Last week in the news
Previous week was marked with Elon Musk tweets which made an impact on the crypto market. His announcement that Tesla Inc will not accept BTC for car purchase pushed the price of BTC to levels below $50K. At the same time, new tweets on meme pushed the price of DOGE by some 50% on Friday.
During the previous week Elon Musk figured out that mining of crypto currencies contributes to overall increased use of fossil fuels, and decided, in his manner, to post a tweet that Tesla Inc will not accept Bitcoin for purchase of Tesla cars. Although it is a very well known fact that mining crypto currencies, including Bitcoin, increases use of electricity, it is unclear why exactly at this moment he decided to put emphasis on environmental awareness and reverse his previous decision. This decision is also questionable considering the fact that Tesla Inc holds at least $2.5 billion worth of Bitcoins. However, currently many BTC analysts are concerned about potential wider consequences of Musk’s decision. In case that other large companies halt accepting BTC due to environmental issues, it could have a negative impact on BTC`s future value. At the same time, Musk announced future work with his team and DOGE in order to “improve system transaction efficiency”, which pushed coin price some 50% up on Friday. Coinbase announced that it will add DOGE to the list of available coins within the next 4-6 weeks.
As Bloomberg reported, the U.S. Department of Justice and Internal Revenue Service (IRS) started a federal investigation of Binance Holding Ltd., amid tax and anti-money laundering. The CEO of Binance, Zhao Changpeng tweeted, that the company is closely collaborating with law enforcement agencies “to fight bad players”, as title of the news article was widely misinterpreted.
Internet Computer is a new crypto currency, launched on Monday, which spotted much attention from the crypto community and investors. Founder of coin is Dfinity Foundation with the main aim to support decentralization of the Internet. This coin should help internet applications to be created based on Internet Computer blockchain. Current market value of the coin is estimated at $35 billion.
After PayPal and Mastercard, the MoneyGram has joined the crypto club in cooperation with ATM operator Coinme, allowing its customers in the US to buy or withdraw their cryptos in cash.
Inflation rate in the U.S. jumped to 4,2% in April on a yearly basis. This increase was higher than expected 3,6% and from March level of 2,6%. Potential higher increase of the CPI in the US is one of major concerns of investors, considering its implications on higher interest rates. On the other side, FED officials are seeing this rise as only a short term effect and that there should not be concerns regarding increasing interest rates in the near period.
Crypto market cap
Crypto market capitalization decreased during the previous week mostly due to negative news coming from Tesla Inc regarding the decision not to allow car purchases in Bitcoin due to environmental concerns. This news supported fears among market participants that other companies might follow this path. Total market cap was decreased by more than $160 billion or 7% on a weekly basis. Daily trading volumes were also a bit higher, moving between $300B and $600B on a daily basis. Total inflow from the beginning of this year is $1,4 trillion which is an increase of 183% in relative terms.
Previous week was in red for the majority of crypto currencies, however, there are few with solid performance. Ether is still in the spotlight of investors' interest. During the previous week, the coin managed to reach its historically highest level by reaching $4.350K, and to increase total market cap by additional $5B. Among other altcoins, good performance had Cardano with increase in market cap by $20B or some 40% and EOS with additional $1B or 13% increase. Bitcoin was leading last week`s down trend with a decrease of $180B in market cap or 16%. Despite Elon Musk tweets, DOGE lost some 22% as of the week-end.
There has not been many changes in circulating supply of leading crypto currencies during the previous week. Ripple`s supply decreased by some 23% on a weekly basis to $58.23B, while Tether increased supply by some 13%.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Bitcoin: is it heading back to $40K?
Bitcoin was strongly hit by negative news coming from Tesla Inc, that the company will not accept payments in BTC for purchases of their cars amid environmental concerns. Current major concern of investors is the question if other companies will follow Tesla`s example which might have highly negative consequences on the price of Bitcoin. Price of BTC dropped during the time of the news announcement from levels of $57.800 down to $45.900 which was a decrease of some 25%. As of the week-end BTC managed to revert back to levels of $50K.
BTC`s price move during the previous two weeks is suggesting some major developments on the side. For the last two weeks, BTC was testing resistance at $60K, without enough strength to break this significant level. Regardless of the latest negative news, some short term reversal was expected to some extent. Level which was previously significant was support at $50K, which BTC tested on a few occasions. Considering move on down side from last week, when BTC broke support at $50K and ended move at next support at $45K, where 0.681 FIBO currently stands, it opened a road to $40K or 0.5 FIBO. At this moment, BTC is testing resistance at $50K, but with a very weak prospectus that this level will be broken on the up side. RSI is close to the oversold side but still not there, which might indicate some short term potential for price to go a bit down from current level.
Based on technical analysis, levels to watch during next week are support at $45K which might be tested once again. If this level is broken on the down side, then BTC will head toward next support at $40K. On the resistance side, level of $50K is currently in the spotlight and if it is broken, then level of $55K will be tested.
Ether: breaking positive correlation with BTC?
Last week started with a new ATH for Ether at level of $4.350, after the coin reverted a bit and ended the week around $3.700. Level of $4.100 is marked as short term resistance, as ETH tested this level during the last three days. It is important to note that ETH was not significantly affected regarding negative news about Bitcoin, which might indicate that it is slowly moving away from positive correlation with BTC and emerging as a new leader on the crypto market.
With the latest move on the down side, RSI fell modestly below 70. As this trend just started, there might be a possibility that ETH will test short term support at $3.500. Next short term support level stands at $3.000. On the opposite side, level to watch is $4.000, if broken on the up side, ETH might head toward new ATH.
Ripple: third week of testing $1.60 resistance
Last week was the third week in a row for XRP to test strong resistance level at $1.60. Without strength to break it, the coin reverted a bit down to next support levels at $1.40 and shortly to $1.20, but ended the week below $1.60 one more time. RSI is currently around level of 50, without supporting clue regarding future move.
Current chart and trading volumes does not provide indication that coin might go above $1.60 level, but rather that there is short term downtrend forming. Since resistance at $1.60 has not been broken for some time now, the coin might look sustaining level at $1.40. Support level at $1.20 might be tested once again. If this level is broken, then the next one to watch is at $1.0.
What’s in store for altcoins
During the previous week Bitcoin Cash tested long term resistance at $1.6 one more time, but again the coin reverted to down side, reaching support level at $1.200. Some short term reversal is currently ongoing as RSI moved from 70 down to levels modestly above 50. In case that BCH breaks current long term support at $1.200 then the next level to watch would be at $1.000. In case that it is not broken, the coin will revert to the upside to test resistance at $1.400 and eventually $1.600 for one more time.
Despite a strong up trend during the previous period, Litecoin was unable to make a clear break above $400 level. LTC reverted down to support level at $300. Whether reversal is over is too early to conclude. However, current charts suggest that there is space for LTC to test once again resistance at $330 up to $370. In case that current support at $300 is broken on the down side, then the next important level for LTC stands at $250.
Binance coin (BNB) tested once again ATH at $690 during previous week, but without strength to go above, coin reverted shortly down to support level at $600. This level is currently tested. In case that it is clearly broken, then the coin might look for new ground at next short term support at $520. However, a move to opposite side would indicate new testing of ATH.
Dash (DSH) was unable to break short term resistance level at $420, so coin reverted to down side to test support at $320. Although this level has not been reached during the previous week, there is still space till the end of current down move. When short term reversal to the up side occurs, levels to watch would be $380 and $400.
EOS managed to reach a new ATH during the previous week, reaching level of $14.8. Two days this level has been tested, after which, EOS reverted to down side reaching shortly support level at $8. However, trading continued during the week between $10 and $11. Coin ended week by testing support at $10. In case that this level is not broken, then the coin will revert to next short term resistance which currently stands at $13. On the down side, next support is at $8.
IOTA entered into clear short term reversal on down side, by reaching support at $1.8. Important support stands at $1.5 which was reached on only one occasion during the previous week. Since RSI is moving modestly above 40, it might indicate that the current down trend is still not over and that $1.5 might be tested in the near period of time. On the opposite side, resistance stands at $2.0 and $2.2.
NEO tested resistance at $110 during previous week, but soon reverted down to support level at $90 which is level currently tested. In case of its break, NEO would head toward next short term support down to $80 and $70. However, there is still space for resistance at $110 to be tested again.
Monero (XMR) is currently heading toward long term support level at $370, since it was not able to break resistance at $420. In case that current support is not broken, there is probability that $420 would be tested again.
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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