Bitcoin Bulls Look for Support

Bitcoin bulls are looking for support just days after a crypto rally sent Ethereum to new highs. The Daily Breakdown takes a closer look.

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Weekly Outlook

And just like that, it’s already the end of August. There’s one full week left in the month before we turn the page to September and the month will go out with a bang. Here’s what we’re watching:

Inflation. On Friday, we’ll get the PCE report, which is the Fed’s preferred inflation gauge. Inflation has been running hot lately, so investors are hoping we get a tame report, which would help usher in a rate cut at the Fed’s September meeting. Overall though, inflation has been moving in the wrong direction over the last couple of reports. On the macro front, we’ll also get the consumer confidence report on Tuesday and the second Q2 GDP revision on Thursday.

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The Setup — Bitcoin and IBIT

Bitcoin made new record highs on August 14th, but then quickly retreated back down to the $112K area. Then on Friday, BTC jumped higher, rallying almost 4% as it temporarily cleared $117K. However, over the weekend it pulled back toward recent support. 

When we zoom out to a weekly chart, we can see that the $107K to $111K area has been key — both as support and resistance. If we zoom in to the more recent range, some technicians may argue that the $110K to $112K zone has been key. While this is technically true, taking a “zoomed out” look can better help us spot larger areas of potential support and resistance. 

In this case, the $107K to $111K area was resistance in December and January, and then in May and June as well. If this zone holds as support, bulls might look for a return back to record highs. However, if this zone fails to act as support, it could usher in lower prices — potentially putting the $100K level in play. 

Options and ETFs

For investors who can’t trade or aren’t comfortable trading cryptocurrencies outright, they can consider ETFs for BTC and ETH. On the BTC front, IBIT remains the largest ETF by assets, while also supporting options trading. 

Bulls can utilize calls or call spreads to speculate on upside, while bears can use puts or puts spread to speculate on downside. In either case, investors may consider using adequate time until expiration. 

For those looking to learn more about options, consider visiting the eToro Academy.

What Wall Street’s Watching

GOOG

Alphabet finally hit new record highs on Friday, eclipsing its peak from February. The stock remains the cheapest name in the Magnificent 7 group (as measured by forward P/E ratio) and is now up 8.6% so far on the year. Dig into Alphabet’s fundamentals. 

IWM

The Russell 2000 was the best-performing US stock index on Friday, rising almost 4% on the day — more than double the next-best performer on the day (which was the Dow, +1.9%). The IWM ETF, a measure of the Russell 2000, hit its highest level since December amid the rally. 

NIO

Shares of Nio remain in the spotlight on Monday as the stock continues to surge. Last week, Nio climbed more than 30%, including a 14.4% rally on Friday. This morning, it’s up another 5% in pre-market trading. Can the stock keep up its six-day win streak? Check out the chart for NIO.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.

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