Last week in the news
Markets were closed higher on Friday, after a period of strong negative sentiment caused by FED`s moves and rhetoric around surging inflation. The US equity market was up by some 3% on Friday. Bitcoin moved above the $20K support line, while Ether manages to hold above $1K.
Regardless of Friday`s modest rebound on financial markets, the optimism among market professionals is still not present. University of Michigan consumer sentiment showed a historically lowest level of 50 in June. Although this indicates a potential slowdown in the US inflation, still it also raises concerns of potential recession in the world`s largest economy. In this way currently major concern on markets is related to a question if the market has reached its bottom line with its latest moves to the downside, or is it still to come in the future period?
The first experiment of Bitcoin adoption on the state level, a case of El Salvador, is currently fading away, as per CNBC`s article. Although the growth of Bitcoin seemed at first a good bet that could increase the wealth of the country, still, a 70% drop in Bitcoin price emerged an urgent need for cash and jeopardized El Salvador`s ability to pay its debt coming due.
News is reporting that Goldman Sachs is leading a group of potential buyers of a company Celsius, a crypto lender, which has entered into huge problems lately. It is mentioned that this investment bank is looking to raise $2 billion in order to buy Celsius`s distressed assets at significant discounts.
Netherland is introducing additional KYC regulation for customers using crypto exchangers. As it has been announced by Coinbase, in case that client is withdrawing cryptos from the exchange, additional details need to be provided, including full name and address and the purpose of the transfer.
During the latest drop in crypto prices, many crypto companies are decreasing the number of employees in order to cut costs, however, Binance is one of rare firms which is actually hiring during these difficult times. Binance CEO, Changpeng Zhao, announced that Binance is expanding its business to a new platform called Binance Institutional, which will be used only by VIP and institutional investors.
Crypto market cap
Inflation is not anymore the main topic on the markets, but now it is a potential recession. Many analysts are in agreement that there is objective fear from potential drop in economic activity, which could trigger another sell-off of equities due to drop in earnings. Crypto market is part of the mainstream, in which sense; it would certainly be affected in a negative manner in case of an actual recession in developed economies. During the previous week there has been a modest rebound on the crypto market. Total market capitalization has been increased by 16%, to the level of $920 billion. Increase was led by major coins, however, altcoins significantly participated. Daily trading volumes have slightly decreased from the week before, moving around $170B on a daily basis. Total funds outflow from the crypto market from the beginning of this year currently stands at $1.260B, which is a decrease of 58%.
Modest rebound of the crypto market during the previous week was led by BTC and ETH. BTC gained additional $53B, which is an increase in the cap of 15% on a weekly basis. ETH`s market cap was up by $30B or 26%. Altcoins were led by BNB and XRP, where BNB managed to recover $6B in market cap, increasing its value by 21%, while XRP`s cap was increased by $3B or 20%. Highest gainer of the week in relative terms was Polygon, which managed to increase its market cap by 67%. Tether continues to follow bearish moves, decreasing its coins in circulation by additional 2% compared to a week before.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Crypto futures market
Rebound of the crypto market was evident in crypto futures. Bitcoin futures with shorter maturity were up by some 3%. Maturities as of the end of this year remained relatively flat compared with the week before, indicating that the market is still unsure about the BTC`s future direction. Maturities as of the end of next year were down by 4%. ETH futures with shorter maturities were up by 13%. Major move for ETH futures was for maturities as of the end of this year, which were up by 11%, however, December 2023 remained flat at $1.2K.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: recession fears are holding recovery
During the previous week modest rebound on financial markets was evident; however, higher level of optimism is missing. For some time, inflation fears were driving the market sentiment, while recently fears of recession were the main topic among financial professionals. Coming potential slowdown in economic activity will impact profits, which could be a major trigger for another sell-off in equities. Crypto market could also be affected as a part of the mainstream markets which collected a significant part of excess liquidity during the last two years.
Previous two weeks Bitcoin was testing a support line at $20K, but without strength to break this level on the downside. BTC started the previous week with modest price rebound to the upside, but only to the level of $21.5K. During Saturday`s trading session selling orders started to emerge. Relative Strength Index moved from the oversold zone, but only to the level of 34. This indicates that clear reversal is still pending. Moving average of 50 days continues to diverge from MA200 counterpart, indicating that potential cross is still on hold.
Markets continue to be driven by strong fundamentals, in which sense, stronger demand might be on hold for some time in the future. In this sense, it could not be expected to make significant and strong moves to the upside. At this moment strong support for BTC is at $20K. Current charts are showing that the next potential target for BTC might be $23K in the coming days. At the same time, there is a high probability for $20K to be tested for one more time.
Ether: regaining strength
Ether is finally picking up some of the strength, which was significantly lost during the previous period. In relative terms, the coin outperformed Bitcoin, but this time in a positive manner, gaining more than 26% in value in a single week. At the same time, ETH short term futures were up by some 11%, expressing market positive expectations for this coin in the near future period.
During the latest sell-off on the crypto market, Ether found a new significant support line at $1K. During the previous week this line has been tested, but without strength to be broken on the downside. ETH reverted in a modest mood, to the level of the short term resistance line at $1.2K, where it is currently traded. Two weeks ago the Relative Strength Index reached a clear oversold market. With short term reversal, the indicator moved from this territory, but to the highest level of 37, indicating that the market is still hesitant to clearly head toward the overbought territory. Moving average of 50 days continues to diverge from MA200 counterpart, not providing an indication of a potential cross in the near future.
Macro fundamentals are the ones to be closely watched in the coming period, as they will continue to determine price moves on financial markets. Technical analysis is currently showing potential for a $1K support line to be tested for one more time in the coming period. On the other hand, there is also some probability for ETH to make a move toward the next resistance line at $1.400.
Ripple: setting path to overbought market?
It was a positive week for XRP, as the coin managed to regain some 20% in value within a single week. After a strong push of the price since the end of March this year, it seems that XRP is ready to finally stabilize the price, after reaching a minimum level at $0.30. During the first part of the week, XRP was traded sideways, without strength to make a move further to the downside. During the second half of the week, XRP entered into a short reversal, moving the price to the upside and level of $0.38.
Divergence of moving averages of 50 and 200 days continues, indicating that potential cross is not in prospectus for some time in the future. On the other hand, RSI made a strong move from the oversold zone up to the level of 50. This indicates a potential for the market to set the stage for the path to the overbought market.
Current charts are indicating that there is potential for XRP to make further moves to the upside in order to reach the overbought side of the market. In this sense, the resistance line at $0.4 might be the next target of XRP in the coming period. On the opposite side, there is also potential for a support line at $0.30 to be tested one more time.
Binance Coin: macro fundamentals are directing price moves
During the previous week there was positive news for Binance exchange, that the company is planning to expand its business introducing a platform for VIP and institutional clients. It was also positive that the company is hiring professionals from the crypto industry during a period of time when the majority of its competitors are decreasing in number of employees. BNB did not react to this news, but was following general crypto market sentiment, making a modest move to the upside. This in practice shows how strong the impact of macro fundamentals is at this moment.
During the previous week BNB was moving in a line with general crypto market sentiment. Current bottom line has been reached at the $200 support line. Coin entered into a short reversal, reaching its highest weekly level at $241. Resistance line at $250 has not been tested, leaving room for a coin to test it in the following period. The Relative Strength Index moved from the oversold zone, but managed to reach 44. This indicates that the market is still not in a stage of clear price reversal to the upside. Moving averages of 50 and 200 days are modestly diverting from each other, still following downtrend.
Technical analysis is indicating potential for a resistance line at $250 to be tested in the coming days. On this path, there is probability for a short move to the downside, in order for the support line at $200 to be tested for one more time, before a final reversal toward the resistance line.
Cardano (ADA): side trading might continue
During the previous week ADA managed to regain some of the value compared to the week before. However, it was such a shy move, which shows that ADA is still missing market strength to make real rebound and erase losses from the previous period. ADA started the week testing resistance line at $0.50, then reverted to the downside and $0.45 level, in order to finish the week slightly below $0.50 resistance.
The Relative Strength Index made a modest move from level 41 up to 46. Currently there is no indication that the market is on the clear move toward the overbought territory. Moving averages of 50 and 200 days are continuing to move as two parallel lines, for some time now, and following a down trend.
Current charts are indicating that side trading might continue during the following days. It is clear that the coin does not have market strength to move above $0.50 resistance, but there are also not enough selling orders to push the price below $0.40. These two levels are current boundaries for ADA and will probably stay as long as ADA`s trading volumes are decreased, with equal participation of both buying and selling orders.
LINK: postponed recovery
Two weeks ago LINK reached its lowest level at $5.5 and started a short price reversal to the upside. However, moves to the upside were extremely shy, so LINK managed to reach its highest weekly level at $7.3. Long term resistance line at $8 has not been tested on this occasion. At this moment, it is more than evident that the market is lacking strength for clear recovery, due to the strong impact of macro-fundamentals. At this stage, stronger recovery is sort of postponed.
Relative Strength Index made its way from level of 45 up to 50, not providing an indication that market is ready for a road toward overbought territory. From the beginning of this year, moving averages of 50 and 200 days are moving like parallel lines with downtrend, without indication that cross might occur in the short future period.
Charts are showing that LINK has a potential for a recovery, but the market is lacking the strength for such a move. In this sense, a sort of stronger recovery could not be expected in the coming days. There is high probability for LINK to test a long term resistance line at $8, but at the same time it could revert shortly to the downside to test support line at $6.
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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