Last week in the news
A call for tighter regulation on crypto currencies and stablecoins from the U.S. regulators on Monday, have pushed the crypto market on downside by some 5%. However, as of the end of the week, the market modestly recovered supported by Elon Musk's statement that Tesla might accept Bitcoin again for vehicle purchases. Bitcoin ended a week at level around $34K, Ether returned to levels above its psychological $2K.
The U.S. Working Group on Financial Markets held its meeting on Monday, in order to discuss issues and benefits around stablecoins. In its after-meeting statement there has been noted an urgency on establishment of regulatory rules for stablecoins. It is expected that the regulators in the U.S. will issue recommendations in the following months with aim to cover potential gaps in current regulation. The members of the Group include Treasury Secretary Yellen, Fed Chair Powell, SEC Chair Gensler and CFTC Chair Behnam.
As of July 21st, Jack Dorsey, CEO of Square Inc. hosted an event called “The B-Word'' where the Bitcoin topic has been discussed with several investors, among which was Elon Musk. In this discussion, Musk mentioned the possibility that Tesla Inc. will probably start accepting BTC again for vehicle purchases after he is certain that it uses at least 50% of renewable energy for its production. He also sees the shutdown of plants using coal very positively, especially ones in China. However, he also noted that he personally owns cryptocurrencies which he intends to hold for a longer period of time, with Bitcoin holding the largest part in his portfolio.
After the ban in China, Chinese crypto miners are moving their operations into other countries. One of them is Kazakhstan. During the last week, the company Bitmain, a large producer of cryptocurrency mining hardware announced its partnership with company ENEGIX, which is one of the largest data centers in the world, based in Kazakhstan. ENEGIX will host Bitmain`s 180MW mining facility. As announced by ENEGIX, the company is planning to increase its infrastructure in the future period in order to host more mining companies, due they are already making power purchase agreements for its Kazakhstan’s facilities.
Japan is joining other monetary authorities in the world in their quest to regulate crypto currencies and stablecoin market. As per news reports, there is a fear from Japan officials that virtual money might significantly interfere with the financial system of the country. They are specially focused on private digital currencies as well as on stablecoins pegged to national currencies. In this sense, the national Financial Services Agency (FSA) has established a special unit with the aim to review regulation on digital currencies. At the same time, the Bank of Japan is reviewing the possibility of issuance of their own digital currency.
During the previous week, JPMorgan announced that it is going to allow access to crypto products not only to institutional investors, but also to its retail wealth management clients. With this move, the bank will become the first bank on the market to offer such products to wealthier retail clients.
The U.S. market has overcome concerns over the economic impact of delta variants. Dow Jones Industrial Average hit its all time highest level on Friday, closing above $35K, which is a year-to-date increase of 14%. At the same time, 10Y Treasury bond benchmark bounced back to 1.28% from 1.13% at the beginning of the week.
Crypto market cap
Although the previous week brought some volatility to the crypto market, the week-end finished in a green territory. The market has digested the potential impact of delta variants on economic recovery, bringing back investors to the financial markets. Crypto market was additionally supported with Elon Musk's statement that Tesla Inc might again start accepting payment in Bitcoin for their vehicles. Compared to the previous week, total crypto market capitalization was increased by $95B or 7.4%. Almost all coins gained in value, led by ones with the highest market cap like Bitcoin and Ethereum. Daily trading volumes remained at relatively lower levels during the previous week, ranging from $115B up to $150B. Total inflow from the beginning of this year currently stands at $581 billion, which is an increase of 73%.
Crypto market gained some positive influx as of the end of week, as almost all coins gained some value compared with levels from the end of a week before. Market was led by Bitcoin, who added $38B or 6% to market cap, followed with Ethereum with gain of $31B or 14%. Among higher gainers was Binance Coin, with market cap increase of almost $5B or 10%, however, at the same time, Binance Coin increased its market circulating supply by some 10% which was the main reason for this increase, while it didn't come from actual price increase.
The table below provides most recent information regarding market cap and circulating supply for most popular crypto currencies.
Bitcoin: triangle break on hold
Previous week Bitcoin started with a testing support line at $30K. Coin price went down to $29.3K, however, the market did not manage to make a clear break of this support line and it has returned to the upside. As of 21st June on an event called “The B-Word” hosted by Jack Dorsey, Elon Musk commented that Tesla Inc might again start accepting Bitcoin for car purchases, after he is sure that it is using at least 50% of clean energy for its production. At the same time he noted that he owns crypto currencies, mostly Bitcoin, which he does not intend to sell. This statement provided a positive influx to the crypto currencies market, where almost all coins gained back some of their lost value from the beginning of the week. Bitcoin moved to the levels modestly below $34K.
At this moment, charts suggest the probability that the descending triangle might be broken on the upside. However, it is too early to jump into conclusion, since clear break is still to be confirmed during next few days. RSI moved up to level above 50 from 34, however, this indicator did not show clear oversold market previously, so it needs to be taken with precaution into analysis. MA50 is currently slowing down with its divergence from MA200. With still low daily trading volumes, a move on the up side indicates more of a short term market correction, rather than its reversal.
In conclusion, some precaution is necessary during the next few days, since current indicators are still to be confirmed. Current resistance level stands at $35K, with higher probability that the market might test this level during following days. In case that it is broken, then the market will focus on $40K resistance. On the opposite side, if $35K is not broken, then the market will revert to the down side and support line at $30K.
Ether: oscillators are ringing the bell
During the previous week Ethereum continued to test a short term support line at $1.750, but without strength to make a clear move below this level. During the second half of the week, ETH reverted back to levels above the psychological line at $2K, reaching resistance at $2.100. Since the beginning of July, ETH has been struggling to break this line on several occasions, but without enough strength to actually make this move. Certainly, still low daily trading volumes are significant contributors to this situation.
By looking at current charts, it seems that ETH is looking for a way to break the descending triangle on the upside. However, at this moment, it is too early to confirm whether it is break revealing or it is just the market's last effort to push the coin to the upside. RSI moved modestly above 50, but it still does not indicate that short term reversal is on the road. What currently concerns the most is potential cross between oscillators. MA50 moved further closer to MA200, with high potential to cross it from the upside. This raises a bell that some higher precaution with conclusions on coin future moves is necessary.
ETH is currently testing the resistance line at $2.100. In case that coin manages to break this line on the upside, it will head toward next resistance at $2.400. If it reverts back from current levels, then it might be expected to test support at $1.950, down to $1.750 for one more time.
Ripple: still not finished with $0.5 support?
As of the first half of the previous week, Ripple was continuing to move in line with the descending triangle. It was expected that XRP would test the support line at $0.50, which the coin did, after which it shortly reverted to the upside and level of $0.60. Resistance line at $0.65 has not been tested during the previous week. For some time oscillators were moving toward each other. During the previous week, the cross finally occurred between MA50 which crossed MA200 from the upside. In technical analysis, this cross raises a bell of higher probability that some significant movements might be expected in the future period of time.
Taking into account movements from the last week, and current developments on the chart, there is increasing probability for the $0.5 support line to be tested again during the next few days. In case that this line is clearly broken on the downside, then levels to watch would be $0.45 down to $0.40. A clear move to the upside from current levels, would bring XRP to test resistance at $0.65 with some lower probability to reach next resistance at $0.70.
Binance Coin: watch for momentum
Previous week Binance Coin was traded in a relatively slow motion. As expected, the coin has tested its support line at $250, but without strength to break it, it reverted to the upside and highest weekly level at $311. BNB is currently trading around the resistance line of $300. BNB continues to follow a perfectly descending triangle, which started as of the end of May this year. The momentum line of 50 days continues to move toward its counterpart of 200 days, so some cross is to be expected in the coming days.
As per current charts, it should be expected that in the near future, BNB will seek to end the triangle cycle and potentially move to the up or down side. This increases the probability for the $250 support line to be tested again during following days. In case BNB breaks on the downside, then the next level to watch would be $200. However, if the coin manages to break the current resistance line at $300, then a move toward the next resistance line at $350 could be expected.
Cardano (ADA): testing of $1.0 support is still not over?
During the previous week Cardano did not have strength to hold above the $1.2 support line, so it went on the downside to test the next support line at $1.0. It soon reverted to the upside, but only to test, now the resistance line at $1.20. ADA is still perfectly following the descending triangle path, without any intent during the previous week to try to break it on one side. Moving average oscillators of 50 and 200 days are continuing to move toward each other, but they are still at a modestly safe distance.
With extremely decreased trading volumes, it might be difficult for ADA to break the current resistance line at $1.20, but coin will certainly continue to test it for some time. In case that it is not broken, there is a high probability that the coin will revert to the downside in order to test once again support at $1.0. Since the beginning of May, this support line has strongly held, but just in case that it is broken, ADA will seek new support at $0.9. On the opposite side, if $1.2 resistance is broken, then the next level to watch is $1.4.
LINK: looking for the end of a triangle
Chainlink was moving in a very short range during the previous week, between levels of $13.3 up to $17.1. Coin is still in the range of a descending triangle and looks for a break. Support line at $15 has been tested and although the coin reverted to the upside, it did not manage to reach resistance at $20. However, as per current charts, there is still a high probability for the support line at $15 to be tested again. In case that it is broken on downside, the next support line stands at $12, down to long term support at $8. On the opposite side, there is some probability for resistance at $20 to 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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