Cryptocurrency this week: An Indecisive Market Liquidating Both Long and Shorts
Analytics Team, Giottus Cryptocurrency Exchange (For the week ending June 12th)
It has been a mixed week in the cryptocurrency market with meaningful gains in only a handful of coins. Key events that drove adoption/fear in the market were: recovery of a ransom bitcoin payment by US Federal authorities that raised a few questions around the security of wallets and El Salvador adopting Bitcoin as legal tender with US State Texas approving cryptocurrency custodial services bringing some cheers to the market. Elon Musk’s tweets didn’t drive the crypto ecosystem much this week. Microstrategy, a strong institutional advocate of Bitcoin, offered to raise $500 million in bonds to buy more Bitcoin during the dip.
In terms of market movement specifically, the week started with Bitcoin (BTC) dumping nearly 8%, devolving market sentiment from hopeful to mild fear. Millions of dollars of long liquidations were witnessed, and a bearish trend was expected to continue. BTC broke another local support at $34,944 and made multiple lower lows before bouncing back from its $31,000 support.
El Salvador’s announcement giving legal tender status to Bitcoin in the country swung the pendulum briefly. This is one of the biggest crypto adoption news stories of the year, and the first confirmation of the possible role of Bitcoin as a currency instead of only an asset.
The market reacted appropriately. Bitcoin generated hourly highs before it was rejected from $39,000 levels, which has been a solid psychological and technical resistance. BTC dominance (as a share of total market capitalization) also witnessed a noticeable increase as Bitcoin outperformed altcoins this week.
Bitcoin attempted to break out above $39,000 several times, making a local channel that broke down after making a death cross between SMA 50 (50-day simple moving average) and SMA 200 in four-hour time frame. Most of the long and short with low margins were liquidated.
In the near future, Bitcoin could be seeing some bearish movements since it failed to break the $39,000 resistance. We can anticipate bearish or sideways movements for months if it doesn’t break and stay above $41,200 resistance. In such a scenario, BTC has potential to breach $31,000 and $29,000 support levels.
Support: $33,000, $31,000, $29,400
Resistance: $43,200, $41,200, $39,400
Etherum (ETH), the second-largest cryptocurrency in terms of market cap, was looking strong despite BTC movements. Funds were flowing into ETH for weeks, but a bull trap triggered after it broke down from a rising wedge while BTC dominance shot up from 41 % to 44%. ETH can dip towards $1800 levels if bearish sentiments continue.
Support: $2300, $2100, $1800
Among other altcoins, Chiliz (CHZ) has gained from the NFT (non-fungible tokens) wave. Even as BTC’s price varied between support and resistance levels, CHZ has gained by almost 10% through the week. CHZ and a few other NFT based tokens could be a good hedge in such volatile and bearish markets.
Top gainers this week (as of 6 pm 12 June)
Amp (AMP) 38%
Chiliz (CHZ) 9%
Waves (WAVES) 0.9%
Dai (DAI) 0.1%
Top losers this week (as of 6 pm 12 June)
Internet Computer (ICP) -46%
THORChain (RUNE) -35%
SHIBA INU (SHIB) -30%
Synthetix (SNX) -29%