Due to many factors, the crypto market continues to plummet. The crypto market sentiment has been skewed towards the negative by the unstable algorithm of “stablecoin”. Market sentiment is being slowed down by the depegation of US-dollar-pegged tokens, similar to what happened with LUNA’s UST. The market is now in the green, after all major coins traded low this week. Market capitalization of $1.3 trillion has increased by roughly 9% over the past 24 hours. Markets fell today, but the market has quickly recovered.
The Terra ecosystem’s explosion has had a negative impact on other major coins, including Bitcoin and Ethereum. Crypto sentiment has been further affected by the TerraUSD (UST), Terra’s stablecoin, and the freefall of Terra’s LUNA token. Do Kwon, Terraform Labs CEO, announced a relief plan but the community seems to be without hope of a revival. The reason is that the project has been abandoned and has largely become null. The US CPI is also up 8.3% year on year, beating estimates by 0.2%. This is another obstacle to a rapid improvement in sentiment. Although the reading is slightly lower than March’s 8.5% readings, it suggests that Fed tightening is not stopping.
Bitcoin lost 28 percent in the past 7 days. The reason for this is that the dollar is strengthening due to Fed’s interest-rate hike and other macroeconomic fundamental changes. The BTC price as of press time was at $28,542. The price of TerraUSD (UST), believed to be the price driver for the current cryptocurrency market crash is down 32% over the past 7 days. The price of UST has fallen more than 18% to $0.6782 in the last 24 hours. BTC/USD trades above $29,500. It has held higher since Wall Street opened. Although volatile, the pair showed no signs of new capitulation. A sea of long positions on Bitfinex and major exchanges Bitfinex supported what analysts believed to be the belief that the lows were not coming back.
The strength of the US dollar is something to be aware of when Bitcoin makes its next move. After a short drop on March 11, the US Dollar Index (DXY), that is ininversely related to Bitcoin, recovered and was not in any mood for a correction.
The crypto bear market is not going to end until the Federal Reserve stops increasing rates. High-interest rates combined with fears of a recession are the major macro factors that have caused the crypto bear market. The Fed will now ease monetary policy and inject liquidity into financial markets. This could spark the next cryptocurrency rally. Other factors that could favor the next bull run are the approval of a Bitcoin spot ETF and Ethereum’s expected move towards a proof-of stake system in the third quarter 2022.
The screen that appears during capitulation can be scary but it is also a great time to compete with the crowd and acquire fundamentally strong cryptocurrency at a low price.
Technical Outlook
BITCOIN:
BITCOIN traded in the red for 7 consecutive weeks. The bears broke all major support levels, making a weekly low at $25,388. This asset dropped almost 47% from its most recent high of $48,240. BTC has not seen a weekly closing below $30k since January 2021. We can see a long shadow indicating buying at lower levels every time the price drops below $30k. It broke the support and tested the 200-week Moving Average before rebounding back up. This week’s closing is crucial. If the asset closes above $30k, then we can expect a relief rally. A close below $28,800 could lead to further decline. BTC has created a ‘Long Legged Doji” candle in the daily timeframe, indicating uncertainty and the possibility of a trend reversal.
ETH:
After facing stiff resistance at the 200 Day Moving Average and Horizontal trendline, ETH saw a sharp drop. The asset fell below the psychological $2k level and hit a weekly low at $1,763. ETH has reached support at the key level at $1,774 (127.2% Fibonacci retracement levels) and the horizontal trendline at $2,711 and bounced back to above $2,000. If the asset holds and sustains above this support, then we can expect a relief rally that can rise up to $2,000.
Matic:
Matic traded in a wide range of prices, from $1.7 to $1.3. Matic experienced a major fall and a breakout to the downside. In just three weeks, the prices fell almost 60% to $0.501. Matic wants to create a Bullish Engulfing pattern. We can expect some relief rally to $0.85 if it closes above $0.601 today and the next candle crosses today’s high.
Weekly Snapshot
USD ($)05 May 2212 May 22Previous WeekCurrent WeekCloseClose% ChangeHighLowHighLowBTC$36,575$29,048-20.58%$39,902$36,269$26,350$36,130ETH$2,749$1,962-28.64%$2,957$2,705$2,697$1,748MATIC$1.06$0.60-43.25%$1.19$1.02$1.06$0.51Cryptocurrency1w – % Vol. Change (Global)BitCoin (BTC)62.01%Ethereum (ETH)81.48%Polygon (MATIC)55.50%Resistance 2$40,000$2,650$1.00$0.65Resistance 1$36,500$2,400$0.85$0.45USDBTCETHMATICBATSupport 1$28,800$1,750$0.60$0.35Support 2$25,000$1,550$0.35$0.28
Market Updates
The Terra blockchain’s validation team has decided to stop all activity on Thursday. This is to prevent any governance attacks after the devaluation of Terra’s LUNA token. The company stated that it is “business as usual” despite the current market panic.
*Sources of charts: https://cryptowat.ch, https://pro.zebpay.com/trade/USDT-INR
Disclaimer: This report should not be regarded as investment advice. It does not consider the financial situation or investment goals of investors. When deciding whether an investment is right for them, all investors should take into account these factors and consult with a professional advisor. This report was prepared by the Company using information that it has access to, as well as information from public sources that have not been independently verified. The Company makes no representations or warranties, either express or implied, regarding the accuracy, reliability, correctness or completeness of the information, opinions or conclusions contained herein. This report is preliminary. The Company does not assume any obligation to revise or update the reports in response to new events or circumstances after the date of the report was made. Trading and Investments in cryptocurrencies viz. Bitcoin Cash, Ethereum, and other cryptocurrencies are highly speculative investments that are subject to market risk. The Author’s analysis should be used only as information and should not replace investment advice.
13th-May-2022 ZebPay
