The crypto market experienced a mixed performance in trading after Federal Reserve Chair Jerome Powell said that inflation is beginning to ease. Bitcoin (BTC) surged 3.11% to $23,788, while Ethereum (ETH) broke the $1,600 mark. BTC volume has been around $30.58 billion over the past 24 hours, up from 37.16% in the last 24 hours.
Last week, BTC’s price topped even the most optimistic price forecasts after the US Federal Reserve announced plans to raise interest rates by 25 basis points. Although Fed Chair Jerome Powell warned investors not to wait for rate cuts in 2023, he made it clear during his press conference that jobs data is currently the focus. The results of the ADP salary survey were released on February 1st showing that US private-sector hiring fell significantly in January. The ADP reading of private sector payrolls came in at 106k, well below the market consensus of 160k. This data fueled investor expectations for future rate hikes by the Federal Reserve. After testing the $22,500 support on Feb 1, Bitcoin gained 6.5% in five hours and has been flirting with the $24,000 level ever since. While the recent gains are exciting, traders should note that crypto market sentiment has improved. Although it will take a little longer (maybe a few days) to break above $24,000, there are no signs of stress emanating from the bitcoin options and margin markets. However, traditional markets still play a crucial role in setting the trend, so Bitcoin investors should not get too confident.
Ether has been struggling with the $1680 resistance since Jan 20th. The ascending triangle pattern and improving investor sentiment in ETH derivatives are giving hope that Ether’s price could reach $1,800 or higher by the end of February. It of course depends on how the price of Ether behaves when it hits the sample deadline in mid-February. On the one hand, traders are relieved that Ether is trading 33% higher year-to-date, but repeated failures to break the $1680 resistance coupled with the stream of negative news could give traders the power to nullify the bullish triangle pattern. On the bright side, Ethereum Foundation developer Parithosh Jayanthi announced that the “Zhejiang” public testnet will launch in February. Ultimately, both the options and futures markets are aimed at whales and market makers who are not comfortable adding long positions with leverage, but at the same time are not concerned about seeing the support of the rising channel from $1,570. Traders will be watching if Ether bulls can sustain the price inside the bullish triangle formation over the next two weeks. If the macro environment allows, ETH derivatives are pointing to a possible Rally towards $1,800.
On the macro front, crypto exchange Gemini is reportedly under investigation by the New York State Department of Financial Services over claims the company has made about assets in its earn lending program. The US Securities and Exchange Commission accused the Gemini exchange of offering unregistered securities through the “Earn” feature. Negative operating margin stocks posted significant gains on Feb 2nd, including Coinbase (COIN) 20%, Cloudflare (NET) 15%, Unity Software (U) 12% and DoorDash (DASH) 10%. It’s also important to remember that Bitcoin’s 40-day correlation to the S&P 500 remains above 75%.
Technical Outlook:
Bitcoin:
BTC after giving a breakout above the range started trading upwards by forming a ‘Higher High Higher Low’ pattern. The prices made a weekly high of $24,255 yesterday. Currently, the asset is trading in a ‘Bullish Flag’ pattern. However, the bulls will face a major hurdle at $25,200 (Previous Top on 15th August 2022) and $28,500 (Horizontal trendline). Once the prices break and sustain above these resistances then we can expect another rally up to $32k. If it resists at these levels then we can expect some profit booking. $21,500 will act as strong support for the asset.
Ethereum:
ETH was trading sideways in a range from $1,050 to $1,300. The asset finally gave a breakout above the range and started moving upwards by forming a ‘Higher High Higher Low’ pattern and rallied up to $1,714.6. The asset has a strong resistance zone from $1,700 to $1,750 (Horizontal Trendline) and after making the high of $1,714, ETH has made a Doji candle with a longer upper shadow indicating selling around the resistance. Hence, to further rally, ETH needs to break, close and sustain above $1,750 whereas it has strong support around $1,500 (200 Day Moving Average).
BNB:
BNB after making the low of $220 showed signs of recovery and went up to $255. The asset was facing stiff resistance at $255 and was consolidating in a narrow range. BNB finally broke the resistance and rallied almost by 31% within a month making the weekly high of $334.4. The asset will face strong resistance at $336 and we can expect some profit booking at these levels. Once the bulls breach these levels then we can expect it to further rally up to $400.
Monthly Snapshot:
| December | January | Last Month | Current Month | ||||
| Close | Close | % Change | High | Low | High | Low | |
| BTC | $16,642 | $23,139 | 39.04% | $18,319 | $16,398 | $24,167 | $16,716 |
| ETH | $1,202 | $1,586 | 31.99% | $1,346 | $1,160 | $1,681 | $1,547 |
| BNB | $246.48 | $312.36 | 26.73% | $301.48 | $221.00 | $333.50 | $255.07 |
| crypto | 1m – % Vol. Change (Global) |
| BitCoin (BTC) | 21.81% |
| Ethereum (ETH) | 18721117935.45% |
| Binance Coin (BNB) | -22.78% |
| Resistance 2 | $28,500 | $2,000 | $1.50 | $380 |
|---|---|---|---|---|
| Resistance 1 | $25,500 | $1,750 | $1.30 | $336 |
| USD | BTC | ETH | Matic | BNB |
| Support 1 | $21,500 | $1,450 | $1.05 | $300 |
| Support 2 | $18,000 | $1,200 | $0.75 | $255 |
Market Updates:
- According to a Jan 31st post by Ethereum Foundation developer Parithosh Jayanthi, the “Zhejiang” public withdrawal testnet will launch on Feb 1st at 3:00 pm UTC. Six days after Zhejiang, the Shanghai and Capella testnets will also be triggered
- The second largest publicly-listed holder of Bitcoin, Marathon Digital Holdings has offloaded some of its Bitcoin for the first time in two years.
- MicroStrategy says no plans to stop trading BTC as paper loss hits $1.3B. The company also booked a loss of $34 million on its first-ever Bitcoin sale last quarter but said it was conducted to harvest a tax loss
- Huang Yiping, a former member of the Monetary Policy Committee at the People’s Bank of China (PBoC), believes that the Chinese government should think again about whether the ban on crypto trading is sustainable in the long run.
