Last week in the news
Another week in a row market spotlight is on a FED hawkish rhetoric regarding potential increase in interest rates and tougher policy in order to fight surging inflation. Markets were closed on Friday in red, while Bitcoin is pushed modestly below $40K; Ether is testing $3K to the downside.
FED Chair Jerome Powell stressed on an IMF panel his expectations that FED could raise interest rates at a higher rate than it usually does. This means that a rate hike of 50 basis points could be expected as soon as the May FED meeting, instead of the usual 25 bps. Market immediately priced a 50 bps rate hike, pushing Dow Jones down by 400 points and Nasdaq by 2%. Benchmark 10-year Treasury bonds were traded higher, around 2.9%.
The online payments company Stripe is getting back into the crypto business, after it dropped support for bitcoin payments a few years ago. As announced, the company will allow its users to make payments in stablecoin USDC while the first company on their list of integration for this payment system will be Twitter.
Panama is another country which entered a club of crypto-friendly countries. Namely, the country's Legislative Assembly`s Economic Affairs Committee approved last week a legislation which will regulate crypto currencies. With this move, the government of Panama is hoping to generate new businesses in the country and increase employment. It is expected that the bill will soon be in force after it passes further approvals of governing bodies.
Crypto lender Celsius warned their customers on regulatory risks to which the company is exposed. Company announced that their new Earn program will probably not be available to customers from the US, as the company is still in ongoing negotiations with US regulators regarding this product.
Crypto market cap
First trading week after holiday on western markets went with decreased investors confidence. Main reason for such sentiment were hawkish comments from FED officials, and their statements that they would have to act in a more aggressive way in order to put a halt on one of the highest inflation figures in the US during the last 40 years. FED Chair Powell noted that a rate hike of 50 bps is going to be on the table during the next FOMC meeting in May. During the previous week the crypto market lost some 2% or $30B, driven by the major coins. At the same time, daily trading volumes remained relatively stable, moving between $150B and $160B on a daily basis. Total outflow of the funds from the crypto market since the beginning of this year currently stands at $372B or 17%.
Regardless of general negative investor sentiment, during the previous week the crypto market was traded in a relatively mixed mode. On one side, major crypto coins were leading the drop in total market capitalization, with Bitcoin losing $8.5B, followed by Ether with loss of $6.5B and XRP which was down by 7% or almost $3B. Binance Coin was also in this group with decrease in market cap of $2B or 3%. On the other side there were several coins who managed to gain during the previous week, like Monero, with an increase in market cap of 19%, Tron was up by 11% and ZCash with an increase of 9.5%. There has not been significant changes in coins in circulation, except that Binance Coin decreased its circulating coins by 1.1% on a weekly basis, which is not so frequently seen with BNB.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Crypto futures market
For a third week in a row, the crypto futures market is trading lower, however, drop in prices during the previous week has not been significant like the weeks before. This might be an indication that the market is slowing down around these prices and that current macro developments have been already priced by the market. BTC short term futures were traded lower by some 1%, while long term futures remained flat on a weekly basis. Prices of futures for the end of this year continue to hold around $42K level.
ETH short term futures were also down by some 2%, in line with spot market developments, December 2022 modestly dropped from $3.2K during last week to $3.1K as of the end of this week.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: struggle for $40K will continue
The FED is again impacting the market with their rhetoric over the inflation fight. A note from FED Chair Jerome Powell during the previous week that FED is considering increasing interest rates by 50 bps, made a negative impact on the market capitalization of both equity and crypto markets. As leading crypto coins are sensitive to macro developments, BTC was pressuring the support line at $40K, ending the week modestly below this line, at $39K. This is the second week in a row that the market is struggling around $40K support. Highest level reached during the week was $42.9K, on only one occasion.
Support line at $40K is currently tested, but it is still not clearly breached. Start of the next week would show if there is enough market strength and buying signals in order to push the BTC price back to the levels above $40K. During the previous week RSI was moving below 50, down to 40, signalling potential that the market is eyeing an oversold zone in the near future. Moving averages of 50 and 200 days slowed down their convergence toward each other, currently moving as two parallel lines. This might be an indication that a potential golden cross is currently on the market hold.
For one more week $40K will be the level to watch. This is currently a significant level for BTC, because future price moves will depend on whether the market will have strength to sustain this support line. In case that market has already priced a 50bps rate hike by FED, then there will be no more prevailing selling orders and BTC will be able to revert back to the level of $42K, with decreased probability that $45K resistance might be tested at this point. On the opposite side, if $40K does not hold, it would lead to the final break of this support line where the next stop of BTC would be $38K for a short term, on its road to $35K support line.
Ether: pressures on $3K will continue
In line with general market sentiment, the market continued to test ETH`s psychological $3K. As of the weekend, price managed to get below this level, when ETH was traded at $2.915, however, the support line at $3K is still holding. Highest level reached during the week was $3.165, still quite below the next resistance line at $3.3K.
RSI continues to move within levels below 50, but the indicator did not go below 40 during the week. At this moment RSI stands aside, not providing much information regarding market sentiment in relation to the future price moves. On a positive side is that MA50 continues to converge toward its MA200 counterpart, although MA200 is slowing down a bit.
Based on current charts, it might be expected that the struggle around the $3K line will continue with the first days of the week ahead. There are currently equal probabilities for the price to move both to the upside, where $3.2K might be a peak move, and also to the down side. In case that psychological $3K is broken, it might be expected that next stop for ETH will be $2.850.
Ripple: heading toward $0.7 support
Two weeks ago, the price of XRP was supported by positive news coming from Ripple`s CEO regarding potential positive outcome of the legal dispute with SEC. However, during the previous week XRP aligned its price moves with the general market trend, and ended the week some 7% lower. Highest price reached at the beginning of the week was $0.78 however, XRP is ending the week around $0.71.
For the last two weeks RSI was moving around 50, without clear indication whether the market is ready to head toward the overbought or oversold side. During the previous week this indicator was pushed modestly down to the level of 40, but still not providing indication whether the market is actually eyeing the oversold side. Also, for the second week in a row, moving averages of 50 and 200 days are moving as two parallel lines, not providing an indication over potential cross in the near future.
Technical analysis is pointing to a sort of side trading for XRP. However, if we take into account that the majority of coins are concentrated on a small number of accounts; it provides a sort of perspective for current price moves. By looking at short-term historical price moves, it emerges sort of trading patterns, with focus on certain levels. Current level to watch is the $0.7 support line, toward which the price is currently heading. Since February this year, this was the major support line, which decreases probability that it might be breached during the following days. On the opposite side, the current resistance line stands at $0.80.
Binance Coin: setting stage for $380 support?
During the start of the previous week BNB continued its path toward $420 resistance in order to clearly test it. Since there was no market strength to push the coin above this line, BNB reverted back, ending the week modestly above $400 level. Lowest level reached during the previous week was $397.
Based on indicators, it continues to be unclear whether the market is actually eyeing the oversold zone, or it is still not ready for such a move. During the week, RSI continued to oscillate around level of 50, with modest push to the 45 as of the weekend. On the other hand, moving averages of 50 and 200 days continue to move as two parallel lines for a few weeks now, confirming the previous statement that the market is still trying to decide on a trading side.
Level of $400 will be the starting point of BNB for the week ahead. If selling orders prevail during the first trading days, it will mean that BNB is currently setting the stage for a $380 support line to be tested in the coming period. However, if $400 sustains, then the coin will revert back to the $420 resistance line to test it once again.
Cardano (ADA): $0.9 support under market test
For the last two weeks ADA is significantly slowing down volatility. During this period of time the coin found equilibrium around the $0.9 support line and continues to trade around this level. Maximum level reached during the week was $0.97 with resistance at MA50 within the last two weeks. Weekly minimum level was reached on Saturday trading at $0.88.
By following price low volatility, RSI indicator was also making modest changes in the value, moving between 44 and 39, certainly not providing much indication if the market is clearly heading toward the oversold zone. On the other hand, moving averages of 50 and 200 days have slowed down their convergence toward each other, implying that potential cross might be postponed for some future period.
Current charts are suggesting that level of $0.8 would be the end of the ongoing cycle for ADA, but it is too early to put this level into the spotlight. It could be rather expected that ADA will continue with its modest moves between $1.0 resistance and $0.9 support line, until clear indication that market is ready to push the price lower to the level of $0.8.
LINK: how long can $13 sustain support?
During the last two weeks price volatility for LINK has significantly decreased. During this period, the price was moving within a range between $14.5 down to $13.2. Charts are showing that selling orders are the ones that prevail on the market, which raises a question for how long can level $13 sustain support?
In line with the price, RSI indicators have also slowed down between levels 43 and 37. It looks like that market is more oriented toward the oversold side, however, there are still not clear indications that it might occur in the near future. At the same time, moving averages of 50 and 200 days have also slowed down their convergence, so they continue to move as two parallel lines.
Charts are pointing that pressure at the $13 support line will continue with the first days of the week ahead. In case that market volumes remain low and there are no higher amounts of selling orders, it might be expected that $13 support will sustain the pressure. In this case LINK will revert to the upside in order to test $15 resistance for one more time.
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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