After trading at $20,000 for several days Bitcoin has seen a sharp decline and fell below $19,000 on September 6. The fall was not limited to cryptocurrency markets. US stock markets closed lower on September 6. The price of Bitcoin and other altcoins has fallen below critical support levels. There is a risk that the upleg will not be strong enough to prevent further falls. The price of the asset has fallen to its lowest level in over 80 days. This move has not only erased all 32% gains from July through August 15, but also erased $246 million in leveraged long futures contracts. To avoid $130m in losses, bulls must push the price to $20,000 by September 9. To maximize their gains, bears need a slight increase below $18,000 in the best-case scenario. Bitcoin bulls have just sold $246 million worth of leveraged long positions in less than two days, so there may be less room to increase the price.
The Ether (ETH), rallied above the moving Averages on Sep 6, but bulls failed to clear $1700. The price fell below the $2097 EMA (20-day) due to aggressive selling by the bears. On above-average volume, the asset rose 0.88%. ETH fell also on Powell’s comments, but rose after that. ETH’s 30-day correlation to BTC is still strong at 0.9. Although the “flip”, an event in which Ethereum’s market cap surpasses that of Bitcoin’s, has not yet occurred, ETH’s prices have performed well against BTC since mid June. This uptrend is already priced in the merge: Ethereum’s transition from Proof of Work into a less power-consuming Proof of Stake.
Macroeconomically, investors have shifted away from riskier assets due to inflationary pressures and fears about a global recession. This protective measure has led to the US 5-year Treasury yield reaching 3.38%, its highest level in 15-years. Investors are signaling a lack confidence in current inflation control by demanding a higher premium to hold government bonds. According to data released September 7, China’s August exports declined 7.1% after rising 18% in July. On September 6, order data from Germany’s industry showed a 13.6% decline in July year-on-year. There is little hope of Bitcoin continuing its upward trend without some decoupling from traditional market. Investors fear that the Federal Reserve will continue to tighten its policies of increasing risk assets. This has led to a sell-off in risk assets. CME’s FedWatch tool showed that the likelihood of a 75-basis point rate increase at the September meeting increased to 80%, from 69% the week before. This extended the rise in the US Dollar Index (DXY) which closed at 110 on September 6.
Technical Outlook
BITCOIN:
Chart for Bitcoin (BTC).
BITCOIN traded in a ‘Rising Channel Pattern’. After facing stiff resistance at its upper trendline, it saw a sharp correction that broke the pattern to the downside. This led to the weekly low of $18,510. Although BTC did make a downside breakout, it failed to test the $17.622 previous low and reversed from $18,510. The asset is showing signs that it is on the verge of recovery. It has traded in green for three days. The resistance levels of $20,750 and $22,000 will be strong and Bitcoin must break through to keep its momentum up.
ETH:
Chart for Ethereum (ETH).
After reaching the $2,030 high, ETH prices saw a sharp correction. They fell nearly 29% to $1,422. After this correction, ETH prices fell almost by 29% and reached a weekly low of $1,422. ETH is currently in a strong resistance zone between $1,700 and $1,750 (Horizontal Trendline & 23.6% Fibonacci Rectangle Level). If these resistances are broken, ETH can rally up to the $2k mark with high volumes. The asset trades in an “Ascending Channel” on a daily basis.
MATIC:
Chart Polygon (MATIC).
Matic created a ‘Cup and Handle’ pattern with a neckline of $0.63 and rallied to $1.05. The asset was then faced with multiple resistance at $1 (Horizontal Trendline and 200 Day Moving Average), and saw a correction of nearly 28%, dropping to $0.7582. Matic was trading sideways for a day, fluctuating between $0.765 and $0.835. Matic broke out above the range, reaching a weekly high of $0.924. The resistance zone between $0.95 and $1 was not broken by the bulls. It is necessary to break the resistance and close above it in order for the bulls to rally further. Matic has strong support at $0.75
Weekly Snapshot
USD ($)01 Sep 2208 Sep 22Previous WeekCurrent WeekCloseClose% ChangeHighLowHighLowBTC$20,127$19,330-3.96%$21,804$19,600$20,402$18,703ETH$1,586$1,6353.10%$1,699$1,428$1,697$1,534MATIC$0.89$0.84-4.65%$0.89$0.76$1.05$0.76Cryptocurrency1w – % Vol. Change (Global)BitCoin (BTC)-4.27%Ethereum (ETH)-18.73%Polygon (MATIC)-20.60%Resistance 2$25,000$2,000$1.05$0.60Resistance 1$20.750$1,750$0.95$0.45USDBTCETHMaticBATSupport 1$17,500$1,500$0.75$0.33Support 2$15,000$1,275$0.63$0.25
Market Updates
Richard Fuller, the Economic Secretary to the Treasury, said the government wants the United Kingdom to be the “dominant global hub for crypto technologies.”American music giant Sony Music Entertainment has signalled intentions to utilise non fungible tokens (NFTs) after filing a trademark application covering music and artists under the Columbia Records logo.ETC Group officially announced on Wednesday the launch of a new Ethereum ETP in response to the upcoming Ethereum Merge. It will use the PoW Ethereum fork, which represents a group of miners opposed to Ethereum’s move to PoS. The clever hack saw the net worth of a user of Nereus Finance, an Avalanche-based lending platform, being exploited. To manipulate the AVAX/USDC Joe LP price for a single block, the scammer used a custom smart contract that leveraged a $51million flash loan.
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 & Investments in cryptos viz. Bitcoin, Bitcoin Cash, Ethereum, etc. These are highly speculative investments and can be subject to market risk. The Author’s analysis is intended to be informative only and should not serve as investment advice.
09-September-2022 ZebPay.
