Last week in the news
Concerns on the U.S. inflation, after August data were published, have driven the markets during the previous week. While the U.S. dollar and stock market lost some of value, the crypto market gained, pushing Bitcoin to the level of $47K and Ether to $3.3K.
During the previous week markets were mostly driven by the U.S. economic data which have increased investors' concerns on the future inflation and timing of potential FED's rate hike. Core inflation rose 3.6% in August compared to the same period last year, as a consequence of supply chain disruptions followed by high demand. Personal consumption expenditure price index is up by 0.3% in August, remaining at the same level from the previous month. For the last two days of the week the U.S. dollar lost some of its strength while U.S. Tbond 10Y benchmark was down to 1.48%. Although the FED has increased its inflation forecast to 4.2%, still the latest figures are raising the concern that inflation might be higher from the forecasted level.
After the People's Bank of China banned all crypto-related business in China during the previous week, the largest crypto exchanges in the world started to cease new account opening to Chinese clients. One of the first exchangers was Huobi, whose plan is to gradually cease all existing accounts of Chinese users by the end of this year. Binance announced that it is blocking new account opening from Chinese phone numbers, while their application is no longer available for download in China. Alibaba.com announced that this company will also ban any kind of trade of goods which includes crypto currencies.
El Salvador, one of the first countries in the world who made Bitcoin fully acceptable in local payments, started mining Bitcoin from energy generated from a volcano. Although this project is still in the testing phase, President Nayib Bukele hopes that these are the country's first steps in securing Bitcoin mining with cheap, clean, renewable and zero-emission geothermal energy.
During the previous week Ripple officially announced that it is entering into the field of non-fungible assets, through its Creator Fund. The purpose of the fund will be to support innovations in tokenization of assets and NFT`s which will support their potential wider use.
In an interview with CNBC, investor and former Facebook executive Chamath Palihapitiya, noted his concerns regarding medium term inflation and his current strategy for hedging against it. His strategy includes investments in hyper growth companies and businesses with annual growth of minimum 50%, stocks that generate cash and also non-correlated assets. He specifically mentioned Bitcoin and Solana and that he is an “intellectual bull” when it comes to cryptos.
Crypto market cap
During the previous week markets were mostly driven by the U.S. economic data which have increased investors' concerns on the future inflation and timing of potential FED's rate increase. Stock market finished the week in red, however, the crypto market was positively supported by inflation concerns. As of the end of the week total market capitalization reached a level of $2.14 trillion, which is an increase of 12% on a weekly basis. Major currencies were driving the market, mostly Bitcoin, Ether and Binance Coin. Daily trading volumes remained at relatively the same level, up to $200B on a daily basis. Total inflow from the beginning of this year stands at $1.35 trillion, which is an increase of 170%.
Previous week was generally positive for the majority of crypto currencies whose market capitalization reconciled after a decrease from two weeks ago. Major coins gained the most, led by Bitcoin whose market cap was increased by $100B or almost 13%. BTC was followed by Ether with a gain in market cap of $55B on a weekly basis, or 16%. Binance Coin also managed to make a comeback with a market cap increase of $13B or almost 23%. OMG Network was another coin which was in the spotlight of investors, since the coin made an astonishing $70% increase in price and market cap in a single week. On the other hand, Cardano and Tether were one of the rare coins which finished the week in red, with a decrease in market cap of 4% and 0.7% respectively.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Crypto futures market
Both BTC and ETH futures were traded higher during the end of the previous week. Short term maturities were up by 12%, while maturities in December, January and February next year were up by some 14%. However, maturities as of December 2022 were traded lower by almost 3% for BTC and 5% for ETH.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: is there a real strength for $50K?
Bitcoin started a week above $40K, major support level. However, Thursday and Friday were the days of important U.S. fundamentals, which pushed coin price to the higher grounds, as U.S. inflation figures were not in the favour of potential inflation slowdown. It seems that BTC is still perceived by the large investors as one of the main inflation-hedging assets, which is overall positive for BTC. Highest BTC price was reached on Friday at a level of $48.5K. With this move BTC returned to the levels where it was at the beginning of September this year. RSI went to 60, but is still away from the overbought market. Oscillators are moving in parallel lines, still waiting for the confirmation of the golden cross.
Level to watch during next few days is $48K. This line has been a strong resistance for BTC for the last month. Technical analysis is suggesting that $50K will be a next stop of the BTC price, but for the a month now market doesn’t have strength to finally reach this level. Whether BTC will manage to make a breakthrough this time, is about to be seen in the coming days. Certainly, if BTC doesn't make a move above $48K, it will revert back to its current support line at $45K, with decreased probability for $43K.
Ether: long road to $4K
Ether managed to recover from losses encountered two weeks ago. One more time, the coin went above $3K from levels of $2.770 where it started the week. ETH is finishing this week testing a major resistance level at $3.500. RSI is currently at 55, not indicating that potential reversal is coming soon. Oscillators are moving parallel to each other, without indication that a potential cross is in store anytime soon.
Since the beginning of August ETH was testing resistance at $3.500. Coin managed to break this level only on one occasion, reaching level of $4K, but soon reverted back to $3K. Resistance at $3.500 continues to be in the spotlight of the market during the following period. In case that there is enough market strength which will push ETH price to the higher grounds above the resistance line, then it is to be expected that ETH will move to the next short term resistance at $4K and $4.1K. However, in the opposite case, ETH will revert a bit at least to the support line at $3K, with a prior shortstop around $3.1K.
Ripple: is there strength to break resistance?
During the previous week XRP managed to resist market pressure on the long term support line at $0.9 and soon started its reversal to the resistance line at $1.0. RSI moved up to 50, without indication on potential price reversal. Moving average of 50 days is modestly slowing down its divergence from MA200. Daily trading volumes continue to be relatively stable on a daily basis.
Current resistance line at $1.0 is the one to watch in the coming days. During the previous period, XRP has been struggling around this level on several occasions. Taking into account historical data, this level can be treated as a significant one for XRP. In case that coin manages clearly to break it and move above, then it might be expected that XRP will head toward the next resistance line at $1.20. However, if this is not the case, then it should be expected that the coin will revert to the downside in order to test the long term support line at $0.9 for one more time
Binance Coin: $430 in the spotlight
BNB had a strong recovery during the previous week. Although the coin started the week at levels of $320, the week ended with a strong push to the upside and to the level of resistance at $430. That was an increase of almost 23% in a single week, which put BNB among few top performance coins for the previous week. RSI was pushed to the level of 60, although still not in the overbought zone, it might indicate that further increase in price will certainly reach this territory. Moving averages of 50 and 200 days are still continuing to move as parallel lines, without indications on potential cross.
Level which is currently in the spot of the market is the $430 resistance line, where BNB is finishing the week. In case that coin manages to make a clear break on the upside, then the next level to watch would be the resistance line at $520. Whether BNB is ready for such a move, is about to be seen. However, based on technical analysis there is a 50% chance. In case that BNB reverts to downside, then level to watch would be short term support lines at $380, with low probability for $350 to be tested again in the coming few days.
Cardano (ADA): are higher grounds too optimistic ?
During the previous week ADA reverted to downside in order to test the support line at $2.0 for one more time. Also this time the coin didn't have strength to break short term support at this level so, it reverted to the upside, finishing the week around $2.30 level. MA50 and MA200 are continuing to diverge from each other, while RSI is exactly on level 50. Indicators are currently not suggesting any potential trend reversal. Although for a few weeks, Caradano was finding resistance at the MA50 line, from the previous week, the price of ADA moved clearly below this line.
Technical analysis suggests that ADA is on a sort of breaking point. There is a descending triangle formed from the beginning of September, where ADA is currently reaching the end of this formation. A break of current resistance at $2.30 on the upside would indicate a clear break of triangle and potential move of ADA toward the MA50 line, which currently stands at $2.40. However, based on short historical data, next resistance for ADA stands at $2.60. At this moment there is a decreased probability that ADA will manage to reach this level in the next few days. On the opposite side stands support at $2.0, where also the second line of the triangle currently stands. There is currently a decreased probability that ADA will go below this level, but just in case that some fundamentals push the price to the down side, then the level to watch would be $1.85.
LINK: moving back to the old channel, or maybe not ?
Two weeks ago LINK managed to break the old channel between levels of $25 and $30 where coin had been moving since August this year. The price went down to the support line at $20, however, during the previous week the coin recovered and went back to the level of $27. Although the resistance line at $30 has not been tested on this occasion, it increases the probability for LINK to test it in the coming period. RSI is pushed up to 55, however, still not indicating any price reversal. Oscillators are currently moving quite close to each other, but without a clear cross.
As previously noted, there is a high probability for LINK to test the resistance line at $30 in the coming days. At this moment there are no clear indications that this level will be broken on the upside. In case of a short reversal, coin might head down to the test support line at $25. On the other side, there is an arousing question if a move between $30 and $25 would return LINK to the old channel, or maybe this time there is something new in store for this coin?
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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