Weekly Crypto Market Report: Jan 31-Feb 06, 2022 - BTC, ETH, SOL & More
Market Fundamentals Analysis
This was an extremely tame weekend, bookended by rallies on either side. To start, we saw a quick Bitcoin rally on Friday from C$47k to around C$53k. This move stands out among most year-to-date price action in that it was essentially independent of equities. It was also quite clearly a BTC-led rally. BTC dominance rose from 41.4% to 42.2%, implying that the source of the rally was fresh USD coming into the space and lifting BTC. Following that move, BTC went to an extremely tight range over the weekend, between C$52,500 and C$54,500.
Following that, almost immediately on the Asia open (time when S&P futures open for trading), we saw another sharp move to C$54,877. This is a fairly important level; it’s where BTC was when we had the sharp move lower on Jan 21st. If the rally stalls now, the level may turn into resistance, but if this momentum continues it could emerge as a floor, and the next key resistance level might kick in at C$61,500.
ETH’s rally has been an impressive one, as it has surged by over 20% in the past week. The asset had to cross the C$3,500 mark, for bulls to regain some confidence. After doing so, ETH has traded and closed in the green above multiple sessions, sustaining above the C$3,750 mark convincingly. ETH dominance stands at 17.5%, and its current market capitalization is at $365bn. From here on, C$4,250 is a key resistance for the asset, and if the asset can beat this level, another rally could be in the works.
The most interesting price action this week has undoubtedly been on SOL. This is a coin that was the poster child for the L1 rally in 2021 but scuffled mightily in Jan, trading from C$230 on New Year’s Day to a low of C$102 on Jan 24th. On Feb 1, it saw an impressive bounce, from around C$127 to C$146. This rally was partially driven by technicals, a chart which appeared to have bottomed out. Over the weekend, the asset beat this level, and is up over 25% week on week, as it currently trades at the C$150 mark.
Several other alts have had a positive week too. Similarly, AXS (37%), LUNA (25%), Polkadot (24%), AVAX (21%), and HBAR (20%) have all seen very impressive gains. MANA has seen a recovery of more than 25% week on week. The bulls pushed the price above the 50-day SMA on Feb. 05, and if prices sustain here, then MANA could rally up to C$4.5.
Despite all the volatility in tokenized markets, VC investment remains robust, cementing that the digital asset class is growing and more players like financial service firms and publicly traded companies enter the arena. Overall, more volatility in sight with continued Fed announcements, mostly economic data, and bond-market projections. Having said that, the past week has been a positive one for the space, after weeks of battling a rather bearish stance. The tide seems to be turning, however, we remain cautious over the next week or so, as assets need to sustain at current levels with good volumes for this trend to continue.
- A bill previously introduced by Washington Representative Suzan DelBene aims to exempt crypto users from paying taxes on transactions under $200.
- Her Majesty’s Revenue and Customs (HMRC), the U.K.’s tax agency, released a controversial set of guidelines that could affect innovation in decentralized finance (DeFi) on Wednesday.
- The Japanese government is considering a proposal to make it easier for registered crypto exchanges to list digital assets in the local retail trading market.
- The Bank of Russia has registered tokenization service Atomyze as the country’s first digital asset management company, the central bank officially announced last Thursday.
Bitcoin Technical Analysis
Bitcoin making the low of C$41,600 was showing good signs of recovery but the prices were facing stiff resistance around C$49,500 (20 Day Moving Average & Descending Trendline) and were trading in a range from C$44,500 to C$48,500. The asset finally gave a breakout above the resistance and rallied up to C$54,877. BTC has an immediate resistance zone from C$55,500 to C$56,000. Once this is broken then we can expect the prices to further surge up to the C$61k mark whereas C$49,000 will act as strong support. RSi above 50 and 20 Day Moving Average tilting upwards indicates a good and positive sign for the asset.
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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.