Last week in the news
A perfect storm are words frequently used to describe what was happening on the financial markets during the previous week. Both the equity and crypto market were traded much lower from previous levels. Major correction occurred, waiting now for dip buyers. Bitcoin is finishing week some 18% lower, Ether dropped to $2K major support.
Wave of sell-offs on financial markets pushed some of the coins to the much lower grounds. Tether has lost its peg to $1, when coin price reached 95 cents. This drop occurred soon after a significant downturn with TerraUSD stablecoin. Market was expecting that the same might happen to USDT, which is pegged to the US dollar. Though the coin swiftly returned to its pegged value, TerraUSD did not as it is pegged to the US dollar through algorithmic economic engineering. On Thursday trading Terra fell down to 23 cents, which is a drop of 70% in value of a stablecoin within one day. Terra token LUKA was halted from trading on Thursday.
Significant drop in crypto prices led to huge activations of margins on futures markets. As per some estimates more than $1.2 billion worth of positions were liquidated, with ETH futures leading the market. On the other hand, BTC`s drop below $30K attracted dip buyers on the stage. As tweeted by El Salvador's President Bukele, the country used this opportunity to add additional 500 bitcoins worth $15.5 million to the country's balance sheet. It has been also announced that the average purchase price was $30.744, while the country holds a total of 2,301 coins.
Companies related to the crypto market also had a tight week. Coinbase previously posted weaker than expected earnings for the first quarter and in combination with market sell-off, price of their shares dipped by 34% during the week. Shares of MicroStrategy were down by 45%. Grayscale Bitcoin Trust, the largest BTC fund, was down by almost 31%. On the opposite side, CEO of FTX, Sam Bankman, confirmed that this company bought a 7.6% stake in Robinhood, which increased the value of HOOD shares by 26%.
One of the largest investment companies from Japan, Nomura, announced that it has started trading bitcoin futures and options with CME Group. This move came as a competitive challenge, considering that its major rivals from the US, Goldman Sachs and JPMorgan are already offering these products to their clients.
Crypto market cap
A perfect storm are words mostly used to describe what was happening on the financial markets during the previous week. It was a painful week for long positions in both equities and cryptos. Luckily, such moves are not so frequent, but from the perspective of the economy, were necessary in order to return the economy back to balance and deplete incredible levels of leverage which central banks have injected into the system since 2008. Crypto market was additionally pushed to the down side through activation of more than $1.2 billion worth of derivative positions through margin calls. During the previous week crypto market capitalization dropped by 25%, losing almost $400 billion during a single week. Market cap was returned to the level from July last year. High volatility also increased daily trading volumes which were moving from $150B up to $210B on a daily basis. Total outflow from the beginning of this year dropped down to 43%, where almost $1 billion was erased from crypto market cap.
General market correction impacted sell-off of crypto currencies, during which 25% of market cap has been wiped from the market within a single week. Most popular coins were the ones to drive significant cash outflow from the market. Bitcoin lost $118B in market cap, which was decrease of 17% within a week. Ether was right behind BTC, with drop of $80 billion or 25%. Significant loss of $15 billion had Binance Coin which is lost of 23%. Loss above $10B also had Solana, which decreased its market cap by 39%. Stablecoin LUNA was one of the highest losers, when coin was halted from trading. On the other side, the collapse of one stablecoin pushed investors toward another stablecoin, Makler, which increased market cap by an incredible 20%. Tether decreased coins in circulation by almost 8%, which is its highest weekly drop.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Crypto futures market
It was a pretty tough week for crypto derivatives markets. Drop in prices of major crypto currencies impacted significant margin calls and liquidation of more than $1.2 billion worth of open positions. Another negative outcome of negative market sentiment was drop in prices for long term futures for both BTC and ETH. BTC futures maturing as of the end of this year were traded above $29K level, ETH futures for same maturity were traded modestly above $2K. Both of these two levels were at the same time current spot levels. This is indication that markets are not expecting some significant recovery of the crypto market at least till the end of this year. At the same time maturities in December 2023 were traded just slightly higher from current spot prices.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: dip buyers are still not on a stage?
Previous week was a second tightest week for BTC and crypto market after a drop of 17% in value within a single week. First hard week occurred during May 2021. However, the difference between these two moves is that the latest one was sort of expected. Levels of $30K were emerging on charts as a major support line where BTC was headed. But, what is emerging from fundamentals is a question if this level is the actual end of market correction? Namely, FED is determined to withdraw excess liquidity from the market in order to fight inflation, in which sense, future price of the BTC is pegged to future FED moves, which, on the other hand, would depend on future inflation figures. Following this logic, a question is emerging, if current levels of BTC are actual end of moves to the downside, or can we expect further drop in price of BTC in the coming period? The BTC futures market does not show much optimism for the price of BTC till the end of the next year, but certainly, it is still too early in time to draw conclusions.
BTC started the previous week with a push of prices to the downside from the $35K resistance line. End of this move was finished at $25.3K which was the lowest level reached during the week. After this level, BTC modestly rebound supported with dip buyers, which pushed price to the level of the current resistance line at $30K. Still, the coin is ending week modestly below this level. RSI clearly reached the oversold market, but continues to move within this range. Moving averages of 50 and 200 days continue to move as two parallel lines, but now with a clear down trend. There is still no indication of a potential golden cross in the coming period.
After strong price moves to the downside, during the following days it could be expected that BTC will search to calm around new levels. Dip buyers emerged on the market during the last two trading days, however, they were not able to push prices above $30K resistance. In case that more buying orders occur in the coming days, it might be expected that the price of BTC will return at least to $33K levels, with lower probability that next resistance at $35K might be tested. On the opposite side, if selling orders continue to be prevalent on the market, the price of BTC might turn back to the $25K support line.
Ether: struggle for $2K starts?
Hard week is behind Ether, in which the coin lost almost 25% of its value, losing more than BTC. Previously, ETH made significant efforts to hold the price around the psychological line at $3K, however, with the latest move, $3K could be a target for the end of this year. Lowest price reached during the week was $1.700, and ETH is finishing this week around $2K line, with prevailing selling orders on the market. RSI was pushed to the oversold market, and continues to move within this range. Moving average of 50 days is speeding move to downside, leaving modestly MA200 behind. Certainly, the golden cross will not occur in the coming period.
Current support line for ETH stands at $1.950, which is line tested as of the end of the week. Considering that selling orders continue to prevail on the market, it increases the probability for this line to be broken in the coming period, where ETH might find new support at $1.850. In case that current support sustains, then ETH will revert to the upside, to the level of next resistance at $2.100. Following resistance stands at $2.300 with significantly decreased probability that the market might test it in the coming days.
Ripple: time for short reversal?
Previous week XRP started around $0.55 support line, however, the coin was swiftly pushed to the downside in line with general market sentiment. Lowest level reached was $0.33 when significant buy orders started to occur. It is only a guess that Ripple intervened on the market in order to stop further drop in price. After this, XRP reverted to the up side, finishing the week modestly above the $0.40 support line. RSI reached a clear oversold market, where the indicator was moving since the start of this week. Moving average of 50 days is speeding up movement to downside, to the point where it looks like the start of divergence from MA200.
XRP is finishing the week at $0.40 support line and with prevailing selling orders. This might be an indication that the start of next week will put the coin under challenge to sustain this level. In case that $0.4 is breached, the next target of XRP might be the $0.35 support line. In case that coin starts reversal from the oversold market, $0.45 up to $0.5 might be levels to test.
Binance Coin: on a road of challenging reversal?
BNB was following general market sentiment during the previous week, so the price was pushed to the downside and to the current level of $290 where BNB is finishing the week. However, it was interesting to see that the lowest level during the week was at $209, within one single move. This indicates that there is part of the market which perceives much lower prices for this coin, at $200, a major support line. Still, the majority of the market is pricing BNB at current levels. Dip buyers occurred as of the weekend, but still, selling orders were dominating the last trading day of the week.
RSI reached the oversold market during the week, but finished the week around 33, which might be an indication that the market started a short term reversal. With latest moves MA50 started modest divergence from its MA200 counterpart, indicating that a golden cross is currently not in store for this coin.
During the last trading day of the week BNB was testing the support line at $250, but without strength to break it to the downside. Coin started its reversal, which adds to the probability that $300 resistance might be tested in the coming days. At this moment, there is no clear indication that the next resistance line at $350 might be tested in the following few days.
Cardano (ADA): historically lowest price is achieved
During the previous week ADA reached a not so nice record. Namely, the coin managed to reach its historically lowest market price at the level of $0.39, but on a positive side, at least the coin managed to increase its volatility. ADA is finishing the week around level of $0.5, with RSI moving at oversold market and MA50 moving slightly away from its MA200 counterpart.
Regardless of significant drop in price during the week, during last trading days buying orders for ADA were emerging. This indicates potential for price reversal in the coming days. In this sense, there is potential for $0.6, eventually $0.7 resistances to be tested in the coming days. On the opposite side, $0.4 might be tested for one more time.
LINK: start of a short reversal?
Prevailing selling orders from two weeks ago, just continued their trend in an environment of negative market sentiment. LINK started the previous week around $10 short term support line, and continued the bearish trend down to the level of $5.3. Since a clear oversold market has been reached, the coin started its short term reversal, finishing week at $7.2.
RSI was moving the whole week in an oversold territory, where it also finished the week. This increases the probability that the coin will start a stronger reversal in the coming days. At the same time, the moving average of 50 days is slightly moving away from its 200-days counterpart, indicating that the golden cross is still on hold.
Long term support line for LINK stands at $8. This line has been broken during the previous week, however, the coin is heading toward this level. Whether there will be strength for a move above this line will depend on buying orders on the market. In this case, LINK might try to reach the previous level of $10. On the opposite side, the level of $6 might be tested for one more time.
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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