Last week in the news
FED's tapering and inflation figures are continuing to be in the spotlight of the financial market. The implication that some of the excess liquidity would be needed to be pulled out of the crypto market is currently in the focus of investors. Markets have finished the previous week relatively flat. BTC`s latest trade was around $46K level, while Ether is finishing week below $4K.
Inflation will certainly continue to be a major topic of investors during the next couple of months. Major central bankers in the world are switching their rhetoric from temporary to longer term inflation. In addition, a new variant of the virus is certainly not adding to economic recovery. Due to these reasons, the U.K. Central bank raised its main interest rate last week by 15 basis points to 0.25%, from previous 0.1%. November inflation figures in the U.K. are showing a sharp surge to the level of 5.1% on an annual basis. After the FED`s regular meeting held the previous week, it is clear that three rate hikes are on the FED's table. According to some analysts, the first one might occur in March next year. What is for now sure is that the FED will start with reduction of its monthly bonds purchase program and that rate hikes will continue through 2023 and 2024.
In its report on stablecoins and cryptocurrencies, the Financial Stability Oversight Council, published on Friday, there has been noted a concern on potential threats coming from stablecoins which are not fully backed with fiat currencies. Other risks mentioned are related to potential failures due to operational or market risks, but also risks from decentralized finance have been mentioned. It has also been noted that current crypto markets are driven mainly by speculators, in which sense, it might be exposed to fraudulent activities. It has been proposed further regulatory scrutiny of these markets.
Michael Saylor, CEO of MicroStrategy discussed the ways that the company might generate profits from its holdings of at least 122.478 Bitcoins, worth some $5.8 billion, in the future. He discussed the possibility for the company to lend some of its holdings, establish a partnership with financial institutions or big techs, or to place its holdings under mortgage.
Crypto market cap
Previous week was a second relatively flat week on the crypto market. FED statements after the regular meeting were in line with market expectations, pointing to further inflator pressures and expected three rate hikes within next year. Considering that the market has already priced FED`s future moves, markets reacted in a calm way. Total crypto market capitalization is ending a week with a decrease of modest 1% compared to the end of the previous week, at a level of $2.18 trillion. Decrease is mostly driven by major coins BTC and ETH. Daily trading volumes were increased to $400B at the beginning of the week, however, during the week volumes were moving around $200B on a daily basis. Total inflow from the beginning of this year currently stands at $1.39 trillion, which is an increase of 175%.
Modest drop in total market capitalization during the previous week was led by major coins, BTC and ETH. Bitcoin lost some 3.9% in market cap, or $35B on a weekly basis, while Ether was down $10B or 2%. Majority of altcoins were relatively flat compared with the previous week, while there are few which managed to increase their market cap. This group includes Solana, with a gain of 6% in market cap w/w, followed by Polygon with an increase of 4%. Although Cardano was down by 1%, still the coin managed to increase its circulating coins by 2,2% 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
Crypto futures market performed in a relatively mixed manner during the previous week. BTC futures with maturity till April 2022 decreased by some 2%, while futures with longer maturities were modestly up compared with end of the previous week, where December 2022 reached price of $51,6K, compared with $51,3K from end of the last week. On the other hand, ETH futures were down by some 2% for all maturities, except March 2022, which dropped by some 10%.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: holiday surprises are not expected?
Bitcoin was moving relatively flat during the previous week, with some slight pressure on the downside. BTC started previous week testing resistance line at $50K, but without strength to move above it, coin reverted to down side. As of the end of the week, BTC managed to break short term significant line at $48K, and move price down to $45,3K. Support line at $45K has not been tested during the previous period. This is the second week in a row where BTC is trying to move to the higher grounds, but instead it is finishing week at lower levels. Some analysts are commenting that the reason for this might be found in announced FED's tapering, where less liquidity will be provided, and in this sense, investors will need to pull surplus liquidity from the crypto market. Certainly with Bitcoin this might be only one of the several reasons for its latest market performance.
After hitting the oversold market, RSI modestly pulled back to the upside, to the level of 40, currently not providing much indication over the potential future price moves. MA50 started its stronger convergence toward MA200, luckily, still keeping a distance. Current charts are pointing to the level of $40K as a line where the current cycle is finishing its move; however, it might take some more time until BTC actually reaches this level. On the other hand, knowing BTC`s historical moves, it would not be surprising if BTC is pushed by some sudden fundamental news before the forthcoming Holiday`s season.
For the moment we can rely only on technical analysis, which is pointing to the support level of $45K, not tested previously. There is an increased probability that BTC will test it in the coming days. This would be a level to watch, because a break of this level will lead BTC to the next support line at $40K and end of the cycle. In case that BTC is still not ready for such a move, then the coin will revert to the resistance line at $50K in order to test it once again. At this moment indicators are showing lower probability that $50K might be broken on the upside.
Ether: $4K can no longer hold?
Ether was holding strongly above $4K for the last few weeks, but during the previous week this level was not able to hold anymore pressures, and price moved down to $3,6K. Soon, it reverted to the upside, but only to test the resistance line at $4K.
Signals from technical analysis for ETH are a bit mixed at this moment. For the last two weeks RSI is moving in a range between 40 up to 57, not providing an indication regarding the actual side of the market and potential price reversals in the near future. MA50 is modestly converging toward MA200, but still moving far away from its major counterpart. Current support line at $3.600 has been tested on only one occasion during the previous week. Charts are showing increased probability that this line might be tested once again in the following days. Clear break of this line would open a way for ETH to move to next support at $3K. However, there is a decreased probability for such a move in the coming week. Instead it could be expected that $4K resistance will be tested once again. If broken, it should not be expected that price will move higher from $4.1K short term resistance.
Ripple: slowdown will continue
During the previous week XRP was moving in a relatively flat mode, between levels of $0.85 down to $0.75. However, there is one important difference compared to moves during a week before, which is that two weeks ago, $0.85 was the support line and the previous week it was resistance. Although price pressure on downside is slowing down, still XRP continues to eye $0.7 support. In this sense and based on the current chart, it might be expected that the slowdown for XRP will continue also during the coming days.
RSI has been continuing to move up, but during the previous week, it has only modestly reached level of 40. This move shows that there is still a long way to go for XRP until the coin reaches the overbought market. At the same time, moving averages of 50 and 200 days are continuing their convergence toward each other, indicating a potential cross in the near future. Level of $0.85 continues to be in the spotlight of the market for the second week in a row. In case XRP manages to break this resistance line on the upside, the coin will head toward long term resistance at $0.9. However, in case that there is not enough market strength to push price higher, then $0.75 will be tested again with higher potential for XRP to head toward the support line at $0.7.
Binance Coin: how far is $450 support?
As it has been expected, BNB slowed down a bit during the previous week. It is evident that market demand has decreased and is unable to push price further to the upside, however, still there has not been significant pressure to the downside. During the previous week BNB was moving in a range from $500 up to $550, modestly below the resistance line at $560.
Current charts are showing that there is still pressure to the downside for BNB, although they are easing to some extent. Resistance line at $520 has not been breached during the previous week, although it has been tested almost every day in the week. On the other hand, the level of $500 has been tested three times within a week. RSI is moving between 47 and 38, without any indication that the market is ready for a short term reversal. MA50 continues to move with a distance from its MA200 counterpart.
Taking into account current and ongoing pressure on the downside, the question is how far is the $450 support line? Resistance line at $520 will continue to be in the focus during the next couple of days. In case that this line is breached on the upside, BNB might head toward next resistance at $560, but there is currently decreased probability for such a move. Charts are showing that there is a higher probability that BNB will test once again the $500 level. If the market breaches this level, it will open a way for BNB to reach a support line at $450.
Cardano (ADA): getting closer to target at $1.0
ADA is continuing to lose its strength while a cross of oscillators is confirmed during the previous week. It supports increased probability that major $1.0 support might be reached in the weeks to come. At the start of the previous week ADA tried to test one again resistance line at $1.40, but without strength to move above it, it reverted to downside in order to test the next support line at $1.20.
After reaching a clear oversold market during the week, RSI moved quite modestly to level above 30, still not supporting indication that market entered into a short term reversal. Price moves during last week are certainly confirming that. There is currently ongoing pressure on the $1.20 support line. There is some probability that it might be broken in the coming days, which will open a path for ADA to move down to the next support at $1.0. At the same time it will be the end of a cycle that started in July this year. On the opposite side, there is decreased probability for $1.4 resistance to be tested one more time.
LINK: is bottom-line reached, or there is still a way to go?
Resistance line at $20 was a hard target for LINK during the previous week, so the coin reverted to the downside in order to test the next short term support line at $16. However, current charts are opening a question if the bottom-line has been reached with the latest move, or is there still a way to go down for LINK?
Two weeks ago RSI reached a clear oversold side, but during the previous week, the indicator was unable to go above 40. Recovery is not going fast as there is persistent pressure on the downside. MA50 is getting closer to MA200 from the upside, indicating that a cross might occur in the near future. Indicators are not moving in favour of a short term bullish market for this coin. LINK is finishing this week testing resistance at $20 for one more time. In case that it is not broken, the coin will revert to test once again support line at $16, which might indicate its further weakening toward $13 long term support line. On the opposite side, there is a decreased probability that the level of $20 might be broken to the upside at this moment.
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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