Weekly Crypto Market Report: Dec 27, 2021 - Jan 2, 2022 - BTC, ETH, FTM, LUNA & More
Market Fundamentals Analysis
Crypto markets seem to have taken a turn for the worse as the year ended. The bears seem to have regained control, driving markets down. BTC is down 7%, while ETH is down 6% over the past week. This trend set in, after the markets saw a slight spike early last week, post which major profit booking was seen, and the flash selling caused markets to close in.
Bitcoin (BTC) has fallen about 30% from it's all-time high at C$85,999. However, despite this fall, Bitcoin was up 63%, YTD (2021), outperforming the S&P 500, which was about 30% in 2021. Industry experts believe that BTC's outperformance in a high inflationary environment underpins the fact that Bitcoin is an excellent inflation hedge asset. Ether (ETH) failed to sustain above the 50-day EMA (C$5,000). This might have attracted selling from short-term traders. Post this the price turned sharply and has dropped close to the strong support at C$4,500. Moreover, the downsloping 20-day EMA and negative RSI suggest that the path of least resistance is to the downside.
The year 2022 has started off with investors having become a little cautious, and seem to be shying away from riskier investments such as cryptocurrencies due to the emergence of the Omicron variant. As the variant spreads across the globe, both traditional as well as crypto markets have taken a hit over the past few weeks. The virus could potentially disrupt supply chains and global travel, and with several nations imposing lock down like restrictions, it could delay a global economic recovery. This fear has led to a degree of panic selling, which in turn has created a downward pressure on the market. In addition to that, ESG (environmental, social and governance), investing and concerns over energy use have also contributed to the recent price fall seen across most major assets. Interestingly though, we have seen cryptocurrencies pinned to the metaverse, gaming and decentralised finance pull investor funds away from the more traditional assets, like BTC, ETH and other L1 altcoins.
Most assets seem to be in a consolidation phase as of now. 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. While the macroeconomic environment with respect to regulation, technological development and adoption remain positive, much of the sentiment will be driven by what the pandemic has in store for us moving forward.
Bitcoin and most major altcoins are staging a recovery from their strong support levels, indicating that traders continue to buy on dips. Amongst top alts, Cardano (ADA) broke and closed below the 20-day EMA (C$1.77) on Dec. 29 but the buyers have not yet given up, as they attempt to push the price back above that. Terra’s LUNA token bounced off the 20-day EMA (C$103) on Dec. 30, indicating that the sentiment remains positive and traders are buying on dips. Polkadot successfully concluded its 6th parachain slot auction with Enjin’s Efinity, and is now set to host NFTs to its network; a big fundamental development. DeFi tokens are defying the price action, as the wider crypto market battles a slump. FTM is currently priced at C$3.18, up 45% over the past ten days. Also putting in strong performances over the last week or so are AAVE (up 23% to C$359), and Uniswap's UNI (up 8.8% to C$24.25).
- PricewaterhouseCoopers has announced that it has entered the Metaverse after purchasing LAND in the Sandbox.
- Tokens.com has announced that it has purchased land in Decentraland. It also revealed that it sees the Metaverse as a huge opportunity and wants to bring fashion brands into the Metaverse and Decentraland.
- NEAR announced that Terra would integrate the UST stablecoin on NEAR and Aurora. The integration means that NEAR’s high-speed network will support Terra’s UST stablecoin.
- Mexico has also joined the race and announced that it would be introducing a new national central bank digital currency in 2024 as per the tweet represented by the presidency and highlighted how it will help the country to be more financially comprehensive.
Bitcoin Technical Analysis
Bitcoin after taking multiple support around C$58,000 started to move up and showed good signs of recovery. However, last week, the asset faced stiff resistance at C$66,000 and made a ‘Gravestone Doji’ candle (Bearish Candle) and the price dropped again to C$58,000. Technically, on a daily time frame, BTC is consolidating and trading in a broad range from C$66,000 to C$58,500 with declining volumes. Breakouts on either side of the range with good volumes will further decide the trend for the asset. Flat Moving Average and RSI around 50 indicates a neutral stance for the asset. To witness a rally BTC needs to close and sustain above C$66,500 whereas if the prices break the key support of C$58k then the prices can further slide to the next support which is at C$51,000.
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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.