Weekly Crypto Market Report: Jan 03-09, 2022 - BTC, ETH, SOL, FTM & More

Market Fundamentals Analysis

The cryptocurrency market is mostly on the slower side, most of the assets have been trading sideways. The digital market capitalization has risen slightly by 1% in the last 24-hours, currently just below $2T. The hawkish view of the Federal reserve was visible in the minutes of the meeting leading to the outcome that an accommodative monetary policy is going to end soon, along with a sharp trimming of bond holdings. The concerns regarding inflation and early rate hikes have saddened the market mood.

So far this month, there seems to be much more direct purchasing of alts, which has had some interesting effects.  Bitcoin hasn’t been able to get the support it usually sees at the top of the month, and correlations broke down a bit, which is why we have seen the asset continue to slide downwards since the start of the year. At the meeting last Wednesday, the Fed seemed more eager than in the past to shrink its balance sheet and to raise rates.  Almost all of the officials revised their inflation forecasts higher. BTC has fallen by 8% in the same time period, and its dominance at 40.1%, while ETH has fallen by 6%, and its dominance currently stands at 19.8%. BTC’s plunge can also be attributed Kazakh government’s decision to resign and shut down the internet amid protests, causing the #Bitcoin network hash rate to tumble by 13.4%. No timeline exists as to when the internet will switch back on in the 2nd biggest BTC mining country in the world.

ETH has fared better than BTC so far this year, both in terms of price thresholds, and also the inflow that the asset has been witnessing. Having said that, given that BTC is the king of the crypto space, and it has been underperforming for a while now, it would be safe to assume that the next rally would most likely have to be a BTC-led one.

Nearly all major altcoins, excluding stablecoins, suffered significant losses week on week. Solana (SOL, -20%), Avalanche (AVAX, -23%), Algorand (ALGO, -16%), Terra (LUNA, -19%), Polygon (MATIC, -15%) and others in the altcoin category posted double-digit losses. As Bitcoin dipped by over 10% in the first week of January, the star performer of 2021, Solana (SOL) has also plummeted.

The larger market’s momentum pulled Solana’s price down the charts. The asset tested the C$176 mark on January 8, 2022, and later broke that support to hit a low of C$171 the next day. Solana has fallen by over 40% month on month. Over the last week, the Solna network performance has been facing some issues. After the network was hit by a spike in high compute transactions, with a capacity of usually around 50,000 transactions per sec (TPS) was severely affected. That, alongside the bearish market sentiment, drove Solana’s price to a freefall. After witnessing an almost independent rally from August till around mid-October last year, the asset’s sensitivity to the market rose over time. Interestingly, this time around, SOL’s price saw a pullback each time BTC faced a drawdown over the past 3 weeks.

Over the past year, L1 alt’s have made tremendous progress. The proliferation of NFTs has contributed to that issue and allowed layer-1 coins such Fantom (FTM) and Avalanche (AVAX) and others to onboard those users that were priced out of Ethereum. These cryptocurrencies witnessed rallies of over 15x against Ethereum (ETH) and took a portion of its market share.

Cryptocurrencies adoption into the mainstream made large gains last year, and continue to do so, as many institutions and major companies started to take crypto seriously. In addition to the launch of the first U.S. exchange-traded fund tracking Bitcoin futures, corporations and well-known brands like PayPal, Whole Foods, Microsoft, Home Depot, AMC and Visa started to accept crypto purchases on their networks. Meanwhile, the oldest bank in the USA, The Bank of New York Mellon said it would start financing Bitcoin and other digital currencies, keeping the overall fundamental outlook positive as this year kicks off amidst a bear market, as we anticipate a recovery to set in soon.

Weekly Snapshot

Market Updates

-          Money transmission network MoneyGram now has a minority investment in crypto ATM operator Coinme following a Series A funding round.

-          Ethereum competitors, such as Polkadot, Solana and Polygon, are growing faster in terms of development activity according to crypto research firm Electric Capital.

-          Airbnb's CEO suggested that the platform's possible crypto payment option would not be restricted to one or two digital currencies.

-          The government of Kosovo has ceased crypto mining in the country owing to power constraints during the winter season.

Bitcoin Technical Analysis

Bitcoin was trading in a range from C$65,000 to C$58,500 over the past month. The asset gave a breakout on the downside of the range and started going down by forming a ‘Lower Top Lower Bottom’ pattern making the low of C$51,261. BTC has plunged almost by 40% from its peak of C$84,999. Technically, the asset has made a ‘DOJI’ candle at the low which indicates indecision in the trend and has started consolidating. Bitcoin has strong support at $50,500. If the prices hold the support then we can expect a bounce or a relief rally whereas a break below $50,500 will lead to further downfall and the prices can slide to C$45k levels. Falling Moving Average and RSI in the negative territory indicates the bears still have the upper hand.

For the latest cryptocurrency prices, check out NDAX's Markets page.

Disclaimer:

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.