Last week in the news
As August U.S. jobs report significantly missed market expectations, equities finished the week in red, putting in question timing of Fed's tapering moves. On the other hand, the crypto market continued to gain, with Bitcoin reaching levels above $50K, Ether passed $4K while Cardano hit new ATH at $3.09 in expectation of token`s dive into DeFi`s after “Alonzo” upgrade in September.
The U.S. nonfarm payrolls dropped significantly in August, adding 235K jobs, significantly below market expectation of 720K jobs. Economists are concerned that this might have an impact on the delay of Fed's withdrawal from the bond purchase program. On the other hand, economists are concerned that currently spreading delta variant might have impact on employment in the near future, which in turn might lead to slowdown in economic output and put in question speed of economic recovery. Jobs figures have pushed major U.S. indexes in red on Friday.
CNBC is reporting on upcoming new regulation in China which would put in focus algorithms used by companies in the field of online sales. The so-called “recommendation algorithms” now need to comply with specific rules defined by China's cyber security regulator with the aim to diminish monopolistic behaviour on the market and increase protection of customer data. Some of these rules would prohibit recommendation algorithms which make users addicted or in any way force them on increased spending. In addition, users need to be notified about use of such algorithms. Analysts are noting that this regulation might impact some companies to change their business models, but also alert that it means a higher state interference into proprietary information.
Cuba has adopted a Resolution 2015, in which the country is actually recognizing use of digital currencies like bitcoin. This resolution notes that the Central bank of Cuba will set further rules for dealing with digital currencies. It sets the frame for legal entities, providing services related to cryptos, to be licensed by the CB in order to conduct such activities in a legal way. It is expected that this regulation will make it much easier to send funds from and to the U.S.
Reports are showing significantly increased use of crypto currencies in Afghanistan, a country recently hit by a significant crisis. After the banks had been closed, and a country stopped receiving support from major international financial institutions, local people turned to crypto currencies. Similar situations have been seen in Venezuela during its latest financial crisis last year. However, as per analysts with expertise in this segment, the situation in Afghanistan is a bit different from the crisis in Venezuela, since here only wealthy people are turning to crypto in attempt to get money out of the country, while the majority of local people in Afghanistan don’t even have a cell phone or internet connection.
Crypto market cap
Lower than expected figures on U.S. jobs in August, which increased investors' concerns over the course of the improvement of the U.S. economy, have pushed the crypto market during the previous week. All major crypto currencies gained in value. As of the end of the week, total market capitalization reached $2.27 trillion, which is an increase of 9.6% on a weekly basis. Major contributor during the previous week was Ether, followed by Bitcoin. Daily trading volumes have been further modestly increased up to $230B on a daily basis. Total inflow from the beginning of this year stands at $1.48 trillion, which is an increase of 187%.
It was a positive week for the crypto market. Majority of currencies have gained in value. Major contributor was Ether with a 20.7% increase in market capitalization or $78B. Ether is followed by Bitcoin who in previous week gained $20B or 2.3%. XRP also managed to gain additional $5B in market cap, which is an increase of almost 10% for this coin. Tether is continuing to strongly increase its coins in circulation. During the last two weeks, total volume has increased by almost 4%. Although Cardano has pushed market cap by 2%, it`s circulating supply has decreased by -0.4%.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Crypto futures market
In line with its market price, BTC futures with shorter maturity periods have been increased by 2% and 4% to levels above $50K. Stronger increase in price of 5.72% on a weekly basis had futures with maturities in January and December next year. Expected price as of the end of December 2022 was $52.7K.
ETH futures had a strong increase in price during the previous week. Maturities up to November were up by 20%, while expectations on price as of the end of this year and beginning of the next year were standing above $4K, which is an increase of more than 26% on a weekly basis. However, futures maturing as of the end of the next year had a slower increase of some 20%. In any case, this increase is a positive sign as it shows market expectations on further increase in ETH price.
Table below provides the most recent information on BTC and ETH future prices.
Bitcoin: still no strength for move above $50K?
Bitcoin`s testing of $50K resistance continued also during the previous week. Although BTC started a week around level of $46K, a move toward the resistance line continued during the whole week, with BTC trying to find a strength to break this line. At one moment price went to $51K on Friday, but soon reverted back to levels modestly below $50K. RSI is currently moving around 60, not indicating that the overbought market is near. MA50 continues to move toward MA200, but it is still moving at a safe distance. Price moves on the down side are still holding to MA200 line. Positive sign was that daily trading volumes have slightly increased compared to previous weeks.
Some analysts are noting that BTC options need to be accounted for when analysing current market moves. There has been some significant portion of options expiring in August which were executed around $50K. This certainly had some impact on the latest push of BTC price toward level of $51K. For this reason, in the coming days price might revert a bit on downside, at least to support the line at $45K.
Considering relatively low daily volume of BTC trading and expiration of August futures and options, BTC might continue to test the resistance line at $50K in the coming days. In case that it is not broken, then it should be expected a modest reversal toward the support line at $45K. However, in case that some strong fundamentals push the price on the upside, then the next level to watch would be $55K.
Ether: DeFi`s and NFT`s are pushing price
During the previous week Ether managed to slip from level of $3.330, which was mostly impacted by the expiring futures in August, and finally make a break through to the levels above $4K. Highest level reached during the previous week was $4.025. RSI went over 70, to clear overbought zone, after which, Ether reverted a bit to levels modestly below $4K. As per data provided from analysts involved in the matter, latest push in price is caused by investors increased interest for investments in DeFi`s and NFT`s and technology around it. If demand continues during the coming period, ETH might be in position to challenge current ATH, or even go above it.
Daily trading volumes remained at relatively same levels, without significant increase, despite strong moves in price. MA50 and MA200 are continuing to diverge from each other. Based on short historical data, current short term resistance stands at $4.100. This level has not been tested during the previous week, which increases probability for it to be tested in the coming period. Next significant level stands at $4.350, which is ATH for ETH. In case of short term reversal, the support line stands at $3.500 down to $3K.
Ripple: moving in a channel?
During the previous week XRP tested a support line at $1.0, but without market strength to break it. Coin swiftly reverted to the upside, breaking resistance line at $1.20, finishing the week at $1.3. This is the level where XRP spent a lot of time during the last two weeks, but did not manage to break it also during the latest visit. RSI is around 60, not indicating an overbought market. Important signal is coming from oscillators, as MA50 crossed MA200 from the downside. In technical analysis such cross is an indication of potential future bull market.
Despite oscillators crossing, current charts are sending mixed signals. Since mid-August XRP has been moving in a sort of channel between levels of $1.0 up to $1.3. There is currently strong resistance at $1.3, which has not been broken for some time. In case XRP manages to break it on the upside, next significant levels stand at $1.4 up to $1.6. On the other hand, if XRP continues to move in a channel, there is a high probability that it will move down to the test support line at $1.0.
Binance Coin: short term reversal, or maybe not?
For the last few weeks Binance Coin was moving slowly but gradually toward higher grounds. After reaching resistance at $520, gradual uptrend has been stopped for a while, as BNB reached a clear overbought zone. Support line at $430 has been tested only on one occasion during the previous week. Daily trading volumes did not change over the same period. Oscillators made a cross, where MA50 crossed MA200 from the downside, which might be an indication that further uptrend is in store for BNB.
Level to watch during the following short term period is current resistance at $520. In case that it is not broken on the upside, then BNB will make a short reversal, at least to level of $430, where support line stands. With relatively low daily trading volume, the probability of testing the next support line at $380 is significantly decreased. On the other hand, if $520 is broken on the upside, the next level to watch is $560.
Cardano (ADA): is demand exhausted?
Cardano is continuing to benefit from its announced “Alonzo” upgrade, supported also by investors' increased interest for technology around DeFi`s and NTF`s. Although the price of ADA did not significantly move on the upside during the previous week, still new ATH has been marked at level of $3.09. This shows that demand for this coin still exists, but it is modestly decreasing. Whether this will be the case in the coming days, is to be seen. Latest information regarding the timing of the upgrade is September 12th. Until and shortly after this date, it might be expected some further movements in price, which cannot be indicated through technical analysis.
Since ADA is currently slowing down, it could be assumed that coin will soon stabilize price movements as it retreats from strictly fundamentals-moved market and fits into technical analysis. Based on short historical data, if ADA reverts a bit on downside, the currently significant level stands at $2.5, which is previous ATH for ADA. Potential moves in the opposite direction will be driven by further demand for this coin.
LINK: is channel finally broken?
During the previous week, there has been increased demand for LINK, as coin went from $24.4 all the way up to $31.7. This was a significant move, as LINK has finally broken a channel between levels of $25 and $30 where the coin was moving for several weeks. There has also been slightly increased daily trading volumes, which supported a move above $30. RSI made a move from 50 to 60, leaving some space for price to go higher before the overbought market is reached.
In case that demand for LINK continues also during the following days, it might be expected that the coin will head toward the next resistance line at $35. However, in case that there is not enough strength to push coin further, then LINK will revert to downside, to support levels at $25, with quite low probability for $20 level.
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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