For the first time since July 2021, Bitcoin (BTC) has posted eight consecutive green candles while registering a 13% gain in the last seven days. While it's not uncommon to see such price actions, the timing and context matters. The Luna Foundation Guard (LFG), which supports the Terra ecosystem, has bought over 11,700 bitcoins worth over $500 million this week. LFG aims to build a BTC reserve pool to support its dollar-pegged stablecoin TerraUSD (UST). In this setup, if UST trades at $0.99, investors can redeem 1 UST for $0.99 worth of BTC. Though hardcore believers of BTC have criticised LFG’s move (citing the unstable nature of the LUNA ecosystem), the massive purchase of Bitcoins contributing to the recent price surge cannot be overlooked. In this article, we will take a brief look at the price actions of crypto assets and the short term outlook for BTC.
In what was expected to be a classic sell off again near the $45,000 region, BTC crossed the resistance in just one hour window assisted by strong buy volumes. At the start of the week, BTC had a confluence of support from the 20 day and 50 day exponential moving averages (EMA) at $40,600 and $40,900. With that momentum, BTC surged ahead to meet the major resistance zone near $45,000 and was successful in flipping the zone back to support.
The current relative strength index (RSI) levels are at 70 indicating the entry into overbought territory favoring the buyers. However, a pullback might be on the cards before attempting any major moves on the upside. BTC will enjoy the strong support at $45,400 in the short term. BTC is currently trading at $47,300.
BTC with its newfound momentum signaled the rest of the crypto market to put the bearish days behind temporarily. ETH managed to break out of the symmetrical triangle at the start of the week and reclaimed the crucial psychological barrier of $3,000. While the 200 day EMA at $3,140 acted as a barrier initially, the sell wall was subsequently absorbed along the way to currently trade near $3,400. The bears are struggling at the moment to remain solvent as multiple overhead resistance levels were broken (liquidations of up to $100 million) in a short span of time. ETH’s short term support will come at $3,280, $3,180 and $3,000 in case of a pullback. ETH’s next major resistance will be at $3,500.
Most of the top 100 altcoins have taken advantage of the change in market sentiment by registering double digit gains in the last seven days. Cardano (ADA), Solana (SOL) have rallied over 20% while Polkadot (DOT), Dogecoin (DOGE), Shiba Inu (SHIB) posted over 10% gains respectively.
Zilliqa (ZIL) emerged as the winner with a whopping 125% gain over the past week. Zilliqa claims to be the world’s first public blockchain built with sharding technology. Sharding will reduce network congestions and increase transactions per second. The ZIL token’s surge has come post securing a key partnership for its upcoming Metaverse as a Service (MaaS) platform, Metapolis. The new platform has been touted as an immersive, gamified XR Metaverse experience.
The supply of Bitcoins that hasn’t moved in a year is at the highest level, last seen only in September 2020. This behavior is an indication of investors holding the asset for the long term. Additionally, the crypto markets have seen a major trend shift at a pace greater than the equity markets offering some confidence for the crypto investors. In the short term, BTC has crossed major resistance at 20 week SMA (at $4,500) and will try to consolidate before attempting to reclaim the next major psychological level at $50,000.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.