Last week in the news
It was a relatively calm week on the crypto market with lower volatilities supported by lower trading volumes. Bitcoin ended a week at levels around $35K, and Ethereum above $2.3K.
News that marked the previous week was certainly a move from the El Salvador Government, which has adopted Bitcoin as a legal tender. This is the first country which approved the so-called the Bitcoin Law, and made the BTC “unrestricted legal tender with liberating power, unlimited in any transaction, and to any title that public or private natural or legal persons require carrying out”. In practice this means that Bitcoin is adopted as a legal means of payment for goods and services, including tax contributions. Reasons for such a decision remain still little known, but as per tweets from El Salvador`s President, Nayib Bukele, his expectations are for the country to become a hub for Bitcoin mining, offering 100% clean energy, as well as potential for boosting the country's GDP. On the other side, economists are noting that some 20% of El Salvador's GDP is coming from its workers, working and earning in the U.S. and sending funds to the home land, where a significant amount of funds is actually spent on bank`s transfer fees. In addition, some analysts are pointing that El Salvador might finally gain independence from the U.S., considering that their economy is highly dollarized and in this sense dependent on the U.S. Federal Reserve moves in the U.S. economy. On the other side, there are also points to the issue of Bitcoin`s high volatility and questioning if the Law can be actually fully implemented in reality. One of the first officials to comment on this decision was head of the Bank for International Settlements (BIS) innovation department, who called El Salvador`s move as a “great experiment”, and noted that BIS still sees bitcoin as a speculative asset without any prospectus of becoming a mean of payment. Anyway, in case that El Salvador makes a successful story of introduction of Bitcoin as a legal means of payment, it might have broader consequences on the same moves also from some other countries, and certainly positive influence on BTC`s future price.
The Bank for International Settlements, a global banking regulator, has introduced a new consultation paper, by which it is required from banks who deal with crypto currencies to hold an increased amount of capital in order to cover potential losses which might generate this risky business. The capital needs to be sufficient in order to cover “full write-off” of cryptos. The aim of such a high capital requirement is to prevent wider use of crypto currencies by banks. On the other hand, higher capital risk weights are not proposed for stablecoins and other tokenized assets which are backed by traditional assets like bonds, equities and similar. Regardless of BIS`s generally negative opinion regarding crypto currencies, this news had a positive impact on the crypto market as it is officially providing a green light for banks to enter into the crypto field of business.
During the previous week, there has been discussion in the news regarding the potential influence of the introduction of digital fiat currencies on the crypto market. As some analysts were noting that it might squeeze Bitcoin from the market, still the majority are of the opinion that it will actually boost demand for crypto currencies. In an interview with CNBC, the fund manager Greg King noted that with digital fiat currencies the Governments will have much more control on the money supply, and “a lot of people get into bitcoin for concerns about that type of control”. In his opinion, digital fiat currencies will only increase demand for crypto currencies.
As per news reports, famous investor Warren Buffet, has not stayed immune to current digital transformations in business. Although he is a well known critic of Bitcoin, his company Berkshire Hathaway recently made a $500 million investment in Nubank, a growing digital bank situated in Brazil.
Crypto market cap
Total crypto market capitalization as of the end of the week was standing at $1.51 trillion, which represents a modest decrease of some $87 billion or 5% compared with previous week`s close. Regardless of this modest decrease, this is a second week on the crypto market with relatively lower volatility and stable levels without strong moves. There have not been gainers on a weekly basis, however, the majority of coins has lost up to 10% on a weekly basis. Bitcoin remained relatively stable with w/w decrease in market cap of 1%. Daily trading volumes are further decreased, ranging from $150B up to $200B on a daily basis. Total inflow from the beginning of this year currently stands at $717 billion, which is an increase of 90% in relative terms.
It was a relatively calm week on the crypto market with lower volatilities supported by lower trading volumes. Although the majority of crypto coins ended the week in red, this decrease was relatively lower and ranged around 10%. Bitcoin lost around 1% in crypto market capitalization, followed by Ehtereum with a decrease of some 2%. Bitcoin cash lost some 10%, Ethereum Classic was down by 11%, while DOGE erased this week it's gains from the previous one, with market cap decreasing by 16%. Also, there has not been any changes in circulating supply.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Bitcoin: getting closer to the breaking point
For the last three weeks, Bitcoin is moving in a relatively relaxed mode, without large price swings which are supported by relatively lower market demand. However, at the same time, a pressure on the down side still remains. During the previous week Bitcoin`s highest level reached $38.3K, implying that market didn’t have strength this time to move closer to the resistance line at $40K. Important line during the whole previous week was resistance at $35K which has been tested, but without clear break. Support line at $30K has been tested only once. Range for the week was between levels $38K down to $32K.
For some time now, Bitcoin has been moving in a relatively short range between levels of $40K down to $32K, but with much higher pressure on the down side, than on the up side. Trend line has a down-trend angle, which could soon collide with the support line at $30K, and push Bitcoin to the final break of the triangle formation. Considering that there is currently general decreased demand on the crypto market, final break will probably be supported by fundamentals. Important levels to watch next week is certainly the $30K support line, where current pressure stands. As we noted in our previous weekly review, the $30K level is the level of 0.236 Fibonacci retracement, so a move to this line will mark the end of the FIBO cycle. On the opposite side, a clear break of $35K resistance, would lead BTC up to $40K.
Ether: still holding to $2.5K but with a pressure on $2.1K
Although the week started promising around level of $2.8K, ETH was actually moving in a downtrend during the whole week. Lowest level reached was $2.2K, while ETH is currently traded around $2.4. However, a pressure on $2.1K is unfolding.
For a second week, the important level for ETH to watch is $2.4K and 0.38 of Fibonacci retracement. At this moment, this support line is tested on the downside. In case of it's clear break, ETH will make a move toward the next support line at $2.100. In case that $2.4K is not broken, then ETH will revert back to the resistance line at $2.630 and probably once again to $2.800, as a level where the coin spent a lot of time trying to break during last three weeks.
Ripple: a break of $0.9 support
After spending the last three weeks struggling around support at $0.9, during the previous week XRP managed to break it on the downside. Still, good news is that there are not too many traders on the sell side, which supported XRP`s trading in a very short range, between $0.9 and $0.8.
Level of $0.9 still remains in focus. Although it is currently a resistance line, there is still a lot of trading made around this level. During the previous week, XRP did not move toward the next support line at $0.7 to test it, but remained around $0.8 instead. Levels to watch during next week will be $0.7 on a down side, which coin might test. On the up side, $0.9 is currently tested, and if broken, then the next level to watch would be at $1.0.
What’s in store for altcoins
Bitcoin Cash continued its ride on the downside, but with very modest moves. Coin started a week around $670 level and slowly reached $550 as of the week-end. Current resistance at $600 was in focus during the week, which BCH managed to break as of the end of the week. This break has opened a road toward next support at $460. However, with significantly decreased trading volumes, it might take some time for BCH to reach this level. In this sense, short term support at $540 might be a level more in focus during the coming period. If this level is not broken, then the coin might again revert to $600 level. Next resistance stands at $800.
Pressure on downside was predominant also for Litecoin. The week started around $180 level, but a down trend was in store for the whole week, and LTC ended the week around $160 level. Both levels are important lines for this coin. From this point, some potential for next support at $140 to be tested stands in a case of clear break of $160 level. In the opposite case, LTC would revert again toward $180, and if broken, will open a path toward next resistance at $200.
Two weeks ago Binance coin (BNB) had a relatively good week compared to other coins on the market, where BNB was traded in a short uptrend and reached level of $430. However, during last week, BNB was traded at lower levels, from $400, down to $325. Current charts imply the probability of the Neckline forming, but final confirmation will be available within the next few days. In case that BNB moves again to the up side in order to test $450 then the upside channel will be confirmed. Levels to watch in the coming period are support at $300 which might be tested and resistance at $400.
Dash (DSH) was relatively stable during the whole previous week, without any significant move which would indicate the trend of this coin. Like with other altcoins, there was some pressure on the downside, but it was quite modest. Coin was moving in a range between $190 down to $160. Current resistance stands at $180 and $200 which DSH might test in the coming days. In case that $160 is broken on downside, then level to watch would be $140.
A slow-motion trading was also dominant with EOS. Coin was moving during the previous week in a short range between levels of $6 down to $4.5. Support level at $5 was finally broken as of the week-end. Currently, there is a probability for the next support level to be tested at $4. In case that coin reverts to the up side, then $5 level will be tested, up to next resistance at $8.
After reaching a two-weeks high at $1.7, IOTA reverted to the downside during the previous week, trading in a very short range. IOTA started a week at $1.3 level and slowly reached level of $1.0 as of the week-end, where currently support level stands. This is also a level to watch during the next few days. In case that it is broken on downside, then next support at $0.75 might be tested. On the opposite side, the coin might revert to the current resistance at $1.5 again.
Decreased trading volumes on the crypto market also made an impact on NEO. During the previous week this coin was traded in a range between $58 down to $43. Support level at $50 has been broken, so coin is currently testing next support at $45. In case NEO manages to break this support, the next level to watch stands at $40. On the up side, current important lines stand at $50 up to $55.
Monero (XMR) had a relatively volatile week, moving in a range between $280 down to $220. Coin ended a week testing current support level at $230. This level is still not broken, which increases the probability for small reversal on the up side in order to test resistance at $250 up to $270. On the opposite side, a break of current support at $230 would move the coin to the next important line at $200.
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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