Last week in the news
General negative market sentiment fuelled by central bankers and high leverage, pushed both equity market, including gaming and metaverse industries, and crypto market to the downside. BTC ended the week down about 20% in a week and 45% from its ATH.
The Central Bank of Russia has officially published a document on 'Cryptocurrencies: trends, risks measures' , which is a sort of call of CB for a new, tighter regulation, i.e. ban of cryptocurrencies related businesses and activities. The reason behind such a proposal is coming from asset`s extreme volatility and high potential for fraudulent activities. Russian CB is also stressing potential negative impact that crypto assets might impose to monetary stability of the country. The call for ban also includes crypto mining in Russia, as it might impose a threat to energy supply in the country and an impact on environmental agenda. Analysts with knowledge on the matter are noting that CB did not mention anything new in its report. On the other hand, ban of crypto businesses in Russia will inevitably have negative consequences on outflow of current businesses, significant funds related to it and highly skilled professionals out from Russia.
News is reporting that the US SEC is rejecting the accounting method which is used by MicroStrategy in order to present earnings from bitcoin holdings. Namely, the company was using non-GAAP methodology for this purpose, which was not in line with the US accounting regulations. SEC made a note in a filing, that the company should adjust its accounting measures for the future fillings. As MicroStrategy holds a significant amount of bitcoins, the price of its shares dropped by 18% on Friday, amid general market turmoil.
The Board of Governors of the Federal Reserve System has officially issued a white paper on Central Bank Digital Currency, calling for public discussion on the major topics related to potential benefits and risks of stablecoins and other means of digital payment methods.
Crypto market cap
Market sentiment was negatively affected by the FED`s rhetoric over its future stronger tapering as well as its increase in interest rates during this year. As the crypto market is highly leveraged, a drop in crypto prices fuelled closure of open positions on Friday trading, which continued during Saturday. Total crypto market capitalization fell again to the level below $2 trillion, reaching $1.6 trillion as of the end of the week. It was a drop of 23%, where $470B was wiped from the market in a single week. Daily trading volumes were ranging around $130B on a daily basis, with Friday`s volume doubled to the level of $260B.
General selloff on the crypto market did not leave any coin in a positive territory during the previous week. Total market cap drop was led by major coins, who lost the most in nominal figures. Bitcoin was down by $170B or 20%, followed by Ether which lost $120B or 30% in market cap. Binance Coin was down by $25B or 30%, while top places belong also to Solana with a drop of $18B or 39% and Ripple, who lost significant $10B or 27% in a single week. On the other hand, Tether was relatively stable with a 0.2% decrease in circulating coins. BNB has decreased its circulating coins by 1%, while Polygon, Algorand and Filecoin have an increase of coins in circulation by more than 1%.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Crypto futures market
During the previous week the crypto futures market was following general developments on the crypto spot market. BTC futures with maturities up to March were down by 15% compared with the end of a week before, while drop for ETH futures for the same maturities was around 21%. On a positive side, there has been only a modest drop of prices for maturities in December this year, where BTC was holding around $45K and ETH around $3.3K. This implies that market perception for prices of these two coins will eventually recover until the end of this year.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: eyeing $30K as a bottom?
General negative market sentiment fuelled by central bankers and high leverage has pushed the crypto market to the downside, during the end of the previous week. Although BTC started the week around $43 level, general selloff has pushed the price 20% lower, to the level of support line at $35K. BTC is ending the week with ongoing pressure on the downside around this level.
Two weeks ago a major development on charts was formation of so-called “dead cross” of moving average lines of 50 and 200 days. Within the first three days of a week, formation was confirmed, and BTC`s price was pushed to the lowest level since July last year. But, the question that is currently open is where does the end of this move stand? RSI was strongly pushed to the oversold territory, moving around 20 for the last three days. Based on current charts, the $30K support line is the bottom of the current move, but it might take some time until this level is finally reached.
After three days of strong price push to the downside, there is potential for the market to calm down around the support line at $35K, where BTC is currently traded. However, there is still strong bearish sentiment on the market, which might indicate that BTC is eying $30K as a bottom of the latest move. A level to watch within the next few days is $35K support. In case that it is broken, then BTC will certainly head toward $30K support as a bottom of the latest move. There is also some probability for $40K resistance to be tested, in case that BTC starts a short term price correction. Anyway, alert for high risks is still active on the market.
Ether: new lows in oversold market are still to come?
Although Ether started the previous week testing resistance at $3.3K, general market trend has pushed the price down to the support line at $2.4K. Lowest level reached during the week is $2.3K as of late Saturday. Although total daily trading volumes have slowed a bit as of the weekend, still, there is ongoing pressure to the downside which imposes the question if the bottom-line is still to come?
In addition to the above question are movements from oscillators of 50 and 200 days, which began their stronger convergence toward each other. This implies that cross might occur in the following days, which will be an indication of the potential further drop in price. On a positive side, RSI went deep into the oversold zone, down to the level of 20, which is an indication that short term reversal might be expected soon.
Results of technical analysis should be taken with precaution until the market calms itself, after such strong movements which had been on the crypto market for the last three days. For the moment it is evident that pressure on downside still holds, in which sense, the level of $2.4K support is the level to watch in the coming days. In case that it is broken on the downside, next support line stands at $2.1K. It should not be neglected that $2K was for a long time psychological level for ETH where coin spent a lot of time trying to break it to the upside. There is some probability for this level to come again in the spotlight of ETH. On the opposite side, if the coin enters into a short correction, the current resistance line stands at $2.630.
Ripple: still not finished with $0.55 support
During the previous week's selloff Ripple showed its fragility and lost around 27% of its value within the last three days. Though, for the last two weeks, XRP was struggling around the resistance at $0.8, still it managed easily to make a move toward the $0.6 support line. Lowest level reached during the week was $0.55 which indicates that there is some potential for further move to the down side.
Moving average of 50 days is continuing to diverge from its 200-days counterpart. RSI went deeply into the oversold market, reaching level of 20, indicating potential short term price reversal in the coming days. Currently, the market is testing the resistance line at $0.60. In case that market starts a short reversal in the coming days, there is probability that price will head toward $0.65 up to $0.70 resistance. At the same time, the market did not finish with testing $0.55 support, which leaves some probability for this level to be tested again in the coming days.
Binance Coin: time of recovery is still on hold?
Loss of 30% in market cap is not something that is frequently seen nor expected for BNB, but it happened during the previous week, under the pressure from general market selloff. From the end of the previous week, the resistance line at $500 was a hard task for BNB and the coin went down to the lowest weekly level at $340 on Saturday trading. However, the coin swiftly returned to the $350 resistance, which is currently tested.
Regardless of the latest strong moves to the downside, moving averages of 50 and 200 days are still converging toward each other. Cross might occur in the coming days, still, they are moving with some distance between them. RSI went to the clear oversold market, but it seems like that time of recovery is still on hold, considering that there is ongoing pressure to the downside.
In the next few days it is expected that the market will continue to test current resistance at $350. In case that market moves from the oversold zone, then BNB will head toward next resistance at $380 with potential to reach $430. In case that selling pressures prevail in the next couple of days, increases the probability for BNB to target to test $300 support.
Cardano (ADA): end of a cycle
For some time technical analysis indicated the end of the cycle at the $1.0 support line for ADA, but the coin was not ready to reach this level during the last several weeks. Latest developments on the crypto market have pushed the coin to this level as of the end of the previous week. Although, lowest weekly level was $0.93, ADA swiftly reverted back to the levels above $1.0 where it is currently traded.
For the last three weeks, moving averages are diverging from each other, after a clear cross from the upside, however, MA50 is modestly slowing down, regardless of latest sharp moves. This might be positive development for ADA, because it indicates potential for actual recovery in the coming weeks. On the other hand, it is interesting to note that RSI has moved from 65 down to 40, but a clear oversold market has not been reached.
Currently, there are mixed signals from technical analysis for ADA. On one side there is potential for short term recovery, while, on the other there is also potential for further move to the downside. It might take a few days until the market calms down and starts its new cycle, which will also be revealed and confirmed through technical indicators. For the moment, there is a risk that the price might shortly move further to the downside, at least till the next support line at $0.9 to test it once again. There is also equal probability for a short price recovery till the resistance line at $1.20.
LINK: recovery is coming soon
Although at first sight it seems like dropping to the $15 support line was bad news for LINK, actually it might be good news from the perspective of the technical analysis. During the previous week, LINK was just following its road set as of the end of the week before and continued its move to the down side. At level of $15 LINK has reached the end of a cycle started in July last year, which increases the probability for the recovery time ahead.
With the latest sharp move to the downside, RSI has reached a clear oversold market, indicating potential for short term recovery. Moving averages of 50 and 200 days are currently moving as two parallel lines, not providing much indication on the potential for cross in the coming days.
Current charts are indicating a higher potential for short term recovery for LINK. In case that current support line at $15 is not further broken on the downside, LINK will revert to test the resistance line at $20. At this moment, there is a very low probability that resistance might be broken on the upside.
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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