Last week in the news
It was a bit of a mixed trading week on financial markets as investors were trying to weigh FED's policy aimed to fight surging inflation. Bitcoin had a good start of the week, but ending it around a short support line at $42K, Ether is still holding above $3K.
During the previous week markets were mostly moved by signals from Federal Reserve officials noting that they are ready to act in a more aggressive policy manner in order to cope with the highest inflation levels in decades. Released FED's meeting minutes exposed plans for a reduction in bond holdings by $95 billion as well as potential future rate hike of additional 50 basis points.
In a Bitcoin 2022 conference held in Miami, Cathie Wood, CEO of Ark Invest, expressed the opinion that traditional banks are jeopardized by crypto currencies. On one side, there is outflow of talented people from banking to the DeFi businesses, as well as outflow of bank clients. She also noted that both lending and saving is currently increasing in DeFi`s.
The UK Government decided to enter into the crypto world through issuance of its own NFT. News are reporting that Rishi Sunak, UK Finance minister ordered a UK state owned company for minting coins to create an NFT by this summer. This is an interesting step considering that the British government is fighting for some time now to put crypto businesses under control and tight regulation. At the current stage, there are only five crypto exchanges in the UK with temporary license, including Revolut, Global Block, CEX.IO, Copper Technologies and Moneybrain.
SEC Chair Gary Gensler announced on Monday that this agency is planning to put stricter controls and oversight on crypto related businesses in the US in order to provide higher protection to investors. Some of the measures will include registration and regulation of crypto platforms, including those trading on futures markets.
CLabs announced on Friday that this company is currently operating with ECurrency in order to provide central banks digital currencies access to decentralized finance. ECurrency is a company which is providing technology supporting central banks to issue digital currencies. Through this cooperation, Celo blockchain system can be used for CBDC`s to gain access to DeFi products.
Crypto market cap
After three weeks of positive sentiment, the previous week was a time for short correction on the crypto market. FED's minutes of the meeting revealed potential withdrawal of liquidity from the market in order to cope with surging inflation, which had a negative impact on the investors sentiment on financial markets, including crypto market. Total crypto market capitalization has decreased by 7% on a weekly basis, erasing $153B in the market value. Major coins were leading this market drop. Daily trading volumes decreased, moving between $150B and $160B on a daily basis. Total outflow of the funds since the beginning of this year has increased to 11% or $242B from last week.
Negative market sentiment pushed prices of the majority of coins into the correction during the previous week. Bitcoin was leading the market to downside, with a total decrease of $73B or 8% compared to previous week. BTC was followed by Ether, which lost $28B or 7%. Other coins which finished the week in red were Solana, with a total drop of $9B or 20%, Cardano, which was down by $5B or 14% and XRP with a decrease of $2.5B or 9%. One of the rare gainers was Monero, which managed to gain 8% increase in market cap despite the general market trend. Dogecoin was supported with Elon Musk`s purchase of Twitter shares, and the coin gained almost 2% in market cap in a single week. Despite the drop in price, Filecoin increased coins in circulation by 1.4%, followed by Algorand, with an increase of 1.1%. Tether continues to add coins in circulation, increasing it by an additional 0.5% during the previous week.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Crypto futures market
In line with general market sentiment, both BTC and ETH futures were traded lower for all maturities. Highest drop in future prices was in short term maturities, where BTC futures were traded some 8% lower, while ETH futures were around 5% down from the week before. As for longer maturities, BTC futures maturing in December 2023 dropped below $50K, where they had been traded two weeks ago. On the other side, ETH futures for the same maturity were traded 2% lower, but still holding above $3.5K.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: FED is spoiling the $50K game
FED has spoiled all the fun in the market during the previous week. As meeting minutes revealed its plans for withdrawal of the liquidity from the market and further increase interest rates, it made an impact on investors to think about repositioning of investments. All markets finished the week in red, including cryptos. Bitcoin, as a leading coin, lost some 8% in value during the previous week. Start of the week was promising at testing $48K, mid of the week brought some price correction, pushing BTC`s price down to $42.2K.
Two weeks ago moving averages of 50 and 200 days started their positive and long awaited move toward each other and potential gold cross formation. However, with the latest price correction these two indicators are moving as two parallel lines. It seems like that cross formation is postponed for some time in the future. RSI started the week around 60 but ended below 50, around 43. This might be an indication that the market is currently looking at an oversold market within the short future period.
Level of $42K is only a short term stop for BTC between support line at $40K and resistance at $45K. In this sense $42K is the level to watch in the coming week. If the market sustains this level, there is a high probability that BTC will revert back to $45K resistance line to test it one more time. On the other hand, if pressures to the downside prevail, there is an equal probability that the market will head to test the $40K support line.
Ether: price equilibrium is holding above $3K
Two weeks ago ETH managed to outperform BTC on the market, which was a rare situation for this coin. During that time, ETH managed to finally make a move above the $3K psychological line, and continued to trade above this level. During the previous week ETH reached its highest level at $3.570 in its attempt to test the $3.6K resistance line. However, after FED's meeting minutes were published, the coin reverted a bit to the downside, till the level of $3.140, where it is currently traded. Psychological line at $3K remained untouched, as buying orders prevailed during the two last trading days of the week.
Moving average of 50 days has slowed down its convergence toward its MA200 counterpart. Indicators are currently moving more like two parallel lines but prevailing buying orders as of the weekend are putting some confidence that convergence will certainly continue in the coming period. RSI was in the overbought zone two weeks ago, but during the previous week this indicator reached level of 50 and modestly reverted back. It provides some indication that the market is still not heading toward the oversold zone.
Current charts are showing the high probability that price equilibrium will continue to hold above the $3K psychological line in the coming period. It is supported by prevailing buying orders around $3.2K. At this moment there is a decreased probability that this line will be broken to the downside, in which case ETH will head to test $3K support line. In case of short term reversal, there is an increased probability that ETH will head one more time toward $3.6K resistance to clearly test it in the coming period.
Ripple: looking at the oversold zone?
Side trading became sort of a trend for XRP during the previous period, however, last week the coin followed the general market trend. XRP started the week testing $0.85 resistance line, however, due to general market negative sentiment; it swiftly reverted to the downside and lowest weekly level at $0.74.
Moving averages of 50 and 200 days are continuing to slow down their convergence toward each other. Current situation is that MA200 is moving faster toward MA50, than the opposite. This might postpone their future cross, and also raise a question at which level of XRP this cross might occur. At the same time RSI has crossed 50 levels, finishing the week around 40. This provides some indication that the market is looking more at the oversold territory rather than the opposite one.
At the moment XRP is testing a $0.75 support line. Based on emerging buying orders, it does not seem like this line will be broken to the down side. Start of the next week will mark this level. In case that buying orders prevail, there is a high probability that XRP will turn to $0.80 resistance line in order to test it one more time. There is currently decreased probability for $0.85 resistance level. On the opposite side, if $0.75 is broken, there is some probability for $0.70 support to be tested in the coming period.
Binance Coin: $420 support line under question
BNB is one of the rare altcoins which complies fully with the technical analysis indication of price moves, at least with recent historical moves. This is positive, as it shows that there is adequate diversification of coin holdings but it cannot make the coin resilient to the fundamental news. General push from the crypto market was reflected in BNB`s price during the previous week. Coin reached its highest weekly level at $460, but soon it reverted back to the down side and level of $420, where it is closing this week.
Two weeks ago, MA50 and MA200 started their positive move toward each other, but during the previous week this move has been slowed down. At this moment, these indicators are moving as two parallel lines, postponing a potential golden cross for some time in the future. RSI has moved from levels above 60 down to 50, still not indicating that the market is on the road of an oversold market.
BNB will start next week by testing the $420 support line. Positive development during the previous week was that this line has not been broken to the downside. It increases the probability that it might sustain at the start of the following week. If the coin reverts to the upside, $440 resistance might be tested again. There is currently a decreased probability that the next support line at $380 might be tested in the coming days.
Cardano (ADA): $1.0 is the end of correction?
During the previous week ADA was following the general market trend and the coin reverted from $1.2 resistance line down to $1.0 support line. On a positive side is that the $1.0 long term support line remained untouched and managed to hold the price above this level.
Moving averages of 50 and 200 days are continuing for some time now to move as two parallel lines, without indication that their convergence and potential cross might start soon. Two weeks ago RSI reached a level of 70 which was an indication that the coin will enter into a short price reversal. Confirmation came during the previous week, when RSI reverted down to level of 45. Break of the 50 line indicates that the market is currently looking for the oversold level.
Current charts are providing a bit of mixed signals for ADA. On one side there is positive induction that $1.0 might provide some resistance to downside pressures. However, if these pressures continue in the coming days, especially with RSI already below 50 level, there is some probability that price might reach the $0.9 support line. On the opposite side, $1.20 resistance might be tested again.
LINK: pressures to downside might continue
LINK started the previous week testing a short resistance line at $18, however, without strength to clearly break it and continue to move toward long term resistance at $20. Negative market sentiment reverted the price down to the level of support line at $15.
Moving average of 50 days is currently acting like a support line for LINK price. MA200 is on its downtrend, however, two indicators are continuing for some time now to move as two parallel lines, without indication that convergence might soon start. With the latest move to the downside RSI was pushed from levels of 67 down to 45 and below 50 line.
LINK is currently at a sort of breaking point. Charts are indicating that there are currently buying orders, but it is unclear whether they will be strong enough to push the price back to the previous level of $18. If the $15 support line does not manage to hold, there is some probability that LINK will head toward next short term support at $13.
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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