Crypto Technical Analysis Report | 2nd-Sept-2022

Crypto tokens had been trading in a zone on Friday, but Bitcoin remained above the $20,000 line. Inflation concerns and hawkish monetary policy comments weighed on sentiment for the digital asset class. Cryptos are looking bearish for now, with little hope of a meaningful recovery. However, all eyes are on the long-awaited Ethereum software upgrade “The Merge”, which is scheduled to be completed by the end of this month. The global crypto market cap has traded at the $989.25 billion mark, increasing around 1 percent in the last 24 hours. However, the total trading volume fell by about 8% to about $67.5 billion.

BTC faced similar pressures at the Wall Street open on September 1 as the US dollar hit a fresh two-decade high. BTC/USD fell to $19,658, down 2.7% from the daily high. The pair faced stiff resistance to break the all-important $20,000 mark in turning stable support, with similar macro signals complicating the bullish picture. This stood in the way of a US resurgence. Dollar Index (DXY) on the day surpassed previous high to hit 109.97, the highest since September 2002. As a result, risk assets lost ground overall, with the S&P 500 and Nasdaq Composite Indexes down 1% and 2%, respectively. The asset posted its worst August performance since 2015 after the monthly candle fell 13.9%. Blowing a blow to bulls’ efforts to stabilise the spot price, the August close was only the second monthly candle to end below $20,000 since the end of 2020. One on-chain indicator especially emphasised that present day BTC ranges are for accumulating and not selling.

Ethereum’s native token, Ether (ETH), appears to be strengthening against the US dollar and Bitcoin (BTC) in the days leading up to its proof-of-stake transition in September. The bullish outlook comes from the classic technical indicators on the ETH/USD and ETH/BTC charts. It appears that investor interest is shifting away from Bitcoin. This has led to a decline in assets under management (AUM) for Bitcoin investment products, which fell 7.16% to $17.4 billion in August. In comparison, the AUM for Ethereum products increased by 2.36% to $6.81 billion over the same period, suggesting that investors in Ethereum products are positioning themselves pre-merger.  Ether (ETH) and ETH staking-related tokens have held up relatively well since bouncing from last week’s sell-off. After dropping to $1,422 on Aug. 28, Ether has gained 11.3% and is trading slightly below $1,600. Lido (LDO), the largest ETH staking service, is up 12% for the day and 32% from last week’s drop to $1.55. 

On the monthly outlook, BTC is trading at the lower end of its 76-day range. But analysts say future Fed action and record open interest are raising the possibility of future events of deleveraging. The market is back in extreme greed and fear index indicating softening sentiments amongst the investors. What could trigger such an event is unknown, but any continuation of the current downtrend in equities, with the Dow and S&P 500 ending the fourth day of decline through late August in losses, could continue to weigh on the price of Bitcoin. data shows that the Dow ended August down 4.1% and the S&P 500 and Nasdaq ended the month down 4.2% and 4.6%. Cleveland Fed President Loretta Mester also said she expects the benchmark interest rate to rise above 4% and that proposed cuts throughout 2023 are highly unlikely. 4% is well above the Fed’s target range of 2.25% to 2.5%.  Although prices are low across the ecosystem, bear markets at least offer attractive opportunities for long-term investors. To capitalise on this opportunity, venture capital firm Seven Seven Six, led by Reddit co-founder Alexis Ohanian, is looking to raise $177.6 million for a crypto mutual fund. Similarly, former Galaxy Digital and Genesis executives are looking to raise a $500 million fund. Although the short-term view seems uncertain, long-term investors may be looking for opportunities. 

Technical Outlook:


Bitcoin Chart | 02nd Sept 2022
Bitcoin (BTC) Chart

BITCOIN after making the recent top of $25,211 witnessed a correction and the prices fell almost by 22.5% and made the weekly low of $19,520. Post this move the asset has been consolidating and is trading in a very narrow range from $19,550 to $20,400 over the past six days. On a daily chart, BTC was trading in an ‘Ascending Channel’ pattern and the prices were trying to take support at the key level of $20,500 (Horizontal Trendline & Lower up trendline of the channel). The asset gave a breakout on the downside of the pattern and has been trading sideways since then. Downsloping Moving Averages and RSI below 50 indicates that bears have the upper hand. $20,500 will act as a strong resistance.


Ethereum Chart | 02nd Sept 2022
Ethereum (ETH) Chart

ETH after making the recent high of $2,030 witnessed a sharp correction and the prices fell almost by 29% and made the weekly low of $1,422. Post this move, the asset took support at $1,450 (50% Fibonacci retracement Level) and is showing signs of recovery but with thin volumes. ETH is facing stiff resistance around its 20 Day Moving Average. Once these resistances (20 Day Moving Average & Horizontal Trendline of $1,750) are broken, the prices may further surge up to $2k mark. ETH has strong support at $1,500 and $1,275. RSI has consistently been around 50 over the past week or so, indicating a neutral stance for the asset.


Matic Chart | 02nd Sept 2022
Polygon (MATIC) Chart

Matic made a ‘Cup and Handle’ pattern with the neckline of $0.63 and rallied up to $1.05. Post this move, the asset faced multiple resistances at $1 (Horizontal Trendline &200 Day Moving Average) and witnessed a correction of almost by 28% and dropped to $0.7582. On a daily time frame, Matic was consolidating sideways in a range from $0.765 to $0.835. The asset has given a breakout above the range and can surge up to $0.95-$1. Matic has a strong support of $0.75.

Weekly Snapshot:

JulyAugustPrevious MonthCurrent Month
CloseClose% ChangeHighLowHighLow
Crypto1m – % Vol. Change (Global)
Bitcoin (BTC)-3.60%
Ethereum (ETH)3.69%
Polygon (MATIC)-51.78%
Resistance 2$24,500$2,000$1.05$0.60
Resistance 1$20,500$1,750$0.835$0.45
Support 1$17,500$1,500$0.75$0.33
Support 2$15,000$1,275$0.63$0.25

Market Updates:

  • The difficulty of mining a bitcoin block increased by 9 percent on Wednesday, making it this year’s second-biggest increase, which is likely to result in narrower profit margins for the industry.
  • Non-fungible tokens have a licensing problem, and Andreessen Horowitz’s (a16z) crypto arm thinks it has an answer.
  • The combined market capitalization of the two largest stablecoins, Tether and USDC, has begun to fall again, a sign that quantitative tightening in the crypto financial system has resumed, Morgan Stanley said in a research report.
  • South Korean port city Busan signed an agreement with crypto exchange FTX to develop blockchain-based businesses in the coming months

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 cryptos viz. Bitcoin, Bitcoin Cash, Ethereum, etc are very speculative and are subject to market risks. The analysis by the Author is for informational purposes only and should not be treated as investment advice.

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