Last week in the news

Although last week of the old year was traded in a mixed mode, overall, Y2021 was a good year for financial markets. The EU equities market gained some 22%, while the US market ended the year with a yearly gain of 27%, and reached historically highest values during the year. Still, another year in a row belongs to Bitcoin, who beat the market with 65% yearly gain and ATH at $69K.

Beginning of this year was marked with expectations of further FED moves with the aim to discourage investments in riskier assets and shutdown of the Internet in Kazakhstan due to the crisis in the country. Namely, after China's total ban of crypto currencies, many crypto mining businesses were transferred to Kazakhstan, which became the second largest mining hub in the world. First trading week in this year Bitcoin finished in red, reaching levels below $41K on Friday.

In an interview with CNBC, Jared Madfes, partner in Tribe Capital venture capital company, who invested significant funds in start-ups within field of crypto currencies and DeFi`s, noted that their main focus in the coming year will be on decentralized finance and infrastructure which supports metaverse and smart contract solutions. He also commented on volatility on crypto markets, advising investors not to focus on a mark-to-market on a daily basis, but to focus on a long term value of those companies.

France is the next country targeted by Binance exchanger to develop their presence and crypto business in the year 2022. As per news reports, Binance is planning to invest 100 million euros in cooperation with France FinTech group in order to establish a research and development centre to support crypto and blockchain business in France.

As CoinDesk is reporting, Bitfarm, a bitcoin miner based in Toronto, has drawn $60 million from its $100 million credit facility from Galaxy Digital Holdings in order to further support its crypto mining business. Credit facility is issued at an interest rate of 10.75% on a yearly basis and is fully backed by coins in Bitfarm holdings.

Crypto market cap

First trading week on the crypto market was influenced by investor’s expectations of further FED moves aimed to discourage investments in riskier assets and shutdown of the Internet in Kazakhstan, a second largest mining hub in the world, due to the crisis in the country. These events discouraged investor’s optimism, decreasing total market capitalization below $2 trillion, to the level from the beginning of October last year. Crypto market cap was down by 10%, with outflow of $220B on a weekly basis. Majority of coins lost their value, but major contributors to decrease were majors, Bitcoin, Ether and Binance Coin. Trading volumes were relatively increased compared to the week before, and were moving in a range from $180B up to $260B on a daily basis. Total decrease in value from the end of Y2021 was $224B or 10%.

Negative fundamentals made an impact on the crypto market to start a new year in a red territory. Major contributors in absolute values to this decrease were Bitcoin, which lost 11% in value or $103B, followed by Ether with a decrease in market cap of $61B or 14% on a weekly basis. Another significant contributor was Binance Coin, with a loss of $10B or 12%. In a relative sense, altcoins which lost the most were Monero, which was down by 23% on a weekly basis, followed by Solana which lost 16% in a market cap and Polygon with 17% decrease. One of the rare coins which gained during the week was Chainlink who managed to surge its market cap by almost 30% in a single week. During the week there have not been significant changes with respect to circulating coins of all crypto currencies.

The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.

Crypto futures market

Crypto futures market ended the previous week traded at lower from the week before. In line with developments on the spot market, BTC futures with shorter maturities were traded down by 10%. December 2022 futures were also down by 10% compared to a week before, reaching $45K. ETH futures were traded lower by some 13%, while there was no data on traded long term maturities.

Table below provides the most recent information on BTC and ETH future prices.

Bitcoin: New Year brings new challenge

Putting the previous year for Bitcoin in perspective, it could be outlined that BTC is the only asset on all financial markets which managed to gain an incredible 65% increase in value during the year. BTC also reached its highest historical level in Y2021, with $69K in October. Year end brought some challenges in terms of higher volatility and some pressures to the downside, however, investors still have positive expectations regarding BTC`s long term value.

First week of the New Year brought some new challenges for the crypto market and BTC. Political instability in Kazakhstan and expectations on FED`s new measures aimed at curbing growing inflation in the US have challenged investors' optimism, so BTC headed to test support at $40K on Friday. This line is also currently tested. BTC is still moving around $41K, but pressure on the downside is still present. If it persists in the coming days, it might open a door for a price move toward the major support line at $30K, down to $28K. However, this move is within a higher timeframe. Looking at a shorter period, the oversold market is evident, which BTC reached during the previous week, with a move of RSI below 30 line.  At the same time moving average oscillators of 50 and 200 days are continuing to move close to each other, indicating a potential cross in the near future.

Level in the market spotlight for the week ahead is $40K support line. In case that it is broken on the downside, it will open a way for BTC to head toward next support at $35K, with short stop around $38K. There is currently same probability that BTC will move up to test $45K resistance in case that $40K support is not broken.

Ether: is it too early for $2.8K?

Although $4K support was holding strongly during the past several weeks, still Ether ended last year below this level. During the first week of the current year, price followed the same path, moving down to the major support line at $3K. At the same time RSI has reached the oversold zone, ending the week at level below 30.

Oscillators of 50 and 200 days are still converging slowly toward each other. Whether they will create a cross will be revealed within next weeks. For the moment they move at a distance, not providing an indication that some major trend reversal is in store for this coin. However, at the current moment charts are revealing increasing probability for a price move toward the next support line at $2.850. Whether this will occur during next week is to be seen. It might be supported in case that current support line at $3K is broken on downside. Still, there is some probability for the price to move toward the $3.6K resistance line, before it moves back to $3K or potentially to $2.85K.

Ripple: oscillators are raising the alarm

General crypto market push to the downside, during the previous week, made XRP to head toward the support line at $0.85, and shortly to next support at $0.7, where XRP last time was in August last year. Last three days of the previous week, XRP was testing a resistance line at $0.85, but without strength to break it. RSI continues to move close to oversold level, but this line has still not been reached. It adds to increased probability for XRP to move further to the downside, until a clear oversold level is finally reached.

Two weeks ago, oscillators of 50 and 200 days have made a cross with the 50-days moving average crossing its 200-days counterpart from the upside. Formation called “dead cross” usually implies an increased potential for a future downtrend. Whether this will be the final case for XRP is about to be seen in the coming weeks.

A level to watch during the next week is the $0.85 resistance line. In case XRP finds market strength to break this level, the coin will head toward the long term resistance line at $0.9. However, there is also a high probability that XRP will move to the downside to test one more time support line at $0.7, in case that resistance at $0.85 is not broken.

Binance Coin: is $420 sustainable?

Binance Coin finished last year with a significant slowdown in price volatility, while it continued within the first trading week of a new year. The support line at $500 did not hold and BNB continued toward the next major support at $420, where it is currently traded. Pressures on the downside are still relatively strong, which imposes a question of price sustainability around $420 level. However, it might be revealed in the coming weeks. For the moment, RSI has entered into oversold territory, which increases probability of potential short term price reversal.

Moving averages of 50 and 200 days are continuing slowly to converge toward each other, but since the beginning of December they are still keeping safe distance. It adds to the probability that BNB is still not ready to change its course. RSI, which reached oversold territory, might add to this probability.

Current charts are suggesting that BNB will continue to test the support line at $420 within the next few days. There is pressure on this level, and if it does not manage to hold, it will open a path for BNB to move to the next support line at $380. On the opposite side, there is also an increased probability for BNB to return to the next short term resistance line at $500, potentially $520 in order to test it one more time.

Cardano (ADA):  still not in oversold market

Previous week ADA started by testing the $1.2 level, where the price of the coin was struggling since the beginning of December. However, the general crypto market trend pushed the price further to the downside and to break the $1.2 support line, down to $1.16, where the coin is currently traded.

Three weeks ago, moving oscillators have made a cross where MA50 crossed MA200 from the above. Since then, oscillators are diverging from each other, clearly confirming formed cross line. Although, this is an indication that the coin might change its trend to downside, in the case of ADA, it's application should be taken with reserve, considering that the coin already had its strong weakening from levels above $2.0 down to $1.20 support. RSI is currently moving below 40, indicating that an oversold market might soon come, but the market is still not in this zone.

Charts are indicating that ADA did not finish with testing $1.20 level. Price is still oscillating around it, trying to make a final break to the downside. Still, indicators are showing some potential for $1.35 level, before the final turn to the downside. In case that $1.20 support line is broken, ADA will head toward the long term support line at $1.0 and end of a cycle started in July last year.

LINK: only a short term move to $27?

It was a pretty interesting week for LINK. It was one of a few altcoins which did not follow the general market path to the downside, instead LINK has managed to increase its market cap by almost 30%. The volume of daily trades almost tripled for the last three trading days in the week. Unfortunately, there is no available market data based on which adequate conclusion can be drawn from where came sudden investors' interest for this coin, in a market which was generally bearish during that time. Certainly, these were surprisingly positive developments for LINK.

LINK started the previous week modestly above the strong support line at $20, when price was pushed to the upside. Highest level reached during the week was $27, but the resistance line at $30 has not been tested. Rather, LINK was trying to break the resistance line at $25, but did not manage in this round.

RSI was pushed to the level above 60, but a clear overbought market has not been reached. Two weeks ago MA50 made a cross with MA200 from the upside; however, MA50 is currently converging toward MA200 from the downside. It will take some time for a “dead cross” to confirm itself. In case that investors' interest continues during next week, it might be expected that fundamentals will push the price of LINK toward the level of next resistance at $30. If the latest move has some short term effect, then LINK will return to the support line at $20 to test it once again.

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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