Last week in the news

Hedging against surging inflation in the U.S. was a major driver of a crypto market during the previous week. Both Bitcoin and Ether reached new ATH`s at $69K and $4.870 respectively.

Inflation is in the spotlight of the market, after surprising data from the U.S. during the previous week. The U.S. Consumer Price Index rose 6.2% in October on a yearly basis. This is the largest CPI increase since the end of 1990. Both economists and investors are concerned that if inflation pressures continue at its current pace, the FED will have no choice but to react, probably through an increase of interest rates. On the other hand, increased interest rates might impact further recovery of the economy after a pandemic. Markets are already set for rates to increase in July next year, with further expectations for another hike in September next year.

VanEck exchange trade fund, which filed for an approval to trade Bitcoin directly, was rejected by the SEC, over inability of the fund to demonstrate that it can prevent fraudulent activities and in this sense, protect investors. SEC continues to be reluctant over crypto-based funds considering current lack of regulation within this field; however, analysts are expecting this to change in the near future.

Bitcoin Taproot upgrade is scheduled to be released during next week. The aim of this upgrade is to allow developers integration of new features which will “improve privacy, scalability and security of the network”. Analysts are divided regarding its potential impact on the price of the BTC. While some think that it could push the BTC price higher, others are sceptical that it will have any impact at all.

While China is strongly pushing the testing phase of its digital Yuan, other central banks are still at the beginning of this process. As per information provided from BoE during the previous week, it should not be expected to see digital GBP at least until year 2025. The Central Bank of Sweden marked the initial date during the year 2026 for digital Krona. As per analysts, there is currently a lot of issues that central bankers need to address, before final rolling of CBDC`s, some of few are security, privacy but also, recently mentioned is that people will have tendency to deposit their funds directly with central banks, avoiding commercial banks, which might impact funds outflow from the banking system.

Kazakhstan is another country whose energy grid has been hit by the increased energy consumption due to crypto mining. Increase in crypto mining this country faced after China's ban of the crypto industry, where many miners from China moved to this country. In order to cope with this issue, the Ministry of Energy of Kazakhstan has proposed a new law, which would limit energy consumption for crypto mining businesses.

Crypto market cap

Hedging against surging inflation in the U.S. was a major driver of a crypto market during the previous week. Total crypto market capitalization has increased by 6%, adding some $154B to the market during the week. Investor’s interest was turned to major coins. which are generally perceived as inflation hedging assets, like Bitcoin and Ether. Total crypto market cap reached new all time highest value during the week, hitting total $2.8 trillion. Daily trading volumes have increased during the previous week, ranging from $200B up to $300B on a daily basis. Total inflow from the beginning of this year stands at $2.02 trillion, which is an increase of 256%

During the previous week the crypto market was driven by major coins, Bitcoin and Ether. Both coins surged by 6% w/w, with Bitcoin adding additional $74B to its market cap, followed by Ether`s $32B. Binance Coin was another coin with good performance, which gained additional $5B or 5%. Interest of investors was also placed on Litecoin, who gained 33% within a single week. Tether`s circulating supply continues to increase, reaching $73.86B, higher 2,8% from the week before. During the week, there were also altcoins which lost some of their market cap, like OMG Network who dropped by 25% and Solana, which was down by 6%.

The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.

Crypto futures market

Both BTC and ETH futures were traded higher during the previous week, reaching new highs, and exposing expectations of investors over coin levels during next year. BTC futures were traded some 5% higher for maturities within the next six months. Highest increase was for maturities as of the end of next year, where they were traded up to $70K.

ETH futures also traded on average 4% higher, with the highest increase for maturities in December 2022. For these maturities the price was above $5K, for the first time in history of ETH futures.

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

Bitcoin: CPI pressures are pushing price higher

Surprising inflation figures in the U.S. have pushed BTC price to the new all time highest levels. During the previous week, BTC has reached a level of $69K, confirming that investors perceive BTC as a main inflation hedging asset. In support of this, it should be taken into account that BTC has beaten the price of Gold during this year.

Bitcoin is currently traded above $64K. After reaching ATH, the coin entered into a short price correction. Lowest level reached during the week was $62,2K, putting pressure at the $65K support line. A $65K support has been tested during the last few days. Moving average of 50 days continues its divergence from MA200, after the golden cross from mid-September. RSI touched a level of 70 on one occasion, indicating that an overbought market might soon come.

Bitcoin Taproot upgrade is scheduled for release during next week. Although analysts are divided on opinion if this event might have some impact on surging price of BTC, some modest volatility might be expected after the release.  As per current charts, there is a high probability that BTC will head to test the currently major support line at $60K, after support at $65K is broken. In case that $65K support holds, then it can be expected a move toward ATH for one more time.

Ether: targeting $5K?

Ether is continuing to follow the upside channel which started as of the end of September. Each new week ETH is reaching a new ATH. Previous week, it was at a level of $4.870. Lowest price during the week was at $4.450, and was in alignment with the channel. If formation continues to hold, it could be expected that ETH will soon reach $5K. Whether this will be the case, it will be seen during the next couple of days.

RSI has only once touched level of 70 during the week, however, it still does not provide clear indication that the overbought market has been reached. Moving average lines of 50 and 200 days are continuing their divergence, indicating that potential trend reversal currently is not in prospectus for ETH. A channel formation is dominant in current technical analysis and is the one to watch. As previously noted, if the channel continues to hold during next week, there is a high probability that the coin will reach the level of $5K and new ATH. On the opposite side, a clear move below $4.600 would be an indication of a channel break on the downside and the start of a major price correction.

Ripple: next milestone at $1.4?

It was a positive week for Ripple, considering that the coin managed to make a short move toward the $1.3 resistance line and finally break from the $1.20 line to the upside. Although, coin swiftly returned back to $1.2 level, the important difference is that now this is the support line for XRP and no more resistance.

Although RSI moved to the upside and reached 67, it is still not indicating that a clear overbought market is achieved. It leaves some space for the coin to move even further on the upside. MA50 is continuing to diverge from MA200 indicating that cross is not coming soon, and in line with it, a potential trend reversal. Technical analysis shows that there is potential for XRP to move again to test short term resistance at $1.30. A clear break of this level would lead XRP toward a long term and major resistance level at $1.4. However, this move might be revealed in the next couple of weeks. If the support line at $1.20 is broken on the downside, there is space for XRP to test short term support at $1.1.

Binance Coin: a new ATH is coming?

Second week in a row the question that is pending an answer is if BNB will have strength to break old ATH and finally make the new one? During the previous week BNB continued its strong price push to the upside, and managed to reach the level of ATH from May this year. However, there was not enough market strength to push prices above this level, but it does not diminish the probability that new ATH might soon come.

During the week RSI reached level of 80, and continued to move above 70. This is quite a clear indication of an overbought market and that price correction is to be expected soon. Although the lowest level reached during the week was $570, still the coin found major weekly support around $600. BNB is currently trading around $640, and based on charts; it is headed to test $700 historical resistance one more time. In case that BNB does not manage to break ATH in this attempt, it can be expected that price will shortly revert to downside, to level of $560 support.

Cardano (ADA):  determined to be valued at $2.0

Although a week before Cardano slipped modestly below the major line at $2.0, during the previous week general market sentiment has pushed ADA again above this major line. Coin reached level of $2.37, but quite soon reverted back to the $2.0 support level, where it is currently traded. It seems like ADA is determined to be valued at $2.0, regardless of general market sentiment.

RSI moved modestly to 60, but soon returned to 50, where it is not providing much indication on the potential reversal. MA50 slowed down its strong convergence toward MA200 counterpart, which is indication that cross and potential trend change are not coming soon.

Based on technical analysis ADA is continuing testing a strong support line at $2.0. In case that it is broken in the coming days, it could be expected that the coin will continue its move toward next support at $1.85. However, if ADA continues to move around $2.0 would not be a surprise, considering that for the last two months the coin is moving in a sort of channel around this level. A move on the upside, could potentially lead ADA to test once again $2.3 level.

LINK: heading toward $40?

It was an important week for LINK, considering that the so-called golden cross started its confirmation. LINK started the previous week above $30 level and soon reached $38.2 as a highest weekly level. Although short correction swiftly came, the coin was still holding above the $30 support line. LINK is finishing the week testing short term resistance at $35. MA50 started its divergence from MA200 counterpart, confirming the golden cross which occurred a week before.

Regardless of last week`s move to the upside, RSI continues to move around 60. This is indication that it is getting close to the oversold market, but there is still enough space until this level is reached. Current charts are suggesting that there is an increasing probability for LINK to make a move toward $40 resistance in the coming period of time.

A level to watch during the next couple of days is $35 resistance. A clear break of this level to the upside, would be an indication that LINK will try to reach its next target at $40. However, if the coin does not manage to break current resistance, then it will revert to the downside, in order to test the support line at $30.

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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