Weekly Crypto Market Report: Dec 13-19, 2021 - BTC, ETH, DOT, AVAX & More
Market Fundamentals Analysis
The market is not quite in end-of-year mode, though one can certainly see it just around the corner. Crypto has traded soft so far this week, with BTC falling below C$60k last week. Bitcoin price lost the C$64,500 support, and altcoin prices dropped by as much as 25% within a matter of moments, before tentatively recovering, and falling thereafter. Bitcoin currently trading at C$59,600. It’s by no means been a convincing bounce, and it seems like the crypto market is trading in a sideways manner. Having said that, BTC’s price retraced 8.2% over the past week, but it also outperformed the broader altcoin market.
ETH has also shown no respite, down approximately 11% week on week. The asset fell below the C$5k mark and has recovered slightly since. ETH did undergo a hard-fork (Arrow Glacier upgrade) last week, which briefly had a positive impact on price, but that quickly eroded. While bears are in control currently, the market seems to be in a consolidation phase. Considering that most cryptocurrencies took a considerable hit on December 13, the overall market structure has held up nicely. BTC dominance currently stands at 41.5%, while ETH is at 21%. Notably, the exchange rate of Ether (ETH) against Bitcoin (BTC), reversed from three-year highs to challenge new support. Some signs of relief did come in after the United States Federal Reserve provided a short-lived performance boost, but overall, progress has been limp compared to earlier in the year. The immediate outlook was no more favourable, with the Coronavirus Omicron variant sparking fresh economic shutdowns set to last into the new year.
The US Senate committee to discuss stablecoins met last Tuesday. Sen. Toomey put forward a framework that would give stablecoin issuers three options: to operate under a bank charter, to receive a special-purpose bank charter, or to register as a money transmitter. Moreover, Elon Musk tweeted that Tesla will sell some merchandise for DOGE, and “see how it goes”. This was enough for a 35% rally in DOGE, about half of which retraced. Any speculation that the Elon effect has dissipated seems overblown.
Polygon has acquired a zero-knowledge startup - Mir in a $400 million deal, as part of its efforts to scale Ethereum and bring users to Web3. Polygon sees zero-knowledge (ZK) cryptography as the most promising technology to scale blockchains. On Friday, Polygon and venture capital firm Seven Seven Six, signed a $200 million deal. The initiative will back projects operating at the intersection of social media and Web 3.0. The focus will be on gaming applications and social media platforms built on Polygon’s infrastructure. Like many crypto-focused businesses, Polygon is experiencing fast-paced growth. The platform has about 120 million unique addresses after users ``increased sharply” in 2021, claimed the CEO. The number of dApps on the platform rose 9,900% from 30 in November 2020 to 3,000 in November 2021. AVAX surged 41% in the last week and sits at C$132 at the time of writing. The rally may be due to two factors: the addition of USDC, and Bitgo’s recent announcement that they would list AVAX.
Silvergate Bank is looking to raise around $461 million through the sale of 3.31 million shares of common stock. The bank recently received an endorsement from JPMorgan, when the giant gave Silvergate an overweight recommendation. Finally, a positive fundamental development posits that the IMF has outlined its proposal for establishing a global regulatory framework for crypto. Last month, the IMF warned of the increasing use of crypto in the developing world – something it referred to as “cryptoization” – which could destabilize economies and hamper central banks’ monetary policy, and regulation around the same might help counteract this. The next few days shall be crucial for us to be able to assess which side the market will trend, as currently much of it is moving sideways.
Bitcoin Technical Analysis
Bitcoin, after making a new all-time high of C$85,999, Bitcoin has been trading in a downtrend and the prices hit the low of C$54,600. Post this move, the asset is consolidating and is trading in a narrow range from C$58,500 to C$63,000. The prices are trying to take support at the crucial level of C$58,660 (78.6% Fibonacci Retracement Level). Technically, on a daily time frame, BTC is forming a ‘Descending Channel’ where a more potent signal occurs with a breakout, which is when the asset’s price breaches an established channel's boundaries, either on the upper or lower side. The falling moving averages and the relative strength index (RSI) around 36 indicate that bears have the upper hand. Hence, we expect the trend to be bearish to sideways until the prices are moving within the channel.
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Information provided in the weekly market report is for information purposes only and should not be interpreted as investment, legal, or tax advice. Prior to investing, it is very important to evaluate your investment objectives and your risk tolerance carefully. This technical report is not meant to provide guarantees of future performance, and users should not rely on it, as the actual performance and financial results may differ significantly.