First Mover: Bitcoin Bounces Back Above $47K Despite Bearish Chart Pattern

PLUS: Bitcoin's Uncorrelated Returns Still Make It Attractive to Portfolio Managers

March 1, 2021 Everything you need to make sense of the crypto markets and beyond Sponsored By: By the CoinDesk Markets Team Edited by Lawrence Lewitinn If you were forwarded this newsletter and would like to receive it, sign up here.  Bitcoin (BTC) +5.68%  $47,828 Ether (ETH)  +11.19%   $1,523 (Price data as of Mar. 1  @11:51 UTC) Good morning. Here's what we're writing about: Market Moves: Bitcoin Bounces Back Above $47K Despite Bearish Chart Pattern Bitcoin's Uncorrelated Returns Still Makes It Attractive to Portfolio Managers Check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Lawrence Lewitinn and Emily Parker, at 9 a.m. U.S. Eastern time. Today the show will feature guests: Max Boonen, director and founder of B2C2 Raghu Yarlagadda, co-founder and CEO of FalconX Simon Chantry, co-founder and CBDO of Bitt MARKET MOVES by SEBASTIAN SINCLAIR & OMKAR GODBOLE Bitcoin Bounces Back Above $47K Despite Bearish Chart Pattern Bitcoin regained some lost ground early on Monday, so far ignoring early indications of a bearish reversal on the weekly chart.   The cryptocurrency climbed to a high of $47,162 during the European morning, having dropped to $43,119 on Sunday – its lowest since Feb. 8. Bitcoin is up 5% over 24 hours near $47,230 at press time.   The rise comes despite signs of bearish trend reversal on a longer-duration technical chart. The cryptocurrency fell 21% in the seven days to Feb. 28, despite multiple favorable market news events, forming a bearish engulfing pattern on the weekly chart. Bitcoin weekly chart, with bearish engulfing pattern highlighted (Chart source: Bitstamp) The candlestick pattern indicates a reversal to bearish conditions, as sellers succeeded in pushing prices below the previous week's "opening" price (on Monday at 00:00 UTC) .   A similar bearish engulfing pattern marked an end of the previous bull market in December 2017. The cryptocurrency then entered a 12-month long bear market which bottomed following an 83% drop to lows near $3,100.   Blockchain data also shows signs of a cooldown in demand. The total number of bitcoin addresses with less than 0.01 BTC has also fallen slightly, according to data from Glassnode, indicating retail investment has begun to ease. The same can be said for wallet addresses containing 1 BTC all the way up to 1,000 BTC, where interest among institutional buyers appears to be capped.   That said, the engulfing candle pattern is just one signal amongst many market indicators and historical data shows the cryptocurrency saw multiple corrections of 30–39% during the 2017 bull market.   "BTC has found temporary footing," Jehan Chu, managing partner at cryptocurrency investment firm Kenetic Capital, told CoinDesk via WhatsApp. "Institutions and long-term investors are forming a solid backdrop and speculators smell a buying opportunity."   Traders should expect continuing volatility, he added, as buyers "prove out a floor" above the $40,000 mark before a return to $50,000 as buying resumes.   -- Sebastian Sinclair & Omkar Godbole   Read original story here:https://www.coindesk.com/bitcoin-bounces-47k-bearish-signal   SPONSORED BY NEXO Your digital assets deserve a savings account in their BEST INTEREST. Leading crypto lender Nexo treats you, your crypto and your fiat to industry-best Crypto & Fiat services, featuring:    * Up to 12% interest on digital assets, paid out daily! * Yields available on BTC, ETH, LTC, BCH, XRP, XLM, EOS, TRX, LINK, BNB, PAXG, USDT, USDC, TUSD, PAX, DAI, HUSD, GBP and EUR. * No minimum or maximum limits on funds deposited, offering infinite opportunities to earn. * Full flexibility with no lock-in periods, so you can withdraw your funds anytime. * #ZeroFees on all transactions. * Military-grade wallet security and top-tier insurance on all custodial assets with SOC 2 Type 2 certified crypto custodian BitGo. Get started at nexo.io LAWRENCE LEWITINN Bitcoin's Uncorrelated Returns Still Makes It Attractive to Portfolio Managers   For anyone who started buying crypto a week ago, the past few days have been awful. Bitcoin closed February down 20% from its all-time highs hit on the 21st of the month. However, for anyone else who bought any time before Feb. 8, it's been an investment that has paid off handsomely.   While bitcoin year-to-date returns may have come off since Feb. 21, they're still significantly higher than U.S. equities. And they're positive for the year, unlike safe havens gold and bonds, which have been crushed with rising interest rates.   Returns for bitcion, S&P 500, gold, and U.S. Treasury bonds, Jan. 1 - Feb. 28, 2021 (Data sources: London Bullion Market, St. Louis Fed, Yahoo Finance, CoinDesk Research)   That's not to say bitcoin comes without risk. Its realized volatility — that is, the standard deviation of returns — is astronomical relative to stocks or even precious metals. That figure over the past 30 days is close to 100% on an annualized basis. Granted, it's four times higher than it was over the summer but it's been even higher, hitting as high as 200% just 11 months ago.     Bitcoin 30-day volatility, annualized (Source: Skew)   Yet despite the past week's tumble, there's still an argument that can be made that the most risk adverse investor should allocate a even small amount to the likes of bitcoin.   JPMorgan strategists Joyce Chang and Amy Ho wrote, "In a multi-asset portfolio, investors can likely add up to 1% of their allocation to cryptocurrencies in order to achieve any efficiency gain in the overall risk-adjusted returns of the portfolio," reported Bloomberg Wednesday.   From a portfolio management point of view, the reason is correlation. The correlation coefficients for bitcoin and other major assets like the S&P 500, gold and bonds are converging on zero. They were elevated for the S&P 500 and gold because of the massive sell-off a year ago in all "risk-on" assets while significantly negative compared to U.S. Treasury bonds (considered a "risk-off" asset).   Bitcoin and macro assets 90-day correlation coefficients, Jan. 2020 to Feb 2021 (Data sources: St. Louis Fed, Yahoo Finance) Sure, for many, bitcoin's volatility offsets any possible allure its spectacular recent gains may have. Nonetheless, for a portfolio to be diversified, its assets must be as uncorrelated as possible. That feature may be enough to continue to attract portfolio managers in the weeks and months to come. --Lawrence Lewitinn BIGGEST MOVERS These are the biggest movers in the CoinDesk 20 over the past 24 hours:   Gainers: Ether (ETH): +11.19% Chainlink (LINK): +8.62% Bitcoin (BTC): +5.68% Losers: Cardano (ADA): -1.29%   The CoinDesk 20 filters from the larger universe of thousands of cryptocurrencies and digital assets to define a core group of 20. These assets constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges. LATEST HEADLINES 3 US Regulators Probing Robinhood's Actions Amid GameStop Trading Craze FINRA, the SEC and the New York Attorney General's Office are all making enquiries with the trading app provider.   Amos Meiri: Where Value Is Going in Blockchain Networks Will wealth flow to Layer One or Layer Two? It depends on the use case, says a long-time observer and investor. MIT's Digital Currency Initiative Raises $4M for Effort to 'Harden' Bitcoin Prominent backers include CoinShares' Meltem Demirors, Twitter's Jack Dorsey and MicroStrategy's Michael Saylor. Tether Allegedly Received Ransom Note Demanding 500 BTC "While we believe this is a pretty sad attempt at a shakedown, we take it seriously," the company tweeted.   Crypto Long & Short: How Coinbase Going Public Is Reshaping Trust in Markets The data divulged in Coinbase's long-awaited S-1 filing is eye-opening. But it's what the document means for the crypto markets of today and the capital markets of tomorrow that is more meaningful.   Google Finance Adds Crypto Data Tab The tool provides real-time and historical data for bitcoin, ether, litecoin and bitcoin cash.   A Better Breed of DOGE? Developers Release New Core With Faster Sync Speed Developers are trying to teach an old DOGE some new tricks.   Bots Encouraged Buying of GameStop, Dogecoin in Meme Trading Craze: Report Posts hyping the craze on social media revealed patterns of keywords and were timed at regular intervals, cybersecurity firm PiiQ Media said.   E-Commerce Giant Rakuten Now Lets Users Shop With Cryptocurrency The move opens up crypto payments at thousands of merchants across Japan that accept Rakuten Pay and Rakuten Point Card.   Supercar Maker Mazzanti Cruises Into Crypto With Bitcoin Payments, Token Sale Mazzanti's security tokens will provide a 50% revenue share in the sale of a special edition "hypercar," but so far interest has been limited.   India's Central Bank Sees Pros and Cons With National Digital Currency A CBDC could promote financial inclusion but also poses a risk of harming the banking system, the RBI said in a report.   Citi: Bitcoin at 'Tipping Point' as Institutions Come on Board  Looking forward, a Citi report suggests bitcoin could "become the currency of choice for international trade."   Introducing Coin Toss, debating the future of money on CoinDesk TV   From the world leader in crypto news and events, the all-new CoinDesk TV covers the rapidly evolving world of digital finance and its role in the global economy.   Hosted by CoinDesk Podcasts Managing Editor Adam B. Levine, Coin Toss sets the stage for debate between guests with opposing views on policy and regulation, privacy and data integrity, fraud and crime and more.   Watch Coin Toss Wednesdays at 10:30 a.m. ET on YouTube or CoinDesk.com. Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. 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