Last week in the news

Cash inflows into the crypto market headed toward new historical highs during last week, reaching again levels above $1.000 billion. Most of these funds, about 97%, were attracted by Bitcoin, followed with Ethereum.  Bitcoin was back to $38K on Friday, increasing price for 20% within one day. CNBC reported that this rise occurred because Elon Musk added hashtag #bitcoin to his Twitter profile. Although we don't diminish influence of Mr. Musk on public sentiment for investments, it is still unrealistic that one hashtag can attract an additional $30billion to crypto market within one day, without much higher incentives.

If we take a look at market performance during the previous week, major developments have been around the stock market in the U.S. DOW fell almost 600 points, S&P 500 down 70 points and NASDAQ is down for 260 points. There was a lot of dust last week about a significant increase in stock prices of the company GameStop (GME) which moved from below $100 up to above $400 just within three days. Such extreme volatility is imposing a high risk for brokers, who decided to limit trading orders for this company. At the same time the US Securities and Exchange Commission interfered to check if there might be some breach of law included in these price swings. Such unpredicted behaviour is not at all welcomed in any financial market as it decreases investors confidence and impacts capital transfers to more predictable and secure zones. Since the price of gold remained relatively calm during the previous week, we assume that some funds from the stock market were transferred into Bitcoin for safety purposes.

New administration in the US had appointed Gary Gensler as new head of SEC, ex partner at Goldman Sachs who previously worked as chair of the U.S. Commodity  Futures Trading Commission. He is also a person with a very good understanding of crypto currencies and crypto market. On the other side, appointed Treasury Secretary, Janet Yellen, recently commented on her concerns about criminal use of the crypto market and called for “curtail” of its use. What we know for certain at this moment is that the focus of regulators worldwide during this year will be strengthening of regulation and control over crypto market and transactions. On the other side, central banks worldwide are examining possibilities of introduction of digital currencies. In its latest survey, Bank for International Settlements, global regulator of the banking industry, has officially published its research concluding that “central banks are progressing from conceptual research to practical experimentation”. Research shows that 14% of central banks in the world are in the phase of “pilot arrangements” while 60% is in the “proof-of-concept”. Central banks are still more focused on stablecoins than on Bitcoin or altcoins. Considering high volatility of crypto currencies, stable coins provide much more stability, and in this sense predictability of its future price and movements, which represents asset-feature needed to sustain financial system stability.

Another important news from the previous week is the jump in price of Ripple for more than 100% on Saturday. It seems like XRP is back on the stage. This increase comes after news that Ripple officials responded to SEC Lawsuit, claiming that functionality of XRP is not compatible with US regulation on securities, in which sense, coin cannot be treated as security. We will certainly continue to follow developments over SEC Lawsuit as its outcome might have considerable consequences on the crypto market.

Crypto market cap

During the previous week, crypto market total capitalization headed toward historical high above $1.000 billion. Some additional $30 billion was added to the market only on Friday, when Bitcoin jumped again to the level of $38K. Based on our analysis, this increase occurred due to developments on the U.S. stock markets where brokers started limiting orders for some companies with extreme volatility. Increase in price was also supported by official answers of Ripple officials to SEC Lawsuit. Taking these developments in account, this time increase in crypto prices was not driven by simple investor`s interest, but more by uncertainty around regulated markets. At the same time, the price of gold did not move much, hence, it seems like BTC is taking over position as investors' safe-haven, at least for short term funds placement.

Total market capitalization has been increased by some $26% since the beginning of this year. Trading volumes were increased during the last two working days of previous week, reaching $460 billion. Volatility in market cap is still driven by Bitcoin, who gained $30B and Ehtereum with  additional $13B.

Previous week was marked with higher volatility on the crypto market.  Bitcoin gained additional 6% in market capitalization, followed with Ethereum who gained almost 10%. Certainly , the winner of the week is Ripple, after positive news, with an increase of 48% in market cap.

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

BTC still testing resistance

As of the end of last week BTC  reached again the level of $38K, due to negative news coming from regulated markets. However, currency reversed to previous levels as of the next day. If we exclude Friday`s price noise, it is clear that BTC is still testing resistance level at $34K, since support level at $30K has not been breached during the previous week. Since the beginning of this year, BTC is moving between 0.618 and 1.0 of Fibonacci retracements. With RSI currently at 50 there is no clear clue that ongoing reversal is over.  In case that resistance level at $34 is not breached during next week, next support level can be found at $30K, down to $27K. On the opposite side level to watch is $40K.  

ETH  still at resistance

ETH is still trying to break the historical highest level at $1.400. Since the beginning of this year, ETH reverted to short term support levels on several occasions, but always moved back to this resistance level. RSI is still moving around level of 60 which might suggest that currency might soon enter into an overbought zone. If the level of $1.400 is broken to the up side, ETH will reach new historical highs. However, if currency enters into reversal, support levels might be tested at levels $1.250 down to $1.080.

XRP – back in the game?

Finally some good news for XRP. Market reaction was clear after published news that Ripple officials are going to fight SEC against their accusations that issuance of Ripple was not conducted in line with U.S. regulation. Reaction showed that the market still believes in this coin. During Friday, XRP moved from $0.282 all the way up to $0.50. Price more than doubled in one day. Long term resistance level stands at this point. Currency is currently trading around $0.40. What is in store for XRP we shall see in the coming days. At this moment, RSI is slowly reaching level of 70 which might indicate that some short term reversal is ahead. Below level of $40 is next support at $30 down to $0.23. On the up side stands level of $50 as a long term resistance

What’s in store for altcoins

LTC tested support level at $120 during last week. As the coin did not manage to break it, modestly reverted to the up side. Currently is trading around a level of $130 which is the next resistance level. As RSI is moving modestly to the oversold side, there might be some surprises in the store for this currency during future periods.

After reaching a new historical high at $25, LINK reverted modestly down to level of $20, which is long term support level. RSI is still not in an overbought zone, so there is probability for this coin to test new highs during the following weeks as, since the beginning of this year, LINK is moving strongly forward.

Last week was a very interesting one for Dogecoin. Currency made an incredible move in price from $0.007 all the way up to $0.07, but soon reverted down to $0.02. We cannot be sure what is exactly behind such a move, but as per some other analysts, it is noted that the issue with GameStop influenced move from stocks to DOGE. We cannot confirm this information. During the previous period coin behaved in a similar way. But after a sharp rise in price, currency swiftly returned to previous levels.

Third week in a row Cardano (ADA) is testing long term resistance at $0.38. Still not enough strength to break it. Currency also didn’t manage to break short term support at $0.30. Sort of channel has been formed since the beginning of this year.  With RSI around 60, there is still a chance for testing resistance once again.

During previous week NEO tested support level at $20 and prices are modestly slowing down around this level. Currently, there is no clear trend for this currency based on technicals. Since RSI is around 50 it would not be surprising if support level is tested again.

Monero (XMR) has slowed down a bit around support level of $120, however, resistance at $135 has been tested again.

Since the beginning of this year Theta formed a channel, moving continuously between levels of $1.60 up to $2.5. Currently there is no indication that coin is ready to break the channel.  Levels to watch are $1.7 as a short term support line, down to $1.5. On the opposite side, resistance can be found at $2.5.

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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