Last week in the news
There has been a lot of new developments around crypto currencies during the last week. New ATH has been reached by both BTC and ETH, supported by major announcements from Tesla Inc. ETH is heading toward $2.000. Ethereum Classic doubled its price during the previous week with a move from $8 up to $16.
The most important news for the previous week with significant impact on the crypto market is that Tesla Inc (TSLA) reported in its annual filing that the company had invested $1.5 billion in Bitcoin. In addition, Elon Musk noted that TSLA is considering accepting payments in BTC for their cars. Such news and statements had major influence for the majority of crypto currencies to gain during the previous week. Both BTC and ETH reached new ATH.
On the other side, economists are still unable to fully understand economics behind crypto currencies, especially bitcoin, and in which sense companies or individuals might use them to conduct purchase or sale of products and services. There are still some economists who see crypto currencies as highly speculative assets but recognize that they do not understand well the value behind them. Indeed, classical economics is not able to explain the phenomenon of crypto currencies and their value, let alone that it might be considered as a payment method. One of the major problems which arise is its extreme volatility and limited supply. Certainly, in order for this to happen there must be some adjustment of regulation both in accounting standards as well as tax regulation. Another question is whether investors who invested funds in equities, with expectation of higher returns, would appreciate such a move. We are still unsure how investors would react to receive dividends payouts in crypto currencies? As we spoke in our last week`s review, there is a high level of volatility of Bitcoin which may influence both positive but also highly negative impact on the fair value of business and company. However, it seems that the majority of investors are not concerned with such questions as some of them already expressed their prediction that Bitcoin might reach $100K by the end of this year with increased demand and limited supply for this currency.
Financial institutions are also entering into the crypto market in order to stay in the game and market. Their regular businesses are not promising any more high returns due to historically lowest interest rates in developed markets. Crypto currencies are perceived as a new, still developing niche, which would reach its full potential in the coming years. As it has been reported by CoinDesk, next institutions to enter into this market segment are Mastercard, Bank of Mellon New York and German Deutsche Bank. During last week, Chicago Mercantile Exchange (CME) launched futures on ether as the second crypto currency trading on this exchange, after Bitcoin. Indeed, economists might still continue to struggle to figure out what is the intrinsic value of Bitcoin, but the market is clear that it is looking for profits and products which might secure doing business on a going concern basis. We could not agree more on this.
Gold gained 1.3% during the previous week in light of the USD drop due to weak results on unemployment. Anyway, next week is going to be an interesting one for fiat currencies as there are several major economic news to watch on majors like Japan and Eurozone GDP, UK inflation, while FOMC minutes will be released for the US. Don't forget to check the trading hours schedule during US President's Day 2021 on February 15th.
Crypto market cap
New record has been reached in total crypto market capitalization as it has reached a level of $1.400 billion during the previous week. Additionally, $200 billion has been added to this market in only one week. During the last two weeks crypto market capitalisation gained additional $400 billion, and total $600 billion since the start of this year. Major cryptos with higher increase in capitalization during last week are Bitcoin and Bitcoin Gold with some $145 and $140B increase. However, the gainer of the week is actually Ethereum Classic which gained additional $800B as this coin doubled its price in a sole week.
In relative terms, total market capitalization has been increased by $76% since the beginning of this year. Trading volumes are still relatively high, moving above $300B up to $450B on a daily basis.
It was a very good week for the majority of crypto currencies, as many of them ended the week with higher price and cap. BTC ended the week with an additional 20% in cap, followed with Bitcoin Gold who gained 51%. Certainly the absolute winner of the week is Ethereum Classic, which managed to double its price within one week. Ripple and Litecoin did well with increases of 35% and 39%. After a gain of 12% a week before, Bitcoin Cash lost some 7% in market cap during last week.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
BTC new resistance at $50K
Big news has been released at the beginning of the previous week, that TSLA has invested in BTC $1.5 billion of the company's money. In addition to this, Elon Musk announced that TSLA is considering accepting purchases of cars produced by this company with BTC. After a few previous tweets on Twitter and interesting statements in the Clubhouse in support of crypto currencies but with mixed signals to the market, finally came tangible steps from this company. Market reaction on this move was clear – BTC headed toward next resistance at $50K which is at the same time, new historically highest level.
Technical analysis at this point is suggesting that the market is moving slightly in an overbought zone with RSI modestly around 70. It might indicate that there is still space for the price of BTC to test current resistance level with possibility for small correction in the coming days. However, if demand in the future stays strong as it was during the previous two weeks, price might go even above current ATH. On the opposite side, historical support level is at $40K, down to $37K where 0.618 Fibonacci currently stands.
ETH heading toward $2K?
Second week in a row ETH is reaching new ATH`s. After managing to finally break the historical highest level of $1.400, ETH reached new ATH at $1.700 two weeks ago and newest ATH at $1.800 during the previous week. Considering that CME started trading futures on ether last week, demand for this coin continued to be at a high level.
Looking at the current chart, there is some probability for ETH to test support level at $1.700 in the coming days. This would be a short term correction of the current trend. RSI is still quite modestly moving at level of 70, without clear indication that the current trend is over. On a downside, the next significant level to watch is $1.400 which is historical support and 0.618 FIBO, down to $1.250. On the up side, a move above $1.800 would indicate new ATH`s.
XRP continuing up trend
XRP is continuing its uptrend move. During last week the coin traded on a higher ground from the week before, moving between levels of $0.5 and $0.65. RSI clearly reached an overbought zone, so some short term price correction might be ahead. Next historical resistance level stands at $0.75. On the opposite side, significant support levels stand at $0.5, down to $0.38.
What’s in store for altcoins
During the previous week LTC managed to break resistance level at $170, finishing the week around level of $210. Next historically significant resistance level is found at $230. During the next period, LTC might test this level. In case that there is not enough strength to break it, support levels can be found at $170 down to $130.
LINK is another coin that reached new historical highs during the previous week. After testing for some time level of $25, LINK moved to the higher grounds, reaching new ATH at level of $35. SI is clearly in an overbought zone, so some levels to watch on the down side are $30 down to $25.
After two weeks of strong price push on the up side, last week has been marked with short term reversal for DOGE. It should not be forgotten that Elon Musk supported this coin through his comments at app Clubhouse. After reaching historical high at $0.08, DOGE reverted to the down side, currently testing support level at $0.05.
Cardano (ADA) is another coin whose price was boosted during the previous week, reaching a level of $0.97. However, after reaching the clear overbought zone, ADA reverted modestly to levels of $0.79. Historically the highest level reached was $1.4. Whether ADA will have strength to test this level again during this year, we shall see in the period that comes.
NEO is another crypto currency that managed to double its price within a single week. Week started at level of $23 but finished at $47. We have to note that historical resistance for NEO stands at $45, so currency is currently testing this level. However, RSI is moving at an incredible level of 85 which might suggest some slowdown in the near future. However, with NEO opposite is also possible.
Monero (XMR) is currently testing short term resistance level at $250 after a strong push above $155 during the previous week. RSI above 80 is suggesting some price reversal. Significant levels on the down side are at $200 and $150. On the up side, historically significant resistance level stands at $270.
Theta managed to break resistance level at $2.5 and reach new historical high at $3.5. The channel in which the coin has been moving since the beginning of this year has been finally breached on the up side during the previous week. With RSI currently moving below 70, there might be some new surprises in the coming week on the up side. In case that there is no strength for such a move, levels to watch on down side are $2.5 down to $1.7.
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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