Weekly Market Analysis of Cryptocurrencies
We report the traditional weekly crypto market analysis based on the contribution by Aayush Jindal (Cryptonews.com). The analysis was made on August 28.
After trading close to $11,550, bitcoin price started forming a support base. In the past few hours, there was a decent increase above $11,700 and $11,800. BTC is likely to continue higher, but there is a major hurdle waiting near $11,950 and $12,000.
A successful close above $12,000 is a must for a fresh increase towards $12,200 and $12,500. If not, the price might move down in a range and revisit the $11,550 support in the near term.
Ethereum price is forming strong support above $400 and it is currently recovering higher. ETH is up +2.0% and it is trading above $410. An initial resistance is near $416, but the main resistance is near $420. A proper break above $420 might initiate a steady rise. If the bulls fail near $420, the price might decline again. The key support on the downside is near $402 and $400.
Bitcoin cash price is up close to +3.0% and it is trading above $295. Immediate resistance is near $300. A daily close above the $300 resistance is likely to open the doors for a fresh upward move. The next key resistance is near $320, above which the price might surge towards $345.
Chainlink (LINK) failed to recover above the $16.00 and $16.20 resistance levels. The price is now approaching the main $15.00 support region. If there is a bearish close below $15.00, it could generate a red flag for the bulls in the short term. The next major support could be $14.20.
XRP price is back above $0.290, but is struggling to gain bullish momentum above $0.292. The first crucial resistance is near $0.295, but the main resistance is still near $0.300. If the price climbs above $0.300, it could restart its uptrend. If not, there is a risk of another drop towards $0.280.
In the past three sessions, many small altcoins rallied over +20.0%, including OMG, ZRX, AMPL, FXC, LRC, SNT, QTUM, LSK, BAL, ICX, BAT and CRO. Out of these, OMG extended its rally for the second day in a row and it climbed above the $6.50 resistance.
Bitcoin’s rally lost power after Powell’s speech
Daniel Cawrey (Coindesk.com) reports that “Thursday featured a highly anticipated speech by Federal Reserve Chair Jerome Powell highlighting U.S. dollar inflation. During the hour Powell spoke, spot bitcoin hit as high as $11,596 on Coinbase. However, it lost steam and dropped $466 to $11,130 before New York traders were eating their lunch.
Singapore-based QCP Capital wrote in an investor note that Thursday’s failed bitcoin rally was a result of the substance, or lack thereof, of Powell’s comments. “Powell’s backpedaling and fuzzy inflation framework has disappointed the market that was hoping for a formalization of inflation policy in this speech itself,” the firm wrote.
The Fed inflation framework, which in Powell’s words is “flexible,” is a positive sign, said Neil Van Huis, director of institutional trading at crypto liquidity provider Blockfills. “Although the market reacted to Powell’s comments, I have to believe anyone really thinking hard about it knew this was a likely response by him,” said Van Huis. “One in the digital asset space might be smiling even more now, saying ‘this thing we are building might actually be working,’” he added.
William Purdy, an options trader and founder of analysis firm PurdyAlerts, expects volatility to rise as a result. “What large open interest means is that there is more money on the line by institutions and retail with strong financial incentives to move prices to or away from certain prices as we move into that expiration,” he explained.
“The two strikes with the greatest open interest are at $11,000 and $12,000,” said Purdy. He thinks spot prices could further gyrate because buyers of options would have gains minimized inside that $11,000-$12,000 range.
Options traders had a small scare when Deribit, the largest bitcoin options exchange, went offline during early European trading hours. At one point, Deribit warned it was possible it wouldn’t be back online in time to handle the 2,000 or so bitcoin options that were expiring Thursday. However, the problem was resolved a few hours later.”
Gas Ether at all-time high
Daniel Cawrey (Coindesk.com) reports that the second-largest cryptocurrency by market capitalization, ether (ETH), “was down Thursday, trading around $378 and slipping -2.0% in 24 hours as of 20:00 UTC (4:00 p.m. ET). Total gas, a unit of account for transactions and smart contract usage on the network, used on Ethereum per day hit 79,294,223,632 units on Sunday, an all-time high. Wednesday was the second-highest gas day, with 79,255,713,214 used.
Marc Fleury, CEO of crypto asset brokerage Two Prime, says Ethereum-based DeFi could be a disruptive game changer for finance in uncertain times, if the network’s congestion problems can be solved by the community. “DeFi lending and yield creation in the crypto space has the potential to disrupt traditional banking,” said Fleury. “Let’s not squander this opportunity.””