Crypto Calms Before the Holiday Weekend

•  Bitcoin (BTC, Tech/Adoption Grade “A-”) is almost totally flat for the week, trading at $33,500.

•  Ethereum (ETH, Tech/Adoption Grade “A”) is also basically unchanged, sitting at just above $2,100.

•  Bitcoin’s crypto market dominance fell a percentage point to 46.2%, largely because smaller cryptocurrencies bounced more off of recent lows.

Bitcoin managed to rebound after setting a new low just under $29,000 last week, and trading this week has established $30,000 as our new downside support level. But future tests of this support may not be out of the question.

The King of Crypto still has a long way to go if it hopes to resume its previous bull-market rally. It must overtake both its 200-day exponential moving average around $39,900 and 21-week exponential moving average near $41,000 for a confirmation. These are typically long-term bull market support levels, and they could pose as considerable hurdles while we’re below them.

Bitcoin briefly overtook its 21-day moving average near $36,000 before succumbing to short-term resistance. It would be a bullish near-term signal to break out above it, but for now, Bitcoin continues to face an extended period of consolidation.

Here’s Bitcoin’s price in U.S. dollars via Coinbase Global Inc. (Nasdaq: COIN):

Ethereum managed to bounce off of its newly established $1,700 low and has traded above it since the weekend. ETH has held above $1,800 for the past several days. But like Bitcoin, it’ll need to maintain itself above the $1,700 level should support be tested again if it hopes to hold an established trading range while consolidating.

The second-largest cryptocurrency by market capitalization also briefly surpassed its 21-day moving average before dipping lower. It remains close to this level, and a sustained breakout above this short-term resistance level would be a welcome sign.

Here’s Ethereum’s price in U.S. dollars via Coinbase:

Index Roundup

We saw a nice rebound during the seven-day trading week closing Thursday. Large-caps were mostly higher, and less established altcoins bounced after getting crushed recently.

The Weiss 50 Crypto Index (W50) gained 6.45%, with most of the crypto market in the green.

The Weiss 50 Crypto Ex-BTC Index (W50X) increased 12.18%, highlighting that altcoins played catchup to Bitcoin this week after losing a greater portion of their value previously.

Breaking down this week’s performance by market capitalization, we see that performance favored the smaller and mid-sized cryptocurrencies.

The Weiss Large-Cap Crypto Index (WLC) rose 3.92%, its rebound lighter compared to the other indexes.

The mid-caps bounced back after a tough last couple of weeks, climbing 20.99% as tracked by the Weiss Mid-Cap Crypto Index (WMC).

The small-caps performed the best this week after a recent brutal stretch. The Weiss Small-Cap Crypto Index (WSC) soared 24.54%.

This week’s price action of smaller and mid-sized outperformance was positive for their cohorts, and it was encouraging to see a slight comeback after many cryptocurrencies set new lower lows last week.

These lesser-established projects suffered greatly over the past couple of months, and this rebound is likely because they were oversold.

But it does not yet signal the continuation of altseason. Until we see Bitcoin cross and hold above the long-term support levels mentioned earlier, it’s very likely that we’ll continue to see more consolidation and range-bound trading.

Notable News, Notes and Tweets

•  Tyler Winklevoss stresses that 56% of Bitcoin mining harnesses energy from renewable sources.

•  New York Digital Investment Group (NYDIG) tweets that consumers and institutions will soon have greater access to Bitcoin’s network.

•  Steve Cohen’s Point72 Asset Management and George Soros’ Soros Fund Management are starting to trade crypto.

What’s Next

This week’s trading data suggests that smaller and mid-sized altcoins were likely oversold during the most recent correction that saw many cryptocurrencies set lower lows.

For now, altseason remains on hold until the established players can reignite a sustained rally. We will likely see choppy short-term trading and possibly see assets retest their support levels. We are not out of the woods for a potential bearish turn, unless we consistently see those supports holding strong.

We also saw multiple crypto adoption developments that show the industry is maturing as expected. NYDIG’s custody and financial services for digital assets should help bridge the gap to enabling widespread usage and bring in more investors.

While some are concerned that the family offices of Steve Cohen and George Soros could cause an increase in speculation and drive institutional regulations, they are inevitable actions that accompany developed markets.

We’ll need to wait for Bitcoin to reestablish an uptrend before we see more exciting marketwide price action. In the meantime, fundamentals are constantly improving.

Best,

Sam

About the Investment Analyst

Sam graduated from The Weiss School, interned at Weiss Research while attending Babson College, and now dedicates his time at Weiss Ratings to in-depth analysis of natural resource stocks and cryptocurrency markets. He regularly contributes to the research and news posted daily to the Weiss website.

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