Weekly Crypto Market Report: Nov 15-21, 2021 - BTC, ETH, DOT, MANA & More
Market Fundamentals Analysis
This week in crypto has been quite volatile. Heading into the weekend, markets seemed to be turning a corner, after being in the red for most of the week. BTC fell below the C$70.5k mark for the first time in 6 weeks, while ETH traded below C$5.1k for a few hours on Thursday evening. Since then though, both BTC and ETH have caught a second wind, up over 3% in the past 24 hours. Similarly, LTC and ADA also joined the weekend rally, up 3.3% and 2.9%, respectively. Meme coins saw yet another retail bid surge, with SHIB (+4.7%) and DOGE (+4.7%) higher after substantial pullbacks from recent highs. AVAX hit a new ATH after an 18% rally on Sunday which boosted the L1 token to over C$190. The rest of the market is broadly green today as buy-side activity is starting to pick back up, and some accumulation is seen.
BTC and ETH futures volume has remained elevated, though open interest is trickling downwards as liquidations continue to tear through the market. Between Thursday and Friday, there has been $620mm of liquidations, $295mm coming from BTC and $132mm coming from ETH. In contrast to recent days, the shorts are feeling 55% of the pain. Funding rates for BTC and ETH are relatively neutral. BTC’s are straddling zero while ETH’s are in the 1-3bps range. BTC and ETH options OI have ticked downward post weekly expiry. On the whole, futures leverage is getting lower and less directional, which should help the market find its footing.
One of the biggest stories of the week came last Thursday, as Polkadot revealed the first winner in its Parachain Auction: Acala. The initiative drew close to $3.5B in crowd-loaned DOT across 10 projects. After some intense competition over the past few weeks, Acala took the edge over Moonbeam and secured the first slot. The initial group of 5 Polkadot parachains will be auctioned off over the next month and go live together on December 17. If the drama and traffic around the Polkadot auction is any indication of the future popularity of candle auctions, there is a high chance this will continue into the future. Metaverse tokens and gaming tokens seem to be the next breakout trend in the crypto market and they are already proving their worth by holding a strong foot in the recent bloodbath we witnessed last week. Decentraland (MANA) surged to a new weekly high of C$5.90 with a 15% surge over the weekend. The Metaverse token rose from a daily low of C$3.60 to set a new weekly high and is currently just 17% below ATH at C$4.85.
From a macroeconomic standpoint, Europe is in the midst of another wave and several governments, such as Germany, the Netherlands, Ireland and Belgium, have initiated lockdowns again across a few cities. There is now concern that a similar wave will hit the US, triggering lockdowns that will certainly impact the economy. Concerningly, the US does have a lower vaccination rate than Europe, though the bar for US lockdowns has generally been higher. If lockdowns do indeed start sweeping through the US, the Fed will likely be hard-pressed to tighten when the economy is theoretically in peril, which could allow for further crypto gains as inflation continues unchecked.
- President Nayib Bukele of El Salvador revealed their country’s plan to build the world’s first Bitcoin city which would be financed through the issuing of $1 Billion Bitcoin bonds in 2022.
- Avalanche (AVAX) rose to a new price high on Nov. 18 and posted weekly gains after its developer, Ava Labs, entered a partnership with "Big Four" accountant firm Deloitte.
- On Thursday morning, Acala, a decentralized finance (DeFi) protocol operating on the Polkadot (DOT) network, announced it had won the first-ever Polkadot parachain auction.
- On Wednesday, the world’s largest collector car auction house by total sales, RM Sotheby’s, announced the company will be accepting cryptocurrency payments via Bitpay.
- The liberal party Senator Jane Hume has commented on the support of DeFi stating that Decentralized Finance “presents huge opportunities” for the Australian to solidify its place as a “front-runner for innovation & economic progress.”
Bitcoin Technical Analysis
BTC saw a sharp correction from its peak, it broke the 20 Day Moving Average and the prices fell almost by 18.5% making the low of C$70,236. Post this move, the asset witnessed short covering over the weekend and the prices bounced up to C$75,864. However, it faced stiff resistance and was not able to sustain above the psychological level of C$75k. BTC has a very strong support zone from C$72,500 to $70,700 and we expect that the prices can bounce from these support levels. A break or close below these levels can lead to further downfall. To further rally, the asset needs to trade and close above the resistance zone of $80,000 to $82,000. RSI is at 40, which signals a slightly weaker outlook moving into this week.
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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.