Market Fundamentals Analysis
The past week has been an interesting one for most crypto assets. After being in the red for in the last week of September, the market finally saw some respite, rallying by approximately 10% as the total crypto market capitalization came up to ~$2.1 trillion. Bitcoin saw its dominance increase to 43%, and currently has a market capitalization of $900bn at the time of writing.
BTC currently faces a stiff resistance in the range of C$62,500, and then at C$66,500. This comes after the asset fell significantly at different points in time last month, from a high of C$66,408. BTC buyers have been quite active, after the fall took place, and volumes have been strong too. The asset is trending towards the C$66k mark, and if it does hit this level, one could expect another fresh rally to set in. Bitcoin remains in a consolidation phase as of now though, and will be so, until price does not beat the C$62,500. Before the cryptocurrencies experienced the plunge they also enjoyed a linear rally, after which markets crashed citing the China crackdown as well as the ripple effects of the defaults of Evergrande, causing a panic.
Ethereum too followed a similar story. The latter part of last week, saw ETH rise by about 15%, and it currently trades at C$4,217. ETH has started to witness good inflows upon recovery, which is a strong fundamental sign of the asset, showcasing that investors are still keen on accumulating the asset. The overall outlook for ETH is mixed at this point in time, and the upside seen during the week, may very well act as the much needed respite the market needed, and hence the next few days remain very crucial at this point.
On the first of the month, ETH climbed by 10%, beating a crucial resistance level of C$3,800, and since then has closed in the green for multiple trading sessions. Furthermore, the impact of the London hard fork seems to have set in, which has further led to some investors holding a bullish outlook for Ether, owing to the classic law of supply and demand. Ethereum is also preparing to switch its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS), a fundamental development that has been in the works for a few months now. The declining ETH reserves suggest that traders are holding on to their Ether tokens, as there could be a supply squeeze for investors looking to enter the Ether market, thus making ETH more valuable.
There have also been some key developments that have taken place among some key altcoins. Grayscale Investments, a New-York based crypto asset manager, has decided to include Uniswap’s UNI tokens in its Grayscale Digital Large Cap Fund (GDLC) portfolio after rebalancing its basket of cryptocurrencies. UNI will make up 1.06% of the fund’s component, as Grayscale continues to cut down on Litecoin (LTC) and Bitcoin Cash (BCH) holdings, as part of its rebalancing exercise. Thanks to this news, UNI has seen an appreciation of more than 35%, over the past 7 days, rising from C$22.50 to C$34.74. Chainlink, Bitcoin Cash and Litecoin together represent 2.32% of the GDLC basket, which is down from 2.88% in July. Grayscale has not made quarterly adjustments to its DeFi Fund yet, which is currently dominated by UNI at 45.20%. Grayscale’s investment products seem to be gaining traction, as it goes mainstream, with leading financial institutions like Morgan Stanley doubling their investment on Grayscale’s single asset Grayscale Bitcoin Trust.
Among other key developments in the altcoin space, decentralized finance (DeFi) interest rate protocol Compound Finance reported a bug within its newly implemented Proposal 062, which overcompensated its suppliers, each receiving millions worth of the COMP token. The error however seems to be contained, and the team has assured its participants that all the funds, supplied or borrowed are not at risk. Surprisingly, COMP has not witnessed any price backlash citing this news, and has remained range bound over the past week trading between C$32.50 and C$35.50. Having said that the asset has missed out on a rally, which the overall market has been witnessing.
Weekly Snapshot
Market Updates
● The decision timeline of four Bitcoin ETFs, including Global X Bitcoin Trust, has been extended by the SEC on Friday.
● President Bukele revealed gas stations in El Salvador will begin selling each gallon of fuel at a $0.20 discount for those who pay using the Bitcoin Chivo wallet.
● The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, explains that some laws provide “significant investor protections” for exchange-traded funds (ETFs), including those seeking to invest in bitcoin futures.
● Decentralized oracle service Umbrella Network officially launched on Ethereum on Friday.
● Authorities in Indonesia do not intend to follow China’s example of imposing an outright ban on cryptocurrencies, a government official said, noting the country will limit itself to ensuring they are not used in illegal activities.
Bitcoin Technical Analysis
Bitcoin was trading in the downtrend, the prices tested and made the low of C$51,000. The asset made a ‘Bullish Engulfing Pattern’ at the recent lows and started consolidating. BTC was taking multiple support at C$51,600 to $51,750 and was not able to break the C$51k mark and the 100 day moving average on the downside, the bulls grabbed the opportunity with both hands and the prices surged almost by 22% making the high of C$62,260.
The asset has given a breakout above the descending trend line and is currently consolidating and trading in a range from C$62,000 to C$59,500. If BTC breaks the psychological resistance of C$62k with good volumes then we may expect the prices to further rally up to C$66,500 to C$72,500. Additionally, RSI is back above 50 which indicates strength in the trend, and if volumes remain supportive, we anticipate that the momentum that BTC carries will sustain, and the bullish outlook will persist.
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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.