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The world’s largest cryptocurrency by market value was up 1.5% over a 24-hour period by press time and is currently changing hands for around $46,100.

Bitcoin is beginning to edge closer toward analyst’s projected $50,000 price tag, as CoinDesk reported Thursday.

“We were seeing many investors taking advantage of recent market movements by taking profits,” said Asher Tan, CEO of cryptocurrency exchange CoinJar. “There’s a trend of conservatism among users who jumped into crypto around similar price levels earlier in the year, with users slightly trimming their holdings.”

Indeed, bitcoin’s total daily volume across major exchanges, including Bitstamp, remains flat when compared to previous months, particularly towards the end of May.

“While the recent price movements have seen an increased amount of activity in the markets, trading volumes globally are nowhere near where they were the last time the price was at $45,000 – they’re much lower,” said Janine Grainger, co-founder of Australia-based exchange Easy Crypto.

The co-founder points toward new investors remaining cautious ever since they had a taste of the crypto market’s volatility when the sell-off in May saw bitcoin prices drop 50% from $56,700 to around $30,000 in a little over a week.

Yet seasoned investors, Grainger argues, are increasingly active with data hinting at a strong uptake in altcoins, beginning Aug. 9. “In particular, ether has picked up significantly against bitcoin and that is starting to trend again as of today,” she said.

“Some folks are worried we’re about to repeat history with this year’s $60,000-$30,000-$45,000, but this time it really is different,” BCB Group CEO Oliver von Landsberg-Sadie told CoinDesk via Telegram on Friday. “There is a ton of institutional money in the system, which behaves very differently from retail money; the ecosystem has evolved significantly with hundreds of thousands of man hours of innovation; and regulation has gained much greater definition.”

Ether isn’t the only crypto trending higher on the day with cardano, stellar and solana posting the highest gains. Zooming out to a seven-day period, most altcoins in the top 20 by market cap are outperforming bitcoin while most decentralized finance (DeFi) cryptos are trending higher in the green, up between 6%-90% over the same period.

“In terms of altcoins, many cryptocurrencies, especially DeFi coins, have been lagging in comparison to bitcoin and ether,” said Tan. “However, we’re starting to see a trend of users swapping bitcoin for DeFi coins, which has been a catalyst for the recent appreciation in their price.”

Despite cooler – but still high – inflation data in July and the U.S. Senate’s passage of a $1 trillion infrastructure bill that could impose certain taxes and restrictions on the cryptocurrency sector, bitcoin’s price climbed to $46,502 on Wednesday, its highest level since mid-May, with retail investors returning to the market. The cryptocurrency was trading at $46,433 as of press time, up 2.45% on the day. 

“The market isn’t expecting the language in the Senate bill to progress as is through the House and into law, which I also agree with,”  Jeffery Wang, head of Americas at crypto services Amber Group, wrote to CoinDesk in an email. “I think once all is said and done, we will have more palatable rules for the crypto industry.”

Cryptocurrencies:

Traditional markets:

“Bitcoin has taken a major leg up in the last few weeks. In our past notes we had anticipated a rally till mid of August,” Pankaj Balani, CEO of Delta exchange, wrote in an email to CoinDesk.

“We believe that the market should take a breather here. We expect the price to consolidate for some time in the $40K-$45K range before taking decisive action toward the end of August, early September,” Balani wrote. “The volatility continues to trade rich and there is interest to write the upside beyond 50K for Aug and September.”

Meanwhile, the total cryptocurrency market cap has topped $2 trillion for the first time since May, according to CoinGecko.

The U.S. Senate’s passage of a $1 trillion infrastructure bill this week with measures considered onerous for the cryptocurrency industry has done little to halt bitcoin’s nearly 60% price rally over the past few weeks.

Maybe that’s because the latest moves by lawmakers in the world’s largest economy illustrate how little appetite there is among top officials to curb the elevated spending that has fueled a run-up in U.S. government debt to unprecedented levels of over $28 trillion.

Crypto traders might be betting that the extra spending could spur inflation, potentially bolstering bitcoin’s appeal as a bulwark against dollar debasement. The Federal Reserve has created trillions of dollars in the wake of the coronavirus pandemic to help absorb the additional U.S. Treasury borrowing; the central bank’s holdings of Treasury bonds has increased by about $3 trillion since early 2020, to $5.3 trillion as of last week.

And despite speculation that the Fed might move to taper its bond purchases of $120 billion per month later this year (including $80 billion a month of U.S. Treasuries), the central bank may need to finance additional government borrowing. The Congressional Budget Office projected in July that budget deficits over the next decade could total $12 trillion, pushing the government’s debt load, expressed as a percentage of gross domestic product, to 106%, by 2031. A decade ago, that ratio stood at just 63%.

The CBO has said that the bipartisan infrastructure bill could swell projected deficits over the next decade by an additional $256 billion. That’s equivalent to another four months of Fed Treasury purchases at the current pace.

And there may be additional upward pressure on budget deficits after the Democratic-led Senate on Wednesday approved a $3.5 trillion budget framework with provisions for extra spending on family services, health and environment programs. According to the New York Times, the effort could “create the largest expansion of the federal safety net in nearly six decades.”

Much of that has been in the works for a while. Last year, bitcoin’s price quadrupled as then- presidential candidate Joe Biden defeated President Donald Trump in a Democratic government takeover billed as the “Blue wave.” But there’s a growing sense now that U.S. finances might be reaching a point of no return.

“You’re putting in motion a government that nobody’s grandchild can ever afford to pay,” said U.S. Sen. Lindsey Graham, a South Carolina Republican, according to the New York Times.

Based on the recent years’ trend, the Federal Reserve might end up paying for a lot of it by printing money.

The U.S. consumer price index jumped by 5.4% in the 12 months through July, the same pace as June and slightly exceeding the 5.3% increase expected by economists, the Labor Department reported Wednesday.

Despite the latest 12-month increase being on par with the fastest inflation in more than a decade, some analysts saw the stabilization as a sign that price pressures from the economy’s reopening might be easing.

“While I don’t think a small decline is a game changer, as far as monetary policy is concerned, it may have been had we continued to see an acceleration, or evidence of more worrying price pressures. Instead, we can all breathe a little easier,” Craig Erlam, senior market analyst for the brokerage firm Oanda, wrote in an email.

The July CPI report isn’t likely to have a major influence on the Federal Reserve’s high-level discussions over when and how quickly to start tapering its unprecedented monetary stimulus. In last month’s Federal Market Open Committee (FOMC) press conference, Fed Chairman Jerome Powell noted that the central bank is aiming to make gains in its goal to reach maximum employment before tapering.

Many bitcoin traders closely track headline inflation numbers in the event that the digital asset becomes a hedge against inflation because of its limited supply cap at a time when the dollar might be losing some of its purchasing power.

An address associated with the hacker who drained Poly Network of potentially hundreds of millions of dollars on Tuesday has started to return the funds, CoinDesk’s Eliza Gkritsi reports.

The transfers came after Poly Network first agitated for the blacklisting of the exploiter’s wallet addresses and then set up multi-signature addresses to receive any returned funds.  

One surprise is that the news of the exploit didn’t rattle digital-asset markets too much. 

“Reports late last night of a $600m hack have done nothing to shake sentiment in the cryptocurrency space, despite it being the largest hack in history,” Oanda’s Erlam wrote. “While a massive story, it seems traders aren’t concerned, something that perhaps we wouldn’t have seen a few years ago.”

The blockchain research firm Chainalysis published its own analysis: “While we certainly don’t expect every cryptocurrency hack to end with the attacker returning the stolen funds, in this case, it appears Poly Network will get its money back and has also learned about an important vulnerability its team can now patch up. Ultimately, the ecosystem will be stronger for this,” the report said.    

Cake Wallet Enables Readable Usernames: Unstoppable Domains, a blockchain domain provider, now allows Cake Wallet users to create custom user names for their wallet addresses. Launched in 2018 as the first free and open-source wallet for the privacy coin monero on IOS, Cake Wallet has expanded to include android applications and support for bitcoin, litecoin, ether and Cardano’s ADA. The wallet maintains some of the fundamental features of traditional wallets such as a built-in exchange and support for “fiat view.” Rather than use a 32-bit ambiguous string (on the visible layer at least), Cake Wallet’s 150,000 users will be able to create usernames under the “[NAME].crypto” format.

Ghana to Test CBDC With German Banknote Printer: The Bank of Ghana plans to test a central bank digital currency (CBDC) in partnership with German banknote printer Giesecke & Devrient. The central bank said Wednesday that Giesecke & Devrient will be providing the technology for the currency, the digital cedi. Munich-based Giesecke & Devrient provides banknote and securities printing services as well as cash-handling systems.

Most digital assets on CoinDesk 20 ended up higher on Wednesday. In fact everything was in the green except for dollar-linked stablecoins.

Notable winners of 21:00 UTC (4:00 p.m. ET):

xrp (XRP) +30.4%

polygon (MATIC) +21.9%

cardano (ADA) +17.6%

By analyzing trading activity on centralized exchanges from different days and time zones, blockchain data firm Kaiko found that on Coinbase, Gemini and Kraken, the ratio between the volume of weekend and weekly BTC/USD trading doubled from March 2020. This finding showed that the average weekend bitcoin (BTC, +1.31%) trading volume is growing relative to the average weekday volume on the three exchanges that are more popular among users in the West.

Meanwhile, as the chart below shows, the ratio of the BTC/USDT pair on crypto-to-cyrpto exchanges Binance, Huobi and OKEx has remained at around 1 in weekday and weekend volume over the past year. The three exchanges represent the power of retail investors in East Asia, especially in China.

On the derivatives market, Kaiko saw that, on an hourly basis, trading volume for bitcoin perpetual futures contracts on Binance and FTX, the two biggest derivatives exchanges, surged around 16:00 UTC. The peak trading time on the two exchanges overlaps between European and U.S. trading hours, suggesting that European Union and U.S. jurisdictions have become “extremely” significant for global crypto exchanges.

“With China cracking down on crypto trading and businesses, a lot of the volume has shifted to North America in the last 12 months,” said Kevin Kang, founding principal of U.S.-based quant hedge fund BKCoin Capital.

Kaiko’s report also show that while the crypto community has focused on the growing presence of institutional investors, it may have underestimated an increase in retail investors.

“This trend conflicts with bitcoin’s institutional narrative as it supposes that retail participation is increasing,” Dessislava Aubert, research analyst at Kaiko, told CoinDesk.

Kaiko’s findings also highlight how investors from traditional finance may have played a role in changing trading behaviors, according to market observers.

Rising weekend trading volume could be partly attributed to automated trading tools that can move some trading activities to weekends, according to Kaiko. Traders who usually conduct large-volume transactions may choose to split their orders into smaller sizes over a longer period of time to “minimize the execution costs and price impact,” Kaiko said.

“As more traditional market makers and quant shops [are] coming into the [crypto] space, we see higher liquidity on weekends than we saw in the past,” Kang said.

Joel Kruger, cryptocurrency strategist at institutional crypto exchange LMAX Digital, told CoinDesk that the trading volume in the past weekend at LMAX Digital was up by 85% from the weekend before, as institutional investors tracked the hotly debated $28 billion tax reporting provision of the $1 trillion U.S. infrastructure bill.

“We’re definitely seeing institutional players taking advantage of the 24-7 access to markets,” Kruger said. “This means being able to react to developments as they’re happening as opposed to being stuck in a position and needing to wait for the market to open up on Monday.”

Analysts remain optimistic about bitcoin despite regulatory uncertainty in the U.S. regarding crypto tax rules. 

“The crypto sector itself is new, and leaning on a nascent technology industry for taxes could impair its growth,” Lucia della Ventura, a researcher at Trinity College Dublin and legal compliance manager at financial software company Ledgermatic, wrote in an email to CoinDesk.

“It is necessary to wait for the final vote, taking into account that several amendments have been tabled as they can potentially change the impact of the bill for companies,” Ventura wrote.

Cryptocurrencies:

Traditional markets:

“Cryptocurrency traders are not so much focused on the expected passing of President Biden’s infrastructure bill, which, as it stands, will include new tax-reporting rules that are very negative for the space,” Edward Moya, an analyst at online brokerage Oanda, wrote in an email to CoinDesk.

In the meantime, “Wall Street is also closely watching bitcoin outperform the dollar and gold,” Moya wrote.

Also, on Tuesday, decentralized finance (DeFi) platform Poly Network was attacked, with the alleged hacker draining roughly $600 million in crypto. The cyberattack contributed to a sour mood across the crypto market.

Bullish sentiment is rising in the options market for bitcoin and ether. “There’s been a spike in demand for near-term options as BTC and ETH obliterated their multi-month price ranges,” Delphi Digital tweeted. “Both assets seem to be in a strong uptrend, and speculators have been buying short-term options.”

The chart below shows the declining 25 delta skew for one-week BTC and ETH option contracts, which means there is more demand for calls than for puts. 

Some traders see an opportunity to short BTC and ETH volatility given the recent activity in the options market. The chart below shows the recent rise in BTC three-month and six-month at-the-money volatility.

“We maintain our short volatility view. In fact, vega (longer dated puts and calls) looks like a good sell at these elevated levels,” QCP Capital wrote in a Telegram chat. 

QCP said that the frenzied buying of calls in both BTC and ETH across the volatility curve led to the short-squeeze rally. “We think this flow comes from funds and large speculators making large topside bets, buying BTC strikes up to $80K to $100k and ETH strikes up to $8K to $10K from as early as September 2021 out to June 2022,” QCP wrote.

Bitcoin’s blockchain transaction volume with values of at least $1 million has risen 10% since the beginning of August and accounts for nearly 70% of the total value transferred. 

These larger investors, as represented by large-value dollar transactions, fueled bitcoin’s nearly 20% price gains since last week, Glassnode said. 

A number of analysts say the trend shows that these institutions are focusing more on the cryptocurrency’s upside than on potential obstacles, CoinDesk’s Muyao Shen wrote.

The “spent output profit ratio,” or SOPR, which is calculated by dividing the realized value of a spent output by the value at creation of the original unspent transaction output, has broken above 1.0, reached a local high, and then reset back to 1.0, after months trading below 1.0, according to Glassnode. The movement indicates “a textbook bullish reversal,” Glassnode said.

An SOPR value above 1 “implies that the coins moved that day are, on average, selling at a profit (price sold is greater than the price paid)” and vice versa. 

​​“Most important to watch is whether SOPR holds above 1.0,” Glassnode wrote. “Should SOPR continue to trade higher, this reflects a bullish scenario where the market is adequately absorbing profits realized on spent coins. If, on the other hand, SOPR falls and trades back below 1.0 on a sustained basis, it would suggest a general weakness in the market and potentially a fake-out rally.”

Most digital assets on CoinDesk 20 ended up higher on Tuesday. 

Notable winners of 21:00 UTC (4:00 p.m. ET):

cardano (ADA) +7.01%

the graph (GRT) +5.84%

uniswap (UNI) +3.4%

Notable losers 

dogecoin (DOGE) -1.93%

litecoin (LTC) -1.75%

filecoin (FIL) -0.71%