Last week in the news

News on potential increase in taxes on capital gains in the US pushed crypto and equity market in the red zone on Thursday. Although the equity market rebounded the following day, it seems that the crypto market would need more time for the same move. Bitcoin was traded down to levels around $50K.

During previous week information that the US administration is planning to increase taxes on capital gains had a negative impact on investors sentiment. As Reuters reported, capital gain taxes could reach 39,6% for earnings above $1 million, which is close to double compared to the current tax rate. This comes with a set of other tax change proposals which would be presented during next week in Biden's address to Congress. Markets reacted in a negative manner to this news. Certainly most sensitive to doubled taxes would be the crypto market where earnings from the beginning of this year were quite high. Some analysts are pointing to the possibility that investors with high earnings would get out from this market in order to book profits. There are analysts who are noting that this rate is too high and that probably the government would settle around level of 28%. The US stock market reacted to this news by losing some 1% on Thursday, but on Friday it was already back on the previous track. What is certain at this moment, while keeping in mind crypto market sensitivity to news, is that some volatility can be expected in the coming period.

PayPal`s Venmo payment application has allowed its users to make transactions with bitcoin, ethereum, litecoin and bitcoin cash. Venmo provided to its customers the possibility to buy, hold and sell these tokens, as well as to make payments for goods and services globally.

Bank of England is another central bank recently, which is investigating possible introduction of digital currency. The aim is to allow its citizens to make direct payments using GBP. However, they have clearly noted that the final decision on introduction has not yet been made. Currently only discussion papers are available for interested parties. Referring to crypto currencies, BoE noted that these “do not pose a risk to monetary or financial stability in the UK.”

In light of new regulation in Turkey, banning payments and holdings in crypto currencies, influenced crypto platform Thodex to be suspiciously shut down. Thodex CEO is currently missing with estimated $2 billion of investors money. Turkish authorities have issued a warrant for Thodex CEO arrest. At the same time authorities have blocked all accounts of another exchange platform based in Turkey, Vebitcoin, after the exchange stopped its activities due to financial issues.

Crypto market cap

Negative news related to possible increased taxation of capital gains in the US, influenced short term run-off from the crypto market. During the previous week, this market lost some $146 billion or 7% in total market capitalization compared to the week before, finishing week at $1.8 trillion. Although the majority of tokens finished week in a red zone, the largest contributor to funds outflow was Bitcoin with some $130 billion. Daily trading volumes continued to be at relatively higher levels from $300B up to $500B on a daily basis.

Total cash inflow from the beginning of this year is $1,0 trillion which is an increase of 127% in relative terms.

Crypto market finished the previous week in the red zone. Majority of currencies performed with decreased market cap and funds outflow. Bitcoin was leading the list, with outflow of some $130 billion or almost 13% decrease. Ripple lost some $13B or 23%. Theta was down by 19% in market cap, followed by Stellar with 18% and Ethereum Classic and  Bitcoin Gold with loss of 16%. One of the rare tokens who gained in value was Monero with 11% increase.

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

BTC reached oversold market ?  

During last weekend BTC clearly broke up the trend channel, entering into short term reversal to levels slightly below support at $50K. Lowest level reached during the previous week was at $47.3K. At this moment the market is testing support level at $50K on down side. Reason for this strong move on the down side was news regarding potential increased capital gain taxes in the US. This proposal should be presented at the US Senate during next week. Depending on the final proposal and market sentiment, it might trigger another volatile week on the crypto market and for BTC.

RSI entered into the clear oversold zone, reaching 30. As there are important fundamentals to come, it might be early to conclude that it represents clear trend reversal. In case that current support level at $50K is broken, BTC would head toward next support at $45K, down to $40K. However, in case that market had digested potential tax increase, than BTC will revert to the up side toward next short term resistance level at $55K. Next resistance above this level is at $60K.

Ethereum confident above $2K

ETH moved in a mixed manner, but during a week stayed confidently above the psychological level of $2K. It has managed to even reach new ATH at $2.630 on Thursday, in a short move to this level. However, for the majority of time, token was trading around $2.400, which is marked as a new short term resistance level. Support level at $2.1K was also tested during the previous week, with quite weak strength to break it.

Current charts suggest that there is still some space for support at $2.1K to be tested again, considering that the clear overbought market is still not reached. In case that it is broken on the down side, the next support level stands at $1.950 down to $1.850. A move on the opposite side would push ETH to test once again resistance at $2.400 and also previous ATH at $2.500.

Ripple still holding above $1

Last week was a sort of setback for Ripple. After reaching its highest level in the last three years, at $1.95, currency reverted on the down side, reaching long term support level at $0.9 during the previous week. XPR is currently trading above level of $1 which is short term support for XRP. RSI is around level of 47, which indicates that clear oversold market is still not reached, but might be close. In case that XRP breaks $1 then long term support at $0.9 will be tested once again. Next short term support stands at $0.65. In case that currency reverts to up side, level to watch is $1.2 up to $1.4.    

What’s in store for altcoins

Bitcoin Gold continued down trend during the previous week, ending it at short term support level at $70. There was one move to level above $100, but the coin was mostly traded between levels of $70 up to $95. Currently, it is testing long term resistance at $85. In case that BTG moves above this level, next resistance stands at $100 up to $120. On the opposite side, if short term support is broken, then next short term levels stand at $65 down to $45.

After almost four weeks holding above $11, Theta entered into down trend, reaching support level at $8. RSI shows a clear oversold market, indicating that some short term trend reversal might be ahead. In this case, Theta might revert to test resistance at $11. On the opposite side, the next short term support line is at $6.

Cardano (ADA) tested short term support level at $1 during the previous week but without strength to break it, reverted to resistance at $1.2. As RSI is currently above 40, it might indicate that some pressure on the down side might be seen once again before a clear oversold market is reached. This provides indication that support at $1 might be tested once again. A move on the opposite side would lead ADA to next resistance at $1.2 up to $1.4.

During the previous week Litecoin broke support level at $250 and continued toward next support at $230, which is currently tested. RSI is around 45, which might indicate that there could be additional moves to the down side until a clear oversold market is reached. If support level at $230 is broken on down side, currency will head toward next support at $200 down to $180. In the opposite direction, move above $230 would push currency toward next resistance at $250 up to $300.

During the previous week LINK broke support level at $35 and moved to test next support at $30. As the clear oversold market has not been reached, there might be a probability for support at $30 to be tested once again in the coming days. In case that it is broken, next support stands at $20. If the coin reverts to the up side, current resistance level at $35 might be tested. Next resistance stands at $40 while $44 is ATH reached during April this year.

After an incredible move from $0.07 up to $0.44 DOGE reverted a bit to levels around $0.2. As there is still not much historical data in order to properly define important levels, and also lack of fundamental data, we still have dozens of precautions when it comes to application of technical analysis on DOGE. Based on quite short data over the last two weeks, it seems that there is some significance around level of $0.25, while ATH stands at $0.44.

After pushing price to resistance level at $140, NEO immediately reverted trend to down side, moving to support level at $80 where it is currently traded. Oversold market has not been reached during the previous week, which might provide some probability that currency might test support levels at $70 down to $60 if current level is broken. If NEO reverts to up side, next resistance stands at $90 up to $110.

Although for the majority of altcoins it was a bit mixed week, Monero (XMR) was holding strongly above support level at $330, which was tested on two short occasions. XMR ended the week at levels above $390. As there was no strength to break long term support at $370 on Saturday, and XRM reversal to the up side, might indicate move toward next long term resistance at $420. ATH at $460 Monero reached in December 2017. Clear break of support at $370 would lead coin to next support at $330 down to $300.

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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