Last week in the news

The United States got a new president last week. As of his first day in the office, the new President proposed a package of economic aid for Americans hit by the pandemic in a total amount of 1,9 trillion US dollars. During the previous week, US dollar lost more than 1% against other major fiat currencies, while Bitcoin entered into short term reversal with a loss of around 30% against USD.

With the start of this year, the banking industry is increasing its efforts to include blockchain technology and crypto currencies into its operations, since this market is currently the most significant competitor for traditional banking, threatening to take considerable part of market share in the field of payments. The Bank for International Settlement, which is global regulator in the field of banking, launched Innovation Network with 63 experts from member central banks with aim to work on few topics related to new technological advancements in the field of finance including “next-generation financial market infrastructures, central bank digital currencies, open finance” and other similar  topics, including cyber security. At the same time, Sberbank, largest bank in Russia, is taking steps to issue its own digital currency. As reported by Interfax Russia, it has been confirmed by Bank officials that this bank applied with the Central Bank of Russia for registration of its own blockchain platform and issuance of its own crypto currency. As noted in the report, there are still some unclear issues related to taxation of digital assets, but regardless, the issuance of coins is planned for spring this year. On the opposite side, Jennet Yellen, former Chair of Federal Reserve and current nominee for treasury secretary of Biden`s administration, expressed worries that crypto currencies are mainly used for illegal activities suggesting to US lawmakers to “curtail” use of coins like Bitcoin. Considering that many businesses in the US as well around the world are switching their operations and strategies more toward some sort of inclusion of blockchain and crypto coins into their businesses, it is our opinion that it is less likely that some sort of ban on cryptos would occur in the US. It is more likely  that sort of higher regulation and state control in this field will occur in the near future period.

There have been some rumours on the market, noting that Tether is not fully supported by fiat currency, but only to some extent. Such rumours have been supported by the lack of transparency for this stablecoin. However, in an interview for Unconfirmed, Deltec Bank deputy CEO, Gregory Pepin, dispelled such false accusations, noting that each coin is backed with more reserve than what in circulation is. USDT is a stable coin pegged to USD 1:1 and should be backed by USD in the same ratio.

Crypto market cap

After reaching $1.020 billion in market cap during the first weeks of January, the crypto market lost some $90 billion in total capitalization, reaching $929 billion during the previous week. Despite this fall, market cap has been increased by some $17% since the beginning of this year. Trading volumes are still relatively stable, moving between $200 and $300 billion on a daily basis. Volatility in market cap is still driven by Bitcoin, who lost $93 billion, followed with Bitcoin Gold which is down for $38 billion and Ethereum Classic with -$28B. Interestingly, ETH gained some $3B in market cap during last week.

Previous week was marked with a down trend in the crypto market.  For the second week in a row Bitcoin is moving in a red zone. Previous week currency lost additional 13% in market capitalization. Bitcoin Cash and Bitcoin Gold followed the same trend and lost some 14% and 16% respectfully. After a gain of 10% two weeks ago, last week Ethereum Classic lost some 3%. The only gainer among most popular coins was Ethereum with some 3% increase in cap or $3B.

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

BTC`s ongoing correction

BTC is still moving in a reversal zone, after reaching its historically highest price at $41.600. This move was clearly seen in charts, as the coin formed double top formation, after testing resistance level at $40K two times. RSI also suggested that currency is leaving the overbought market after falling below 70 for the first time after several weeks above this level. RSI is currently moving around level of 50 which provides no clear clue that reversal is over. Oversold side is still ahead, but at the moment it cannot be clearly seen at what point in time it will be reached. A week before BTC was testing support level at $34K. Last week it managed to break it, reaching next short term support at $30K which also became a significant psychological level for this currency and 0.618 of Fibonacci retracement at the same time.  BTC is currently testing resistance at $34K, but in case that there is no strength to break it, the next level to watch on the down side is $30K, down to $27K which is short term support. In case that BTC breaks current resistance at $34K, the next significant test will be $40K level.  

ETH – high potential for new highs

Strong push of currency since the beginning of this year is continuing, despite short reversal in the past week. After reaching a level of $1.400, which is also historically high from January 2018, currency reverted, after not being able to break this level and mark a new historically highest price.  During last week, currency tested support level at $1.080 where 0.786 Fibonacci stands, but swiftly reverted to the up side. Charts are suggesting that there is a possibility for ETH to test once again level of $1.400 as RSI is moving quite modestly below level of 70. In case that this level is not broken, next significant levels to watch on the down side are  $1.080 at 0.786 Fibonacci, $900 at 0.618 retracement, down to $800 at 0.5 Fibo.

LTC – between S/R lines

Litecoin did not manage to test once again long term resistance level at $170 during last week, although there was some modest potential for it. Instead, currency reverted to the test support line at $120. Previous week, LTC spent moving in a range from $150 resistance down to $120 support, without clear indication about direction of trend. At the same time, trading volumes have been decreased, compared to previous periods. RSI is currently moving around 50. Whether LTC will have strength to move above resistance of $150 we shall see in the coming week. In this case the next resistance is standing at $170. On the opposite side, the next level to watch is $120 down to $100.

What’s in store for altcoins

In a week before, LINK managed to reach a new historically highest price at $22.7. For a few days during last week, currency reverted to test long term resistance at $20. However, the last day of the week was another good day for LINK as coin price managed to go above previous high, reaching a level of $25.5 which is marked as a new historical high for this currency.

Ripple continues to move steady between levels of $0.2 and $0.3. Considering thought times through which XRP is passing, currency will probably continue to move around these levels until any glimpse on resolution of SEC charges are announced, hopefully positive for XRP.

Dogecoin trading volumes are continuing to decrease. However, the price was moving in a range $0.009 down to $0.007, without clear indication on a trend. Whether this currency would catch investors' eye and have strength to define a trend, we shall see in the coming weeks.

Cardano (ADA) tried to break long term resistance at $0.38 but without success. Currency reverted to down side and currently trading between levels of $0.27 and $0.37. Long term support level can be found at $0.20, but ADA is trading above this level for the whole week. We are keeping an eye on this currency as it has exposed some potential during the previous period of time. Whether it will have strength to break resistance at $0.38 we will see in the coming week.

NEO managed to break short term resistance level at $25 for a very short period of time. During last week currency reverted to test short term support level at $20 and moved back to levels around $25. This is one of very interesting altcoins as it is moving in an uptrend for a very long period of time, but with significantly high volatility.

It was not such a good week for Monero (XMR) as price broke support level at $135 in order to test next support at $120. This level has not been breached, so resistance at $135 is currently tested. RSI is moving modestly below 40, and is not suggesting a clear oversold market. In this sense, some probability exists that XMR might test once again at $120.

For some time now Theta is moving steady between levels of $1.6 and $2.2. Level of $1.7 is a short term support line, if broken, next level to watch is $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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