Cryptos weekly market analysis

We report the crypto market analysis on the last trading sessions made by Aayush Jindal (

Bitcoin corrected higher above $8,650 and $8,700. However, the previous supports near 8,850 and 9,000 prevented a convincing upside break. As a result, it is now showing a few bearish signs below 8,800.
On the downside: If there is a clear break below 8,650, the price could even break the 8,550 support area. Any further losses may perhaps lead the price towards 8,250.
On the upside: the bulls need to gain pace above 8,850 to start a decent recovery wave.

Ethereum corrected more than -10.0% from the $210 support area. It climbed above 220 and 230.
On the downside: It is currently testing 225, below which there is a risk of a drop towards 210 in the near term.
On the upside: the 235 zone prevented further gains. A swing high was formed near 238 and the price declined below 230.

Bitcoin cash corrected higher from the $300 support area, but it failed to continue above 330. It formed another top and it is currently declining below 320. If it continues to move down, there is a risk of a bearish break below the key 300 support area in the near term.

Litecoin is under a lot of bearish pressure and it is currently struggling to stay above the $60.00 support. If there is a successful close below 60.00, there is a risk of a sharp decline towards 55.00 support. Conversely, the price could recover above 62.50 and 64.50.

XRP gained bullish momentum and recovered above 0.235. However, the bears came into action near 0.245. As a result, the price trimmed its gains and it is now approaching the 0.232 support area. Any further losses may perhaps lead the price towards 0.225.

In the past three sessions, a few small-cap altcoins declined more than -5.0%, including AION, DX, MONA, BCD, ALGO, LSK, ABBC, REN and HC. Conversely, SXP, BCN, MKR, KNC, ZB, FTT and LINK are up more than +5.0%.

Bitcoin ends February in red for the first time in six years

Bitcoin is currently (Feb. 29) trading at $8,661, a -7.25% drop from the Feb. 1 price of $9,339, according to Bitstamp data. The loss is the first February decline since 2014, when the cryptocurrency had dipped by -31.5%.

Bitcoin has risen in February in six out of the last eight years. The -31.5% slide in 2014 is the biggest February drop on record, while, the biggest February gain of +63.9% was registered in 2013. Bitcoin was widely expected to record strong gains in February, having confirmed a bull breakout with a +30.0% rise in January.

The cryptocurrency rose in the first half of February, to a multi-month high of $10,500 on Feb. 13. Bulls, however, lost speed in the third week. What looked like a simple correction has ended up in a strong sell-off to one-month lows near $8,500 earlier last week.

Bitcoin’s drop raises question about its safe-haven role

Last week’s Bitcoin market drop raised question among analysts about its safe-haven role. The most famous crypto failed to increase despite the coronavirus-led slide in the stock markets, with the DJIA recording its worst four-day performance since the 2008 financial crisis.

Even so, there is some consensus among traders that the 2020 upward trend is not over yet. Glassnode, a blockchain intelligence firm, said in its weekly research note: “The present low MVRV Z-Score suggests that BTC is still undervalued, with significantly more room to grow before reaching the next market top. This provides support for many analysts’ predictions that bitcoin will stay above $8,000 for the time being.”

The market value to realized value (MVRV) Z-score measures the deviation between bitcoin’s realized value and market value to identify periods where the cryptocurrency is extremely overvalued or undervalued. The ratio currently stands at 0.52, that is, well below the red band, which usually indicates market tops. So, there is room to rally, as suggested by glassnode. Also, in the past, bitcoin has set a new market cycle top (the highest point from the preceding bear market low) in the calendar year of reward halving, but before the event. If history is a guide, bitcoin may yet rise above the June 2019 high of $13,880 ahead of the May 2020 halving, setting a new cycle top from the bear market low of $3,122 reached in December 2018. Considering the current situation, however, that may look quite a difficult goal to achieve.

‘World is ready for private money’, JPMorgan says

The world may be on ready to adopt ‘private money’ such as Facebook’s Libra, on a large-scale, JPMorgan Chase says, although there are still hurdles to overcome before this can become true. According to the Perspectives report, released by the investment bank, people are ready to embrace new monies, any type of currency issued by a private institution, because the vast majority of fiat currency is already privately issued, by the way of fractional reserve banking.

Under the current system, private banks indeed create electronic money every time a loan is granted. However, governments still have a monopoly on printin money, although this only accounts for a very small portion of all the monetary transactions that are made. In the report, titled ‘Blockchain, digital currency and cryptocurrency: Moving into the mainstream?’, JPMorgan backs the role of stablecoins, while dismissing traditional cryptocurrencies for their high volatility, saying “volatility remains a severe impediment to broader adoption” and that crypto currently has “a limited role” as an asset for portfolio diversification and hedging.

According to the report, stablecoins that are backed by financial assets is the asset that will first gain large-scale acceptance and that may challenge traditional fiat currencies. However, issuers of stablecoins should be prepared that their business may be about to face regulatory scrutiny at a whole new level compared to what has been the case so far, with regulators treating them much in the same way as traditional banks are treated. ‘The privilege of doing issuing private money comes with significant regulatory oversight and costly compliance obligations’, the report says, adding that ‘rapid adoption and scale are hindered by the underlying technology and the need for substantial regulatory oversight,’ while estimating that blockchain-based solutions in traditional banking are still ‘three to five years away.’

The report concludes that the regulatory hurdles for a stablecoin to be accepted for tax payments to the government remains ‘significant’, and it also lists the sourcing of stablecoin collateral and energy requirements of proof-of-work cryptocurrecies as potential limitations. ‘Absent substantial and ongoing improvements in efficiency, it will be very difficult for truly distributed stablecoins to achieve global scale, in our view. Reliance on a central authority for validating transactions and maintaining the integrity of the ledger is a possible solution, but does not offer the same benefits as a true [distributed ledger technology],’ the report concludes.

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