31 December 2021 | ZebPay Trade-Desk
Crypto markets seem to have taken a turn for the worse. The bears have taken over, causing the market to slide rapidly. BTC is down 3%, while ETH is down 5% over the past 24 hours. Bitcoin and most major altcoins are facing selling at higher levels, this happened when the market showed some respite yesterday. However, the rapid selling has put downward pressure on the market, causing it to fall. Bitcoin (BTC) has fallen about 30% from its all-time high at $69,000.
However, despite this fall, Bitcoin is up 63%, YTD, outperforming the S&P 500, which is up 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’s (ETH) has failed to sustain above the 20-day EMA ($4,011). This might have attracted selling from short-term traders. Post this, the price turned sharply and has dropped close to the strong support at $3,600. Moreover, the downsloping 20-day EMA and negative RSI suggest that the path of least resistance is to the downside.
Investors have become a little cautious, and are 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. The virus could potentially disrupt supply chains and global travel, and with several nations imposing lockdown-like restrictions, it could delay a global economic recovery. This fear has led to a degree of panic selling, which in turn has created 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.
While the big guns, BTC and ETH continue to trade sideways and have failed to show any real momentum, the altcoin sector’s impressive allies this week indicate that investors are looking outside the market leaders for projects to invest their funds into. This is also a sign of maturity for the whole ecosystem, and especially the DeFi space. The market is overall red, but with the volume growing. The digital market is back with positive action in the midst of the holiday season and hopes to end the year on such highs.
Technical Analysis:
The next few days are likely to be quite interesting for the largest asset by market capitalization, Bitcoin (BTC), as it is hovering around the $57,000 mark, and the battle between the bears and bulls intensifies. Ethereum (ETH), too, is looking promising at current levels and faces strong resistance at $4,850 next. But, if it beats that, it might just witness another rally. The sentiment is fairly bullish even at these levels, which is probably why the market has been able to sustain for an extended period of time. On-chain metrics haven’t been showing any rally-specific trends either. This means that the network is under-utilized, and the on-chain activity would have to catch up with price performance in order to sustain the market. Overall, the market has been largely in the green this month, and while a correction could be in the works, we can’t be sure when that will happen or if it will, as the macroeconomic outlook seems to be gaining positive reinforcement and investor sentiment is largely positive too.
Bitcoin (BTC) Technical Analysis and Chart:
At the time of writing, Bitcoin is trading around $47,000 reflecting a gain of about 0.75% approximately over the period of 24-hours.
Bitcoin after breaking the crucial support of $53,000 early this month witnessed a sharp fall and the prices made the low of $42,333. Post this move, the asset is consolidating and trading in a broad range from $45,000 to $52,000. BTC took multiple support at $45k and last week it showed good signs of recovery. However, the bulls failed to push the prices above the range and the asset made a ‘Gravestone Doji’ candle at the resistance of $52,000.
Once the breakout occurs above $53,000 with good volumes then we can expect the asset to further rally up to the $60k mark. If the prices break the support of $45k then the prices can further slide to $40k levels.
Ethereum (ETH) Technical Analysis and Chart:
At the time of writing, Ethereum is trading around $3,715 reflecting a gain of about 1.75% approximately over the period of 24-hours.
ETH after making the low of $3,446 early this month started forming a ‘Symmetrical Triangle’ pattern (which represents a period of consolidation before the price is forced to breakout or breakdown). The asset has given a breakout on the downside of the pattern but with low volumes and has dropped to $3,600 levels. ETH is trying to take support around $3,600, if it holds and sustains above the support then we may expect some relief rally. A break below $3,600 will lead to a further downfall and the prices may slide to the next support which is at $3,350.
Basic Attention Token (BAT) Technical Analysis and Chart:
At the time of writing, BAT is trading around $1.19 reflecting a gain of about 3.5% approximately over the period of 24-hours.
BAT after witnessing a sharp fall early this month showed good signs of recovery and the prices surged almost by 65% from the recent low of $0.8757 to $1.45. However, Bat faced stiff resistance around $1.4 (50% Fibonacci retracement level) and saw a minor correction. BAT has strong support at $1.15 and $0.9 whereas $1.45 and $1.7 can act as a strong resistance level for the asset.
Monthly Trade Summary Sheet:
Monthly Price Analysis:
| November | December | Previous Month | Current Month | ||||
| Close | Close | % Change | High | Low | High | Low | |
| BTC | $57,005 | $47,178 | -17.24% | $68,789 | $53,569 | $59,042 | $42,875 |
| ETH | $4,631 | $3,714 | -19.80% | $4,892 | $3,934 | $4,780 | $3,525 |
| BAT | $1.46 | $1.19 | -18.49% | $1.92 | $0.93 | $1.92 | $0.90 |
Monthly Volume Analysis:
| Cryptocurrency | 1m – % Vol. Change (Global) |
| BitCoin (BTC) | -12.65% |
| Ethereum (ETH) | 5.81% |
| Basic Attention Token (BAT) | -41.62% |
Support and Resistance Levels:
| Resistance 2 | $60,000 | $4,500 | $1.700 |
| Resistance 1 | $53,000 | $4,150 | $1.400 |
| USD | BTC | ETH | BAT |
| Support 1 | $45,000 | $3,600 | $1.150 |
| Support 2 | $40,000 | $3,350 | $0.900 |
January Outlook:
The overall sentiment has been bearish this month, and it seems like this might stick amidst this new variant. Markets were volatile, and the tussle between bears and bulls continue. In the month of January, we expect our favourite asset BTC to see attractive volumes and growth, as the fundamental outlook is positive. Volumes have started to see a recovery, which is necessary for prices to improve. Along with BTC and ETH, the majority of other altcoins also witnessed a similar trend, appreciating through the start of the month then falling rather dramatically.
As Banks, FIs, Governments, and MNCs continue to adopt digital assets, coupled with the ever so increasing coverage this asset class has been witnessing among institutions and research papers, the macroeconomic outlook is strong. As mainstream, more credible fund managers and economists start investing and holding BTC as well as ETH, we expect others to follow suit, further instilling belief in the asset class, and pumping up volumes. With countries now starting to consider cryptos as legal tenders, the outlook is even more positive.
Lastly, we expect January to be a positive month and anticipate the upward trend to continue. Though volatility seems to be a given, fundamentally BTC and ETH, the largest assets by market cap, continue to hold a strong footing in the marketplace. Given that, we remain bullish on both BTC as well as ETH and feel positively towards altcoins, especially those operating in the DeFi ecosystem, along with BAT and MATIC which has piqued our interest significantly, after major fundamental developments have occurred this month across both these assets.
Market Updates:
- Business intelligence firm MicroStrategy has added $94 million worth of Bitcoin (BTC) to its holdings after purchasing the crypto asset at an average price of $49,229.
- Sber, the Russian government-backed company and the largest bank in the country, is launching a blockchain exchange-traded fund (ETF) to track the performance of major crypto companies, such as Coinbase and Galaxy Digital.
- Binance, the world’s largest cryptocurrency exchange, announced Thursday that it will acquire the remaining outstanding shares of Swipe, a prominent crypto Visa card provider.
- Authorities in Iran have decided to permit power generation plants using renewable sources to sell electricity to licensed cryptocurrency miners.
Happy Trading with ZebPay!
References:
*Sources of charts: https://cryptowat.ch
Disclaimer:
This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum etc.are very speculative and are subject to market risks. The analysis by Author is for informational purposes only and should not be treated as investment advice.
