Weekly Crypto Market Report: Nov 29 - Dec 05, 2021 - BTC, ETH, MATIC, AVAVE & More

Market Fundamentals Analysis

BTC has seen a significant correction over the past week falling by approximately 25% to lows of C$54,600.  This in turn flipped the sentiment in the marketplace, which means that bears are now in charge. The panic selling came after Evergrande defaulted on yet another loan, and after BTC fell below its crucial support at C$68,500 over the weekend. Moreover, investors seemed concerned at the emergence of a new COVID-19 variant and hawkish comments from the Federal Reserve.

Much of this is in line with what we had anticipated and stated in our previous report. The macroeconomic outlook seems to have changed, which has resulted in a bearish shift. On the upside though, we have seen good inflows into the asset, and do believe that BTC is in a ‘buy-zone’, as the asset does look very attractive at current levels. Some form of recovery has already set in, and BTC has recovered over 15% since the Saturday crash and is approaching the C$65,000 mark.

The spread and impact of the Omicron variant of COVID-19 is a situation that one must keep an eye on, as talks of potential travel restrictions, as well as lockdowns, have started to emerge globally. This might promote another round of government stimulus, which would increase global debt and weaken currencies against gold and cryptocurrency. The current price action is similar to a price pullback that happened this past September. BTC fell by 25% and caused panic amongst BTC investors. Then BTC reverted to new ATHs. Now, BTC fell down by -23%.

ETH has followed suit too. ETH has seen a significant correction over the past week falling by approximately 20% to lows of C$4,562. When the crash took place over a 24 hour period, total liquidations worth $2.53bn were seen. The majority of the overleveraged positions liquidated in the crash, which is a signal for bear markets to take over. Ether’s move downside surprisingly allowed for it to hit a three-year high against Bitcoin (BTC). The ETH/BTC ratio was up by approximately 11.50% as it hit 0.0835 BTC for the first time since May 2018. This happened in the wake of the market-wide sell-off, as ETH weakened by 15% against the US dollar, compared to BTC’s 21% intraday loss. Hence, while Ether's losses were significant, they were relatively milder compared to Bitcoin. Ethereum seems to be outperforming Bitcoin by a good margin this year.  Its market dominance is up to 22%. The number of active addresses on the network continues to climb, while the issuance of new ETH is diminishing, a classic demand and supply paradigm, which is the key reason for its rise.

The altcoin landscape hasn’t seen anything different this week. This is definitely a BTC-led crash, and altcoins weren’t spared either, as most of them crashed over the weekend. Having said that, there have been some noteworthy developments. Aave is looking to launch a service that will integrate a compliance protocol, which will allow typical traditional finance entities such as banks, hedge funds, and market makers to access DeFi. This is anticipated to happen in a month or so. South Korea’s leading bank, the Shinhan Bank, completed developing a proof-of-concept. The proof-of-concept has been designed to enable international remittances leveraging stablecoins using the Hedera Network.

The MATIC/CAD pair plunged to the 100-day SMA (C$1.97) but buyers stepped in and bought this dip. MATIC is special in the sense that the dip came in for a very short time, and the asset witnessed an immediate recovery. The ‘buy on dips’ strategy seems to have pulled MATIC back up, as it currently trades around the C$2.25 mark convincingly, which amidst the crash is impressive.

Weekly Snapshot

Market Updates

• Fidelity Canada has officially launched the Fidelity Advantage Bitcoin exchange-traded fund (ETF) and the Fidelity Advantage Bitcoin ETF Fund which are basically mutual funds, listed on the Toronto Stock Exchange.

• A cabinet note being circulated by the Government of India on the upcoming cryptocurrency bill has finally spread positive light for the investors and the industry, indicating that rather than banning private cryptocurrency, the digital asset would be under the regulatory orbit of the SEBI.

• Croatia’s largest supermarket chain Konzum is now accepting crypto payments for online purchases and plans to expand the new payment method to its physical chain stores also.

• On Friday, WisdomTree, a financial institution with over $76 billion in assets under management, announced it had created four cryptocurrency indices in the United States and Europe to provide diversified portfolio exposure to investors.

Bitcoin Technical Analysis

BTC was trading in a downtrend post making a peak of C$85,999. The asset was taking support at C$68,500 (50% Fibonacci Retracement Level) and was showing signs of recovery.

However, the bulls were struggling to breach the resistance level of C$75,500 and the 20 Day Moving average. The bears reacted as this weekend, it broke the support of $68,500 and witnessed a massive 20% fall making the low of C$54,600. Post this move, the asset has seen some short covering but the prices are hovering around C$60,000. BTC has a strong support zone from C$58,500 to C$55,000 and to rally it needs to close and sustain above the resistance zone of C$65,000 to C$68,500. RSI (Relative Strength Index) below 30 indicates that BTC is entering the oversold region.

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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.