Last week in the news
Geopolitical tensions and further inflation surge in the US marked previous trading week. Crypto currencies were traded in a mixed manner, ending the week slightly lower from the week before. Bitcoin dropped by 5% on Friday trading, getting back to $42K level. Ether continues to hold around $3K.
The US inflation is continuing its strong rise, confirming that it is not only “transitory” as initially presented by the FED officials. Latest published figures show that CPI rose by 7.5% in January on a yearly basis. Analysts are estimating that potential rise in interest rates by 0.5% might come in March, with several rate increases during this year. There are still no official comments from FED on the inflator or interest rates topic in light of the latest inflation surge.
As CNBC is reporting, one of the largest crypto currency exchangers, Binance, will make a strategic investment in the magazine and publisher Forbes in the amount of $200 million. With this investment, Binance will become the second biggest owner of Forbes. Analysts are noting that this deal is important also from the aspect of further increasing influence of the crypto world on “real world”.
Samsung, a South Korean tech company, held an event for new Galaxy smartphones in the Metaverse during the previous week. Event was held on the metaverse avatar Decentraland, but the event did not go exactly as anticipated, due to technical difficulties that users have experienced. Although the initial idea was a positive one from the marketing perspective, still, it seems that Metaverse will need some further developments in order to attract a larger community.
Governor Matolcsy of the Central Bank of Hungary commented last week his full agreement with statements of the National Bank of Russia and some EU regulators that all mining activities related to crypto currencies should be banned. He also pointed out potential which crypto currencies have for illegal activities and also that current demand is driven by speculative capital which can create market bubbles.
The US crypto exchanger Coinbase will offer to its clients separately managed accounts (SMA) together with crypto currency fund manager One River Digital Asset Management. This means that Coinbase clients will be able to hold assets on the Prime platform or in Coinbase Custody while trading on One River`s platform.
Crypto market cap
Although the previous week started positively for the crypto market, still, geopolitical tensions and further inflation surge in the US influenced modest drop of investor optimism as of the end of the week. Total crypto market capitalization managed to reach again level of $2 trillion; however, due to a drop on Friday trading session, total capitalization ended the week at $1.87 trillion, flat compared to the week before. Daily trading volumes were modestly decreased during the week, moving in a range from $130B up to $230B on a daily basis. Total outflow of the funds since the beginning of this year still stands at 14% or $300B.
Although the first part of the previous week was promising for the crypto market, the end of the week brought some short reversal. Coins were traded in a mixed mode, ending the week relatively flat compared to the week before. Bitcoin managed to increase its market cap by modest 1% on a weekly basis, adding $12B to the cap. This time BTC was followed by Ripple, with an increase of $5B in market cap or almost 15%. Cardano also had a good week with additional $2B in market cap or 7%. Coins that finished the week in red were Ether, with a decrease of 4% or $14B on a weekly basis, followed by Solana, who lost some $6B or 17% and Binance Coin, dropping $3B or 5% on a weekly basis.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Crypto futures market
Rise of the crypto derivatives market continues. In line with developments on the spot market, crypto futures for both BTC and ETH have increased. Surge of BTC futures with shorter maturities was around 7%, while ETH futures were flat. The major development during the previous week was in futures contracts with longer maturities, like end of this and next year. Prices of the futures for these maturities surged for both BTC and ETH by 20%. Latest futures price for BTC maturity in December next year was $50K, while for ETH price ended the week at $3.495 level.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: fundamentals will determine next move
Bitcoin started the previous week heading toward the $45K resistance line, which was a positive and expected move. However, the end of the week brought some negative fundamentals regarding geopolitical and inflator risks, which was reflected in negative investors confidence, and a drop in BTC price down to $42 short term support line. On a positive side, investors' focus is still on the futures market, looking for higher returns, where maturities in December 2023 reached a price of $50K, reflecting expectations of investors on the future increase in value of BTC.
Technical analysis is currently sending mixed signals. On a positive side, MA50 is modestly reverting its divergence from its MA200 counterpart. Slowdown might indicate the start of the future convergence toward MA200 and potential cross in the future period. RSI moved up to the level of 64, however, a clear overbought market has not been reached. This provides some potential for further price move to the upside until a clear overbought market is reached. A look at support lines suggest that there is room for the $40K support line to be tested one more time in the coming days.
Considering currently increased risks coming from geopolitical and inflation factors, it might be expected that some pressures on the downside will persist in the coming days. In this sense, there is an increased probability for support line at $40K, eventually $38K to be tested in the coming days. On the opposite side, technical analysis is suggesting that there is room for price to move to the higher grounds from current ones, where $45K resistance might be tested one more time in the following days.
Ether: optimism is still fading?
Despite the fact that Ether made its move to the $3.2K, still, it was too early for higher optimism, that this level might sustain within a short period of time. As of the end of the week, fundamentals made their impact on the crypto market, and ETH moved down to $2.85K support line, where coin is currently traded. For some time now, ETH is struggling to break the $3K psychological line, however, technical analysis is still not in favor of increased optimism.
During the previous week RSI has moved to the level of 62, still not reaching the overbought market. As of the end of the week, the indicator moved down to the level of 50, not providing much indication regarding potential future price moves. On a not so positive side is that MA50 is continuing its divergence from its MA200 counterpart, after a clear “dead cross” made a few weeks ago. This adds to the probability that the coin is still not ready to make a clear reversal to the upside.
At this moment, ETH is testing a support line at $2.850. If pressures to the downside continue in the coming days, the next level to watch would be at the support line at $2.630, with a short stop around $2.800 level. On the opposite side, there is some probability for $3.3K resistance to be tested again.
Ripple: overbought market has been reached
During the previous week XRP made a significant breakthrough from previous $0.6 levels. As of the first half of the week, the coin managed to reach its highest level at $0.91, testing a long term resistance line. At the same time the overbought market has been reached, opening a path for short term reversal to the downside. XRP is ending the week testing $0.75 short term support line.
With the latest move to the upside, the moving average of 50 days has slowed down, implying potential change of direction from divergence from its MA200 counterpart. This would be a positive move which will indicate potential change in trend direction to the upside. However, two lines are still holding significant distance from each other. On the other hand, RSI has reached a clear oversold side, ending the week around level of 60.
As XRP is ending this week testing $0.75 short term support line it would be level to watch in the coming days. In case that fundamentals push the price to the downside, there is probability for the next support at $0.70 to be tested. Currently, there is a decreased probability for the coin to return to previous level around $0.60 in the coming days. On the opposite side, there is some probability for the $0.85 resistance line to be tested again.
Binance Coin: recovery under question
Sort of slow-motion movements are continuing for BNB. Although in the beginning of the previous week the coin reached a resistance line at $430, from $380 support line where it was previously traded, still, momentum was lost as of the end of the week, where the coin returned back to the short term line at $400.
Technical analysis is still pointing to the cross made two weeks ago, where MA50 crossed MA200 from the upside. This was an indication of potential downtrend in the coming period, so the latest price moves were sort of a reflection of the technical indicators. RSI has reached level of 50; not providing an indication that a clear move to the oversold market is near.
BNB is ending a week at $400, with an increased probability that the $350 support line can be tested in the coming days. Before reaching support, there might be a shortstop around $380 level. On the opposite side, the resistance line at $430 might be tested again in the coming days.
Cardano (ADA): support at $1.0 is still holding
At the beginning of the previous week, the inventor's optimism pushed the price of ADA up to the level of the resistance line at $1.20. As fundamentals made their impact as of the end of the week, ADA finished the week modestly above the support line at $1.0. On a positive side is that ADA is strongly holding the support line at $1.0. On the other hand, it raises a question: how much market pressure can this level hold?
Moving averages of 50 and 200 days are continuing their divergence from each other, despite the latest price move to the upside. This adds to the probability that the price at the $1.0 support line will be under pressure in the coming days. At the same time RSI has moved to the level of 50, after it reversed to the downside, ending the week at level modestly above 40. During the previous period clear oversold market has not been reached, leaving some space for this to occur in the coming period.
Level to watch in the coming days is the $1.0 support line. This line is for some time in the spotlight of the market. In case that it does not manage to hold in the coming days, ADA might move to the next support at $0.9 to test it. On the opposite side, there is lower probability for $1.20 resistance to be tested one more time.
LINK: there is good news and a bad one
During the last three weeks LINK was heavily struggling to reach the resistance line at $20. Good news is that the coin finally managed to reach this level during the previous week. However, not so good news is that this level could not be sustained, and the coin reverted back to the support line at $15. As of the end of the week, LINK is still trading above this support line, with high potential to test it again in the coming days.
Moving averages of 50 and 200 days were moving as two parallel lines during some time, however, with latest moves, MA50 started to converge further from MA200 counterpart. This points that divergence is still not over and that it might take some time until the trend is broken, and MA50 starts with convergence. RSI has reached level of 50 but soon reverted to the downside, ending the week around level of 38.
Level to watch in the coming days is $15 support line. LINK is heading to test it for one more time. Technical analysis is suggesting a higher probability that this level will sustain in the coming days. However, in case that it is broken, the coin might head toward $13, with lower probability that the next support line at $8 can be reached. On the opposite side, there is also higher probability for the $20 resistance line to be tested again, with a short stop around level of $18.
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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