Last week in the news

Quite a dynamic week for the crypto market. Majority of currencies found new, lower trading grounds after few important regulatory news released during the previous week. Bitcoin was traded down to $30K, Ether slightly above $2K. One would say that it is so typical for crypto assets, while all analysts are in agreement with the statement “if you want to trade Bitcoin, you will need to have strong nerves”.

Elon Musk continued to make his contribution to bear crypto market by implying in his new tweets that Tesla might sell its holdings in Bitcoin. After some ten hours he again commented on Twitter that Tesla has not sold any of its BTC holdings. But the initial question still stands unclear and that is if Tesla will eventually sell BTC?

Major impact on BTC price during the previous week came from China. At China's meeting of the Financial Stability and Development Committee, held on Friday, members issued an statement noting risks coming from crypto currencies. In this sense, there is a call for a ban of providing any services related to crypto currencies by financial institutions and payment companies in China. Although there is still no official regulation in place, financial industry associations in China had issued a call for financial and payment institutions to stop offering any service which is in some relation to crypto currencies. During the year 2017. China had banned ICO`s, also citing financial and investment risks, and recently it has put a halt to crypto mining in the Inner Mongolia region amid environmental issues. In the beginning of crypto development, China was one of pioneers in this field, with an increasing number of crypto users. However, the latest bull market which started at the end of last year, has revived interest for crypto currencies in China, resulting in the Government's latest decision, amid financial and environmental risks. Meanwhile, PBOC is still in the testing phase of its own digital currency.

There is also new regulation introduced in Hong Kong. Namely, Hong Kong regulators will provide licences to crypto exchangers which will be able to provide services only to professional investors.

Talks about crypto regulation were in the focus previous week also in the US. In order to cope with risks of dealing with cryptos, Biden's administration proposed that all transfers of crypto currencies above $10.000 should be reported to the Internal Revenue Service. This would have implications on IRS staff, as it`s plan includes an increase of staff by 86.000 of full time employees within the next ten years. In addition, the U.S. Securities and Exchange Commission Chair Gary Gensler commented on the need for new regulation with the aim to provide protection to investors amid highly volatile asset classes like crypto currencies. He specially emphasized the unknown extent of currently leveraged crypto assets. At the same time, FED is continuing to explore the introduction of its own digital currency. It is expected that the FED will release its discussion paper in the coming months, with focus on risks and benefits of introduction of digital currency, while the Boston Fed and the Massachusetts Institute of Technology are currently working on technology which would be used for the new digital dollar.

Crypto market cap

News related to the ban of crypto business in China as well as concerns over possible Tesla`s sale of its BTC holdings have made a significant impact on the crypto market. Only within one week near 30% of value has been wiped off the market. As of the weekend, total market capitalization was standing at $1.58 trillion. Daily trading volumes continued to be at higher levels, moving between $400B and $600B on a daily basis. With the latest decrease, total inflow from the beginning of this year is $795 billion, which is an increase of 100% in relative terms.

Bearish trend continued for a second week in a row for crypto currencies. This week, almost all coins were affected with this trend. Bitcoin and Ethereum were leading the down trend, where BTC lost some $200B or 22% in market cap, followed with Ether`s drop of 37% or $170B. Binance Coin is down by 46% or $42B. All other coins also lost in value. At the same time, there has not been significant changes in circulating supply of leading crypto currencies during the previous week. Ripple`s supply was increased by some 30% on a weekly basis to $46.14B.

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

Bitcoin: at $35K is actually good news

Although some traders would say that the previous week was another hard week on the crypto market, the good news is that BTC`s move has confirmed signals derived from technical analysis of the coming down trend. If we continue to forecast price moves based on technical analysis, BTC`s drop to $40K is actually good news, because, price reversal is coming! But the long position is quite dangerous for now becasue the price can reach the level $20K.

Certainly there has been some negative news during the previous week, which pushed the crypto market to the down side. BTC was mostly affected by the regulatory ban of crypto currencies in China. This decision will have some implications on BTC, but the full scale of it is questionable, as businesses from China would be transferred to offshore countries, where doing crypto business is legal. So, fundamental news are actually not so bad, as it might look at first sight.

BTC started the previous week by testing support level at $45K, but soon went down to next support at $40K. Wednesday was a day when BTC shortly hit level of $30K, but soon reverted back to levels between $35K and $40K. At time of writing this article, BTC is testing resistance at $40K. During the previous week RSI went all the way down to 20, which is a certain sign of an oversold market and indication that price reversal is ahead. Charts are suggesting that there is space for BTC to test once again support at $35K, where 0.382 FIBO stands, but the highest pressure can be expected around resistance level of $40K, or 0.5 FIBO. Levels to watch during next week is $40K, if broken, then $45K will be tested (or 0.618 FIBO). On the down side, in case that $35K is broken, then the coin will continue  toward $30K once again and then next level is about $20K.

Ether: a need to test $2K?

Previous week Ether started at levels around $3.5K, and finished it around $2.3K. Within a short move on Wednesday, ETH headed down to support at $1.8K, but soon reverted back to levels above $2K. Technical analysis at this moment is not suggesting that down trend is over for ETH, but is close. RSI is still moving around 40, modestly above oversold market signal. Looking at the historical price movements, the level of $2K was a psychologically very important level for ETH, where coin has spent a lot of time and struggled to comfortably break it. A move to $2K support would provide clear indication that price reversal to the up side is coming. At this moment, ETH is testing resistance level at $2.400. In case that this level is not broken on the up side, ETH will revert down to support line at $2.100 and eventually to psychological level of $2K. On the opposite side, a break from $2.400 resistance would lead ETH to next resistance at $2.630 all the way up to $3K.

Ripple: still not end for bears?  

After struggling below $1.6 level for a few weeks, Ripple made significant move on downside during last week`s overall bearish rally on crypto market.  XRP found current new ground below $1.0, but it is still unclear whether bearish move for this coin is over.

During the previous week, XRP broke short term support level at $1.0 and ended week at long term support at $0.9. RSI is around 40, indicating that the down trend is still not over, and that there is space for this coin to go even lower. In case that $0.9 is broken on the downside, next supporting ground for XRP will be at $0.7, based on historical data. It would be a clear indication that the current down trend is over and that reversal to the up side is coming. In case that coin does not have strength to break $0.9 on down side, then some short term reversal to the up side can be expected, to level of $1.0 and up to $1.20.

What’s in store for altcoins

During the previous week Bitcoin Cash broke support level at $1.200 and ended move to down side at level of $600 at its short term support line. This level was tested for the last three days, when the coin was moving between resistance at $800 and support at $600. At this moment it seems like there is not enough strength for the coin to further go downside, so there is a probability for reversal, to test once again resistance at $800. If this level is broken, then the next target for this coin will be $1.000. Still, in case that $600 is broken on the downside, then the level of $400 will be the next target for testing.

In its latest move, Litecoin lost some 50% of its value within one week. Coin made an easy way to the downside from $300 down to $160, which is the support line where the coin last traded in February this year. RSI clearly reached an oversold market, which implies that the downturn for LTC might be over at this level.  At this moment, LTC is testing resistance at $180. In case that this level is broken, then the coin will go to next resistance lines at $200 and $230. On the opposite side, support at $160 might be tested again.

Binance coin (BNB) reached support level at $250, which was a significant drop from previous level above $500. RSI reached a clear oversold side, indicating the possibility that reversal on the upside is coming. Resistance level from this point stands at $300, where the coin is currently traded. In case it is broken, then the next level to watch is $400. However, a turn to downside would lead the coin to current support at $250, with some possibility to reach $200.

During the previous week Dash (DSH) made a move from resistance at $320 down to support level at $180. This support level is still tested, but it does not seem like the coin will have strength to break it on downside, as also, RSI shows a clear oversold market. In case that coin reverts to the up side, level to watch is $240 as current resistance level. Next resistance stands at $320. On the opposite side, a break of $180 support would lead the coin to level of $160.

In a short move EOS tested support level at $4, where the coin was previously traded as of the end of March this year. It soon reverted back and was traded between $6 and $5 for the last three days. Considering that there is still no indication that a clear oversold market has been reached, there is some probability that EOS will shortly test support at $4 once again, before the coin reverts back to resistance at $6 or $8.

IOTA continued its reversal which started some two weeks ago, reaching its lowest level at $0.75. Coin ended week testing support level at $1.0. Considering that the oversold market has been clearly reached, there is a probability that IOTA will revert to test resistance level at $1.5. On the opposite side, the next support level stands at $0.75.

During the previous week NEO shortly tested the support line at $40, but ended week testing resistance at $55. There is still no clear sign of an oversold market, so it can be expected for NEO to test once again support at $40 before currency finally reverts back to resistance levels at $55 up to $65.

Monero (XMR) ended the week at $230 support level, after testing support at $200 during the week. Current charts are suggesting that the support line at $200 might be tested again. However, reversal on the up side from current level would lead XMR to next resistance at $250 and $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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