Last week in the news

End of the previous week was marked with news on the escalation of a new variant of the virus, which pushed investors off the market, seeking more secure assets. S&P was down by 1.5%, while the crypto market lost some 7% within a day.  Bitcoin is ending the week testing support line at $55K, while Ether is holding strongly above $4K.

MoonPay announced that the company managed to raise $555 million in its first fundraising campaign. MoonPay is relatively new fintech within a field of crypto exchangers, founded three years ago in Miami. The fundraising was led by Tiger Global and Coatue, while the company is currently valued at $3.4 billion. As per company officials, raised funds will be used to improve the company's products with the aim to make crypto easily accessible to masses.

Several weeks ago, the president of El Salvador announced state plans to secure clean energy for crypto mining, using volcano geothermal energy. During the previous week a new announcement has been made by President Nayib Bukele that the state is planning to build a so-called “Bitcoin city” which would be situated near a Conchagua volcano. This project will be funded by cryptocurrencies and partially through issuance of “Bitcoin Bond” in cooperation with Blockstream, which is a company dealing with digital asset infrastructure.

News had reported that India is planning to propose a new bill in parliament, which will impose tougher regulation on digital currencies, including potentially significantly higher taxes on capital gains from crypto trading. This comes as a compromising solution in order to avoid full ban of crypto currencies in India. At the same time, it is setting the legal stage for India`s own digital currency, which will be issued by the Reserve Bank of India. As per some initial information from CB of India, a pilot program for digital Rupee might start during the second quarter of 2022.

In a speech held last week at the Financial Stability Conference in Ohio, Federal Governor Christopher Waller supported payment innovations in the U.S. including also stablecoins. He sees stablecoins as a means to increase the competitiveness of the market for payments. For some time now markets are expecting issuance of a new regulation on cryptos by the SEC, after the U.S. Senate adopted the Infrastructure Bill recently, which set a regulatory stage for further regulation within a field of digital assets.

Crypto market cap

As of the end of the previous week news on a new virus variant hit the market, and pushed investors to seek a more secure place for their assets, away from equities and also crypto currencies. Total crypto market capitalization decreased by some 7% on Friday, finishing the week at level of $2.46 trillion, down from previous level of $2.62 trillion. This is the second week in a row, where the crypto market is dropping by 7%. At the same time, daily trading volumes have not significantly changed from a week before, still ranging between $200B and $250B on a daily basis. Total inflow from the beginning of this year currently stands at $1.66 trillion, which is an increase of 210%.

Second week in a row crypto market is finishing week in a red, this time due to general market insecurity over potential future economic consequences of a new virus variant. Same as previous week, Bitcoin and Ether were major contributors to drop in market capitalization, followed by Cardano. Bitcoin lost some 7% in value, losing almost $85B in market cap. Ether was down by 5% or $28B. Although Cardano was previously holding strongly to the neutral side, during the previous week the coin made a significant drop in value, losing almost $12B in market cap, or 18%. There had been few coins who gained in value during the week, out of which ZCash made an astonishing 43% increase in market cap, adding $1B to it, while Filecoin added 13% in value, increasing circulating supply by 4% 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

In line with developments on a spot market, future prices for shorter maturities were down by 6% for BTC and 5% for ETH. On the other hand, prices for maturities in April and December next year were up for both coins, expressing market expectations that current spot market price corrections are short term.  Prices of BTC futures maturing in December 2022 are still holding above $61K, while ETH futures for the same period were up by more than 1%, holding above $4.500.

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

Bitcoin: sensitivity on fundamentals will continue

During the previous week investors were concerned about the potential economic impact of a new virus variant on future economic developments. In funds transfer to more secure assets, almost all financial markets, including the crypto market were down on Friday. Bitcoin lost some 7% of its value, but still continues to hold around major support line at $55K. Considering that new variant brings concerns regarding potential new lockdowns, bans of travelling, and decreasing business activities for some industries, which are all still unknown at this moment, Bitcoin will continue to be fragile to any new developments around new variant. In this sense, some investor precaution is advised in the coming week or weeks.

Chart developments from the last week are pointing that oscillators have begun to slow down their divergence from each other. MA50 is modestly slowing down its up move, indicating that it might start converging toward its MA200 counterpart in the very near future. RSI made a move toward level of 37, which is very close to the oversold market, but it still does not provide clear indication that potential reversal due to the oversold market is ahead. Although BTC started the week testing $60K resistance, Friday news turned the price toward the support line at $55K.

In a week ahead increased volatility might be expected in case of further negative news regarding the new variant. It should be considered that fundamentals will play a more important role for the BTC price, then technical analysis indicators. In case that market remains stable, technical analysis is currently indicating that BTC will return again to the current resistance at $60K, if current support at $55K is not clearly broken. However, in case of increased volatility, there is some probability that BTC will make a move toward $52K, down to the support line at $50K. In any way, investor’s precaution is necessary during the coming days.

Ether: holding strongly above $4K

As with BTC, the same general news has made an impact on Ether`s price, during the previous week. After breaking the upside channel on the downside, two weeks ago, Ether went down to test a major support line at $4K. Since there was no market strength to move price further to the downside, market swiftly reverted to the resistance line at $4.5K. However, Friday news has pushed ETH price one more time to $4K support.

With latest moves to the downside, moving average oscillators are slowing down. MA50 is still at a safe distance from MA200, but it slows down its divergence. RSI went down to 40, however it is still away from the oversold market. At the current moment RSI is moving around 50, which does not provide any indication on potential price reversal soon.

Based on current indicators, there is a high probability that $4K will continue to hold in the coming days, except in case of some extraordinary negative fundamental news. It could be expected that ETH will return to the upside in order to test the resistance line at $4.460 for one more time. In case that it is broken to the upside, ETH will move to test next short term resistance at $4.660.

Ripple: heading toward major correction

During the previous week XRP was testing the resistance line at $1.0, however, Friday's news pushed the price to the downside and to the level of $0.95, where XRP is currently traded. This move is important as it is an indication of a major price correction toward the $0.85 support line, where the latest cycle, started in September this year, will end.

RSI went down to the level of 33 on Friday, indicating that an oversold market might soon come. However, at this level there is still no clear indication that the oversold market has been reached and that potential price reversal is to come. Moving averages of 50 and 200 days are still at a safe distance, but they have started their modest convergence toward each other.

Current charts are indicating that XRP has started its major correction toward the $0.85 support level. It might be expected that this level will be reached in the coming weeks. Prior to this, there is a higher probability that XRP will try to test once again resistance at $1.0 and long term support at $0.9, before it makes its final move to $0.85 and end of the cycle.

Binance Coin: forming a double top, or not?

Binance Coin was one of the rare coins on the market during the previous week, which was not hit to the higher extent by the negative fundamental news. Moreover, BNB increased its value by 2% compared to the end of the previous week. Although it seems like BNB doesn't like to be correlated with crypto market general moves, there has still been reaction on Friday, where the price range was moving between $660 down to $550. Still, the next day BNB swiftly recovered and moved to levels above $600, where it is currently traded.

RSI is currently moving between 50 and 60, providing indication that move on the upside is more probable than the move on the opposite side. MA 50 is continuing its strong divergence from its MA200 counterpart, and it is not even slowing down. Technical indicators are showing increased probability that BNB will try to test its old ATH at $630 for one more time in the coming days. There is also probability for current ATH at $700 to be reached after $630 resistance is broken. In this case, BNB will form a double top formation, which increases potential for future price correction. However, this needs to be confirmed in the coming few days. In case that coin reverts to the down side, then the next support line can be found at $620 down to $520.

Cardano (ADA):  oversold market has been reached

Two weeks ago ADA managed to make a move below $2.0, where the coin was struggling around for the last two months. During the previous week, this trend continued toward the level of $1.5, which was also the minimum level reached since the beginning of August this year.

With its latest move to the downside, RSI went down below 30, and to clear oversold side. At the same time, the moving average of 50 days is continuing its higher convergence toward MA200, indicating that in the near future these lines might form a cross, which would further indicate potential price reversal. But for the moment, they are moving with some distance between them.

Considering that a clear oversold market has been reached, there is increased probability for short term price reversal to the upside. In this sense, ADA might test again its latest levels at $1.7, and potentially will try to move for one more time to the strong resistance line at $2.0. End of a cycle for ADA is at level $1.0, however, it might take some time until the coin reaches this long term support line again.

LINK: moving back to $20, or not?

A move to the downside continued for LINK, second week in a row. Although LINK started a week testing resistance at $30, very soon the coin reverted to the downside, reaching $23 on Friday. Although RSI made its move toward 32 level, the clear oversold market still has not been reached. At the same time both MA200 and MA50 are changing their slope to the downside, however, they are still at safe distance from each other.

End of the current cycle, started as of the end of July this year, would be at the $20 support line. Whether this level will be reached within the next couple of days is to be seen. Technical analysis, based on current charts, is suggesting that the $25 resistance line will be tested in the coming days. In case that it is broken, then LINK might return to the levels from the beginning of the previous week. However, if there is no market strength for such a move, then LINK will certainly revert to the next support line at $20.

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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