Welcome to our weekly brief. Here you will find an overview of main events and news from last week and expected events for week 04.
Fundamentals and expected events: week 04
Crypto markets: Cryptocurrencies have wiped out another approximately $130 billion from their total market capitalization in the last 24 hours. Bitcoin has weakened by more than 5%, the lowest since July 2021. Since last November’s low, the most popular cryptocurrency has already lost more than half of its value. Ethereum has lost around 7% and is also down around half since its peak. The outflow is still driven by fears of rising key interest rates and increasing regulation in Russia, which intends to ban mining and all cryptocurrency operations on its territory. Rising tensions over Ukraine further amplifies the latter theme.
Stock and commodity markets: The main S&P 500 index weakened 5.7% in light of concerns about rising dollar rates and mixed corporate results, its worst weekly performance since June 2020. The index fell below its 200-day average, which is always taken as a significant technical factor. Nasdaq wrote off 7.6% and weakened for the fourth straight session. Compared to the high of last November, the index has already lost about 14%. European stock markets are entering the new week in a very bad mood. This is due to the ever increasing tensions in Ukraine and the resulting rising natural gas prices on the markets and the resulting growing fears of continued inflation. All major sectors are in the red, with the tourism and hospitality sector the worst off with a drop of over 3%. Markets are also starting to worry about the economic impact of the omicron wave. Oil is retreating from its highs in the context of the above-mentioned negative factors. Gold is gaining slightly in importance and strength.
Important events: The US Fed is due to act on rate setting mid-week and the markets are concerned about a possible hardening of the stance of the world’s major central banks on dollar rates. It will tbe the key event of this month. Next to the Fed, earnings season will continue to be followed. Companies such as Microsoft, Tesla, Intel and Apple will be on the agenda. Geopolitics will also further contribute to the overall nervousness on the markets. In summary, markets will be very volatile in the coming week as well and the retreat from risk assets could continue.
Cryptomarkets and marketcap: week 04
The total crypto market capitalization reached 1,589 trillion USD.
Bitcoin’s price is currently 33,250 USD.
Crypto Fear and Greed index is 13, extreme fear.
BTC / USD
In the history of BTC, we have already had several moments similar to this one.
For example here:
Here you can see how BTC can create a sense of powerlessness and insecurity and then explode. March 2019 was a similar situation where we fell below the main TL on the monthly candle and the bull run started the next month. Given the rate of adoption of the cryptoccurencies and a strong investor interest, such scenario is likely to repeat. We still have some room to fall and still BTC can make a decent and unexpected shot up. The ideal scenario is that BTC closes the monthly candle above the main TL and the critical scenario is that we find ourselves above that main TL in the next month. At the moment, the whole development looks rather pessimistic. So let’s see which of the larger investors will jump in first and turn the fear and greed index up again. If no one like that emerges within a month, we are in for a bear market.
ETH / USD
ETH is almost at the very bottom of the long-term range. $2230 for ETH is the very bottom of the range. At this point, we still have room for some downside of about $200. There are still many traders in the market who like to execute break out trades. However, we would not recommend this in any way at this juncture as we are also in the POC area on the monthly TF, which are massive supports. ETH against BTC is also at a complete bottom, so this may also play an important role. If we bounce now, our TP is around $2800 where the next move will be decided. Otherwise, the same situation applies as for BTC, fears of further downside remain. And it is necessary to be vigilant. To the downside, we have a significant range restriction. To the upside, we have a lot of room. So with the right risk management setup, the opportunity for a successful trade is great.
Disclaimer: This is not an offer for concluding a contract. Trading cryptocurrencies is a highly risky business and as such you are the only person bearing the risk and responsible for your own decisions. Do not engage in trading unless you do your own research and are fully knowledgeable of the risks.