Last week in the news
Both crypto and equity markets slowed down during the previous week amid investors fears regarding potential economic slowdown which might occur due to the delta variant of the new virus. It seems that investors were looking for safer ground from riskier assets, considering that U.S. benchmark 10Y Tbond yield fell down to 1.25%. Bitcoin was traded down to $32K, while Ether reached $2.050.
The decision of the UK's Financial Conduct Authority not to allow crypto currency exchanger Binance to establish its operations in the U.K., due to deficiencies in the anti-money laundering procedures, had some impact on business of this company with Briton customers. As media is reporting, Briton customers of the Binance did experience issues with funds transfer and card withdrawals. As per FCA`s decision, the company is still allowed to conduct business with the U.K. citizens over its website, however, it is obliged to officially note that the company is not allowed to conduct business in the U.K. On the other side, beneficiaries of Binance`s ban were actually its rivals on the market, some of which significantly increased the number of customers, like Bitstamp, Kraken and Gemini.
The Peoples Bank of China issued a statement on Tuesday noting that it has ordered a shutdown of one company under suspicion that it was providing “software services for virtual currency transactions”. In the same statement, other institutions are also warned not to provide any sort of services related to crypto currencies which includes marketing services or even space renting. Many analysts are asking if this is a completely new level of China's ban of crypto assets? But the question which still stands open is why and especially why now? Although the official explanation provided from China's government is that it wants to reach its “green” targets, there are several other hypotheses noted by analysts. Among widely discussed theories are the ones claiming that China is trying to clear the road for its own digital Yuan, which is currently in the testing phase and is expected to be officially released and available for wider use in the coming period. Still, what is the actual truth, remains unknown. However, what some analysts are noting is that China's ban on Bitcoin and mining is irrelevant considering that the BTC and crypto market expressed resilience to this kind of negative news. Also, businesses developed around crypto currencies were swiftly transferred offshore, mostly to the U.S.
As reported by Financial Times, the U.K.`s Advertising Standards Authority has placed crypto advertisements under high level of priority and will closely monitor such marketing communication in order to “take down misleading and irresponsible” advertisements. ASA also noted that it will act swiftly and “hard”.
The Bank for International Settlements (BIS), a global banking regulator, has issued a new working paper, covering risks related to cross-border payments with Central Bank Digital Currencies (CBDC). In this paper, BIS is emphasising enhancements of cross-border CBDC payments in terms of AML/CFT consistency as well as for alignment of regulatory and supervisory frameworks for such payments. The report is also implying on potential macroeconomic implications of cross-border CBDC and on a proper setup of its infrastructure. Some of the central banks, like Hong Kong, Thailand, China and UAE are already in the testing phase of digital cross border payments, however, BIS is also stressing issues which need to be addressed before CBDC final release.
Crypto market cap
Fundamental news on potential impact of new virus variant on setback on economic recovery as well as new bans on cryptos in China made modest impact on crypto market capitalization during previous week. Compared with a week before, total market cap decreased by $52 billion or 3.6%. Bitcoin, Ether and several altcoins were leading the market on downside, however, Binance Coin increased its value, despite negative news about Binance ban in the U.K. Daily trading volumes were modestly decreased, ranging from $150B down to $120B. Total inflow from the beginning of this year currently stands at $568 billion, which is an increase of 71% in relative terms.
Regardless of modest drop in price, for the majority of altcoins previous week remained flat without significant movements in market capitalization. Coins which led the market to downside are Bitcoin, which lost some $23B in market cap on a weekly basis or 3.5%, followed by Ether with a drop of $14B or 5.5%. Musk`s favourite DOGE was down by some $4.5B or 14%. One of the rare coins which gained in market cap on a weekly basis was Binance Coin, with an increase of $3B or 6.7%. It is interesting to note that this is the second week in a row that Binance is in the spotlight of the market due to its ban in the U.K. and second week that Binance Coin is gaining in strength.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Bitcoin: $35K continues to be in focus
During the previous week focus in the news covering financial topics was on the question which Bitcoin level the institutional investors are eyeing in order to start buying this coin again. While some analysts are noting that the level of $30K might be the breaking point, there are few others who are arguing that BTC is currently in wider consolidation and that $20K would mark the end of the downturn. Who is right, the market will show in the coming period.
Bitcoin started the previous week at levels around current resistance at $35K, but reverted to the downside, reaching a level of $32K. As of the weekend, BTC was trading around $34K. Price equilibrium at $35K still remains even with further decrease in volumes of daily trades. It seems like the market is slowing down, especially if we take into account that during the previous week, BTC did not come close to current support at $30K in order to test it. Instead, the lowest level reached within a week was $32K.
As per current charts, MA50 modestly slows down its divergence from MA200. At the same time RSI is continuing to move below 50 for the last three weeks. A short term channel between levels of $40K down to $30K is still active, but with current higher perspective on downside and level of $30K. Since during previous period BTC did not manage to break strong resistance at $35K, and at the same time, level of $30K remained out of the market range, it increases probability for this support line to be tested. So, $30K is a level to watch in the coming period. With current daily volumes of trade, it seems unlikely that the market will manage to break it, but still, if fundamentals push coin further on downside, then the next support line to watch stands at $25K. In case of a move to the opposite side, level in market focus is $35K, and in case that this resistance is broken, BTC will head toward $40K and test the opposite side of a short term channel.
Ether: how long can $2K hold?
Previous week Ethereum started around level of $2.400 but swiftly reverted to downside, reaching lowest weekly level at $2.050 on Saturday. ETH ended a week also around this level. For the last three weeks, ETH has been following a descending triangle, with a supporting line at $1.850. This raises a question if the psychological level at $2K can sustain for a longer period of time, or ETH is on a road to break it?
As per current chart, during the previous week ETH has tested both resistance line at $2.400 and support line at $2.100. Support line is still tested on the down side. Within the last three weeks, RSI did not move above 50, while it is currently standing modestly below this level. Short term momentum for the last 50 days is still getting closer to MA200 but continues to sustain a difference between these two lines.
For a moment, the support line at $2.100 will remain in focus of the market. In case that it is broken, ETH will head toward testing its psychological level at $2K. In case that it is clearly broken, then the next level to watch would be $1.850 as the end of the descending triangle. In case of a move to the upside, resistance line at $2.400 might be tested again.
Ripple: is $0.5 next target?
Although Ripple started the previous week testing the resistance line at $0.7, the market did not have enough strength to go above this line, and the coin reverted to the opposite side. Support line at $0.6 was shortly tested, but the coin found weekly equilibrium around $0.65 level, which is currently support line tested. On the other side, Ripple was following a descending triangle line, which started as of the end of May this year. Supporting triangle line is at $0.5 level. At the same time, RSI also headed on downside, currently standing modestly below 40, while moving averages of 50 and 200 days are gradually diverging toward each other.
If the current trend moves ahead, and XRP continues to follow the triangle pattern, then it could be expected that the next target of XRP to be at level of $0.5, where the pattern will end. On the opposite side, the current level at $0.65 will be tested, and if broken, coin will head toward the next, but strong, resistance line at $0.7.
Binance Coin: rejecting to go with the flow?
Although Binance exchanger did not managed to get licence for operations in the U.K., it did not affect investors confidence in this coin. Regardless of general crypto market trend which moved modestly to downside, Binance Coin rejected to go with the flow, and moved from $280 from the beginning of the week up to $340 during the week. Coin is currently trading around level of $320. However, jumping into conclusion on negative correlation between the general crypto market movements and BNB might be too optimistic.
Current charts show that latest peak at $350 is in current focus of the market. However, this peak falls below previous one from the beginning of June this year, where coin was trying to break a $430 level, but without success. This is indication of potential triangle which BNB is forming, where supporting line stands at $250. Momentum line of 50 days is quite slowly converging toward the momentum of 200 days, but it is still not crossing it. Currently the support line at $300 is tested. In case that it is broken on downside, BNB will head toward next support, which stands at $250. Currently there is higher probability for this line to be tested due to decreasing triangle chart formation. In case that coin reverts to the upside, then resistance at $350 will be the next target.
Cardano (ADA): next target at $1.2?
Cardano was moving in a relatively short range during the previous week, between levels of $1.47 down to $1.28. ADA`s price range was between resistance at $1.40 and support line at $1.20 which has not been tested during the week. This puts in spotlight this level, which might be soon tested. On the opposite side, stands resistance at $1.40.
LINK: is resistance at $20 too strong?
Chainlink was another coin with very tight moving range during the previous week. Coin was moving between levels of $21 down to $17. Based on recent historical data, there is some significance around the $20 line, where coin spent some time in the past. Although this line has been tested during the previous week, current charts suggest that testing might continue during the next period of time. In case that it is broken, the coin will head toward next short term resistance at $25. On the opposite side, a support line at $15 might be tested.
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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