the third quarter as investors used the pullback as a prime ‘buy the dip’ opportunity. Wednesday’s earnings report is expected to greatly affect how the stock performs in the final months of 2024.
“It needs to be a beat and raise [guidance] quarter because I think that's sort of built into investor expectations,” Ruben Roy, managing director and applied technology analyst at Stifel, told Yahoo Finance. “Certainly, the discussions that we're having would suggest that there's widely anticipated expectations for a beat for the July quarter earnings and then a sort of a beat on the guidance for the October quarter.”
At the market close, the S&P and Nasdaq both finished up 0.16%, while the Dow was flat. NVDA climbed 1.46% on the day to trade at $128.30.
Data provided by TradingView shows that Bitcoin (BTC) retested support at $62,000 on Tuesday, hitting a low of $61,460 near midday before bulls pushed it back above the support level.
BTC/USD Chart by TradingView
“Bitcoin has dipped below $63,000 as traders capitalize on recent gains following the weekend rally in the crypto market,” said analysts at Secure Digital Markets. “We are approaching our target of $62,000, which we view as an attractive entry point for those looking to establish long positions.”
“There is substantial buying interest between $60,000 and $62,000,” they added. “The options market reflects a generally bullish sentiment, with a notable increase in call options at a $100,000 strike price.”
“However, the market doesn’t seem poised for a significant upward move in the short term,” the analysts warned. “Since the launch of spot Ethereum (ETH) ETFs in the U.S. on July 23rd, the market has faced challenges, though stablecoins have remained resilient, with their supply continuing to grow despite the recent correction in August.”
“In the U.S. ETF market, Bitcoin continues to demonstrate strength, attracting $202.6 million in inflows yesterday, bringing the total to $454.6 million over the past two days—a significant figure compared to recent weeks,” they concluded. “On the other hand, Ethereum has seen consistent outflows, with $13.2 million withdrawn yesterday, marking the eighth consecutive day of outflows.”
At the time of writing, Bitcoin trades at $62,055, a decrease of 2.28% on the 24-hour chart, while Ether is down 3.86% and trades at $2,587
Improving sentiment
“The current crypto market reflects a state of heightened sensitivity, with the Fear & Greed Index swinging between extremes, highlighting its reactive nature,” said Shubh Varma, co-founder and CEO of Hyblock Capital. “Recently, the index shifted from fear to greed, emphasizing how the market continues to respond strongly to news and events.”
“Despite this volatility, the broader economic environment remains supportive. Central banks, including the Federal Reserve, are adopting dovish stances, with rate cuts expected soon,” he said. “Liquidity cycles are increasing globally, suggesting a favorable backdrop for risk assets, including cryptocurrencies. The dovish sentiment from the Jackson Hole symposium further reinforced this outlook, as evidenced by the substantial inflows into Bitcoin ETFs, with $252 million net inflows reported on Friday alone.”
After highlighting the increased volatility for Bitcoin, which has been oscillating between $60,000 and $64,000, Varma noted that “Market participants are closely monitoring this behavior, especially as retail long positions have been on the rise. Historically, an increase in retail longs has been inversely correlated with Bitcoin's price, often signaling a bearish outlook,” he said.
“Altcoins are also seeing significant activity, particularly in response to specific news events,” he added.
“For example, the arrest of Telegram CEO Pavel Durov led to a sharp decline in the price of TON, accompanied by a large liquidation event,” Varma said. “Interestingly, despite this price drop and liquidations, open interest in TON reached all-time highs, indicating that traders remain actively engaged and are perhaps seeking to capitalize on volatility. This behavior suggests that the market is not on the sidelines but rather starting to actively search for opportunities, even in a climate of uncertainty.”
He noted that “Liquidity levels play a crucial role in the current market dynamics, especially during the ongoing consolidation phase,” and identified the key liquidity zones “below 62,000 and around the mid-58,000 region for Bitcoin.”
“A potential price drop towards these levels should be closely watched for significant decreases in open interest, which could indicate the market's maximum pain points,” Varma said. “So far, most open interest hunts have been occurring during price drops, often leading to subsequent price rebounds, a pattern that traders are keen to exploit.”
“Order book dynamics also provide valuable insights into market sentiment,” he added. “Currently, there is an imbalance on the supply side, which has historically been a bearish signal.”
Varma said that if Bitcoin’s price loses support at $62,000 and “moves toward the identified liquidation zones, ideally accompanied by a significant drop in open interest, it could present a compelling opportunity.”
“Additionally, if the order book imbalance shifted towards the demand side, this scenario would create a high-risk, high-reward setup for taking long positions, especially considering the favorable macroeconomic environment,” he concluded.
Altcoins drift lower
It was a down day overall for altcoins, as 80% of the tokens in the top 200 recorded losses.
Daily cryptocurrency market performance. Source: Coin360
Sun (SUN) extended its winning streak with a gain of 9.6%, followed by increases of 8.5% for Helium (HNT) and 7.1% for Floki (FLOKI). Echelon Prime (PRIME) led the losers with a decline of 12.3%, while Aragon (ANT) fell 7.8%, and Ethena (ENA) lost 6.5%.
The overall cryptocurrency market cap now stands at $2.17 trillion, and Bitcoin’s dominance rate is 56.4%.
