Last week in the news

Financial markets ended the second quarter with extended losses, pricing high inflation, fears of recession and monetary moves. So called “crypto winter” is still holding.  Bitcoin is finishing the week testing $20K support, while Ether is still holding modestly above $1K.

Implications of crypto market losses since the beginning of this year are starting to reveal in the crypto industry. Layoffs have been only the beginning. During the previous week a Singapore based crypto hedge fund Three Arrows initiated a bankruptcy procedure as the company filed for Chapter 15 of the U.S. Bankruptcy Code. On the other hand, a crypto trading and lending firm Genesis Trading is expecting several millions of potential losses due to their exposures to Three Arrows, as per people involved in a matter commented.

A crypto brokerage firm Voyager Digital issued a statement on Friday noting that it is suspending trading on its platform, including deposits and withdrawals of funds. As it has been noted, this suspension is only temporary, but for how long suspension will last has not been noted. According to Sam Bankman-Fried, founder of crypto exchange FTX, there are a number of cryptocurrency exchanges which are already out of cash, hence, news regarding insolvency of exchanges will continue in the future.

Announced data on the inflation in the Euro zone for June, revealed continued inflator pressures as it hit a new high at 8.6% in June. This is a certain signal that the ECB will increase interest rates at their July meeting, for the first time in the last 11 years. As it has been announced from the ECB, a new rate hike is possible in September this year.

Meta has disregarded its Libra project after several years of struggle, hence, its digital wallet Novi will be shut down. Meta revealed its plans in a message to its customers, urging them to withdraw funds from the platform.

The U.S. Securities and Exchange Commission refused to issue approval to the Grayscale Bitcoin Trust for its ETF based in Bitcoin. Immediately after the rejection, the Grayscale Trust filed a lawsuit against the SEC in the hope that it might reverse their decision.

Crypto market cap

Total crypto market capitalization ended the second quarter of this year down by 61% from the beginning of the year. Concerns regarding potential recession in developed economies are still high among investors, in which sense; nobody is asking a question where the current bearish market bottom line is. Markets are waiting for a signal that inflation has peaked in order to make a move from the current investment vacuum. Until then, some further price corrections to the downside might be possible. Last week`s drop in crypto market cap was led by major coins, Bitcoin and Ether, which lost the most in nominal figures among all other coins. Total market cap dropped by additional 8% in a single week, where $73B in value has been erased. Daily trading volumes were relatively flat, but still decreased from usual volumes on the crypto market, moving around $106B on a daily basis. Total outflow of funds from the beginning of this year was increased to the level of $1.335B.

Bitcoin and Ether were coins which were leading drop in the crypto market cap during the previous week. In nominal values, Bitcoin lost $35B or 8% of its market cap, followed by Ether, with a weekly decrease of $17B or 11%. Major altcoins followed the same path. Binance Coin`s market cap was down by almost $3B or 7%. XRP dropped by $2B, which is a decrease of 13% in market cap for this coin. Tether continues to decrease its coins in circulation, dropping total market cap by an additional 1%. Regardless of decrease in price, Filecoin managed to keep its market cap flat due to an increase of circulating coins by 1.4%. The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.

Crypto futures market

Crypto futures were following general market sentiment for crypto currencies. Futures with shorter maturities were down by 8% for BTC and by 13% for ETH futures. However, major developments were with futures prices for the end of this and next year. BTC futures maturing in December this year dropped by 9%, ending the week below $20K. ETH futures for the same period were down by almost 17%. Current market expectations for ETH price as of the end of this year as well as for the end of the year 2023 are still holding modestly above $1K, with very small price difference, pointing to current market uncertainty over the future price levels of this coin.

Table below provides the most recent information on BTC and ETH future prices.

Bitcoin: $20K support is challenged

Markets do not favour uncertainty, in which sense, capital preservation currently plays a more important role from returns on capital. Last week there was a further decrease in the value of both equities and crypto currencies, but the only assets that gained in value were US Treasury bonds. Capital flow currently goes to Treasury bonds as a means of capital preservation, while real returns still remain in a negative territory, considering widening inflation. In a current economic environment in developed countries, where economic indicators are pointing to high potential for a recession, it might take some time until market sentiment turns to positive.

BTC started the previous week by testing a support line at $20K. Highest level reached during the week was $21.4K, but without much market strength to move the price to the higher grounds. During the whole week BTC was traded with dominant selling orders. The price was pushed further to the downside, ending the week modestly above $19K. Lowest weekly level was at $18.5K. As of the weekend, the Relative Strength Index was pushed down to the oversold territory, one more time since the middle of June. Moving average of 50 days continues to diverge from its MA200 counterpart, indicating that cross is not in store for this coin for some time in the future.

Macro fundamentals in the U.S. continue to be the primary driver of the crypto market for some time now. It will also continue in the future. During the week ahead FOMC minutes will be released as well as non-farm payrolls and unemployment rate for June. In the case that any of these indicators surprise the market and imply a potential for further FED tightening of monetary policy, markets might react in a negative way. It should also be noted that the ECB meeting is also in a week ahead where it is expected that the ECB will increase interest rates and comment on the current state of the EU economy. As per current charts, RSI is pointing that reversal is ahead for BTC, in which sense, the coin might return to levels above the $20K support line. In case of a surprise in fundamentals, BTC has currently equal probability to move down to $18K next support line to test it.

Ether: market is always right?              

Market continues to punish ETH without any obvious reason. Since the beginning of this year ETH lost almost 72% in value, while BTC lost around 60% for the same period of time. There is no rational reason for such a loss in value for ETH, except only to comply with saying that the market is always right. Market is still in a sort of vacuum when the price of cryptos are in question, considering that difference between ETH futures maturing at the end of this year and the ones maturing at the end of the following year were only 30 points, implying on sort of current market confusion regarding the future prospectus of this coin.

Ether started the previous week testing resistance line at $1.2K. Soon the market lost its strength, and pushed the price toward the next support line at $1K. The price of ETH went modestly below $1K only on one occasion during the week, however, most of the time, ETH was traded above $1K support. During the Saturday trading, buying orders emerged, still, without any significant strength to push the price to the upside. During the week RSI was moving very close to the oversold market, but the line of 30 has not been reached. Moving average of 50 days continues modestly to diverge from MA200 counterpart, indicating that cross is still not in store for this coin.

Macro fundamentals are the ones to be watched during the week ahead for the potential price movements of crypto currencies. They will continue to play an important role for this market in a period to come, in which sense, technical analysis might not provide accurate price directions. If there are no surprises with macro fundamentals, then it might be expected that the price of ETH will modestly rebound to the level of $1.2K resistance line. However, if the price breaks the current support line at $1.0, then the price might revert further down to the level of $900.

Ripple: side trading might continue              

XRP significantly slowed down volatility during the previous week. Market was side trading this coin. Considering general negative market sentiment, side trading sometimes might be a good thing. It suggests that the $0.3 support line is the current bottom for this coin and there is no strength to move the coin further to the downside.  Highest level reached during the week was $0.36; however, the $0.4 resistance line has not been clearly tested.

Moving average of 50 days is currently slowing down its divergence from its MA200 counterpart. This indicates a potential that two lines might start the convergence road and potential cross in the future, but it is still early to confirm such an action, especially, taking into account current fragility of the crypto market. Two weeks ago RSI made a strong move toward the level of 50, however, during the previous week the indicator returned to the level of 37. Oversold market has not been reached.

As per current charts, XRP will start week ahead by testing the support line at $0.30. In case that there are no selling orders in place, which might push the price down to the next support line at $0.25, the coin will revert to the upside in order to test the resistance line at $0.40. Currently there is no indication that this line might be breached to the upside.

Binance Coin: potential for $200 support

General negative market sentiment is continuing to impact the price of BNB coin. During the previous week, the coin was making modest moves between levels of $242 down to $204. Support line at $200 has not been clearly tested on this occasion. As of the end of the week buying orders started to emerge, which stopped the price of moving further to the downside.

RSI is moving sort of sideways during the last two weeks, between levels of 44 and 37. It is a clear reflection of the spot market, where investors are still not certain which side to take. On a positive side is that the moving average of 50 days is slowing down its divergence from its MA200 counterpart. Still, path reversal is not indicated on the charts, in which sense, potential cross might take some time in the future.

Technical analysis is implying that there is probability for a support line at $200 to be tested in the coming days. At this moment, there is no clear indication that this line might be breached to the downside. In case of a short term reversal, the price of BNB might revert back to the level of $240, eventually $250 resistance line.

Cardano (ADA):  continuing slowdown

As it has been expected, ADA continued with side trading during the previous week. This is sort of typical behaviour of this coin, after prior strong price moves. During the previous weeks, the price of ADA reached historically lowest levels, after which, the coin started its side trading around level of $0.45.

Relative Strength Index is a reflection of the side trading market, as this indicator moved between levels of 45 and 40 during the whole week. Moving averages of 50 and 200 days are continuing to move as two parallel lines, but this time, MA50 modestly slowed down its moves to the down side. Still, convergence between two lines has yet not started.

As per current charts there is a high probability that side trading will continue for another week in a row. It is evident that the market does not have strength to push the price to either side. At this moment, of prevailing negative market sentiment, it might be a good thing for ADA. Currently, there is a high probability for the price to continue moving between $0.40 support and $0.50 resistance lines.

LINK: recovery is still on hold

Although LINK started the previous week in a positive manner, heading toward the upside, still the highest level reached was $7.1. Long term resistance line has not been tested on this occasion. By following general market sentiment, price soon reverted to the downside, to the level of $5.88. Coin is finishing the week testing the support line at $6, but without strength to break it further below.

Relative Strength Index is continuing sort of side moves during the last two weeks. The indicator is moving slowly between levels of 50 down to 40. It provides no indication that the market is ready for a move toward the overbought side. Moving averages of 50 and 200 days are continuing to move as two parallel lines, with MA50 currently slowing down its down trend.

Technical analysis is suggesting that LINK will continue to test the $6 support line in the coming period. There is currently no indication that this line might be broken to the downside. In case that support line is not broken, the coin will revert shortly to the upside and resistance line at $8. There are also no indications that the price might go above the current resistance line.

Disclaimer: This article provides exclusive views of the author. It does not in any sense represent a suggestion for trading.

This Market Analysis has been published by a staff writer at XBTFX.

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