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Bitcoin (BTC), for better or worse, has become intertwined with global economic forces in the past few months. The global market capitalization of BTC which commanded a whopping $1 trillion at the 2021 market peak is now below $400 million. Macro events occurring all around the world that determine the monetary climate everywhere, have left a deep effect on the crypto industry too.
US Dollar (DXY index) has been climbing to new local highs last seen only in 2002 indicating investors affinity to park their money in less risky assets. Events that have caused the recent sentiment shift are interest rate hikes by the US Federal Reserve, weakening of the Euro, collapse of economies like Sri Lanka and stagnant economic growth around the world post COVID-19. More specifically to the crypto industry, failure of Terra, insolvencies of decentralized finance (DeFi) companies like Celsius, Voyager and venture capital companies like 3AC has created numerous roadblocks to the recovery of the crypto ecosystem.
Bitcoin (BTC) continues to encounter strong selling pressures at overhead resistance levels as capitulation events described above leave no room for major trend reversals in the near future. BTC got rejected at $22,450 a few days ago and has been attempting to retest $20,000 ever since. Today, BTC slumped to sub-$20,000 and is currently trading at $19,600. Only reclaiming the 200-week moving average, which is at $22,630, will again confirm a strong uptrend. At this point, a downside play by BTC is more likely.
Ethereum (ETH) has been mimicking the market leader by getting rejected near $1,280 on the same day as BTC did. ETH is likely to underperform in the current market conditions as BTC’s dominance is expected to go up in the coming weeks. ETH is on the verge of losing $1,000 as it is down by 7% in the last 24 hours. Losing which will open the gates to $800 region next.
Among the top 20 crypto assets by market capitalization, only Polygon (MATIC) has managed to exhibit strength with a 2% gain in the last 24 hours. MATIC, which is still up 12% on the weekly, saw its price surge as social media platform Reddit (with over 400 million monthly active users) announced its plans to launch non-fungible token (NFT)-based avatar marketplace on Polygon. The new marketplace will give users the chance to buy tokens at a fixed rate without the need for a crypto wallet.
Another winner among the top 100 is Quant (QNT) which saw a 40% increase in the last seven days. The rally seems to have accrued from the bullish technical setup QNT had in its daily timeframe. Quant Network is designed to offer a solution to the blockchain interoperability issue. It achieves this by building a new protocol layer on top of present and upcoming distributed ledger technologies (DLTs), enabling them to converse and share information.
With respect to quick relief rallies, as enticing as it may seem to the market participants looking for quick profits, it is generally advised to understand the risks associated with such trades as relying on technicals during bearish macro-economic environments might backfire very easily. Volatility is expected in the upcoming days.
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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.