Will cryptocurrencies turn red this end of the year?

In this new crypto point of the weekend we will do a market analysis which will allow us, like every Sunday, to understand how the market is structured and the developments that have taken place on cryptocurrencies in these last days. From total capitalization to the decentralized financing, we will have the opportunity to look at the trend that occurs between Bitcoin and Ethereum. Without further ado, let’s go straight to TradingView.

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A troubled market that faces great resistance

Price of the total market cap of cryptocurrencies on a daily scale (Bitcoin, Ethereum and altcoins).

First of all, as with every crypto point of the weekend, let’s take a look total market value to determine how prices have moved over the past few days. Last week we highlighted on the H4 scale the compression that had taken place on prices between the EMA200 and MA100, predicting volatility to come.

This observation has been confirmed as the past few days have been quite hectic in the markets. The rates picked a bearish momentum with another one rejection under resistance of $835 billion. Thus, cryptocurrencies are still developing in the range that has been built since the price drop in November.

So far, the price manages to stay above the old all time high from 2017 to 761 billion dollars. As long as the market does not break this level lower, we can expect cryptos to return to higher levels. However, a price acceptance below this level could see the market return to levels not seen since 2020 with a new bearish leg.

A complicated situation for altcoins

Cryptocurrency market value price per 3D unit of time (excluding Bitcoin and Ethereum).
Cryptocurrency market cap price per 3D unit of time (excluding Bitcoin and Ethereum)

Regarding altcoins, we can see that the situation is different in the sense that by removing the capitalization of Bitcoin and Ethereum, the prices are below the major support zone at $315/320. We can see downtrend strength with a lack of action from the buyers who were unable to take prices above the EMA13.

All the more so, in light of the weak recovery that has taken place in recent weeks where prices returned to the support, a downward crossing of the support was quite predictable. From now on, we will have to monitor the price action and the ability of altcoins to regain support. A retake of 320 billion dollars will be a positive sign: a strong recovery among buyers.

However, given the current market dynamics, we need to maintain a bearish bias and until support is regained, bearish targets should be kept in mind. Over the next few weeks and months, if the markets decide to continue to turn red, we can imagine a return of altcoins, initially to 240 billion dollars.

Bitcoin is gaining strength against other cryptocurrencies

History of Bitcoin's dominance over other cryptocurrencies on a daily scale
Course of Bitcoin dominance over other cryptocurrencies on a daily scale (1D)

Around bitcoin dominance, the latter maintained its bullish momentum by breaking free from the area where it developed. We had emphasized in the previous crypto points the need for the course to overcome the upper limit to apply 41.32%. This observation was later confirmed the course passed the first key level without difficulty before returning to EMA200, which is the first since July 2022!

Now dominance is heading towards another key level of 42.56%. This is an interesting fact that demonstrates bitcoin’s strength and relevance within the bear market. While it has developed at a similar level for several weeks, a bitcoin dominance developing upwards is explained by a parallel decline of certain altcoins as well as Ethereum. Thereby, Bitcoin is a way, since the beginning of December, to limit the decline in portfolios for those exposed to it.

If dominance regains 42.56% of dominance, it can take the path of the focal point 43.2% which is shown in blue. However, we should expect some price reaction at the upper key level. It could mark one bitcoin downtimewhich would allow other cryptocurrencies to perform well in late 2022.

Ethereum is being challenged by Bitcoin’s wave of dominance

The price of Ethereum against Bitcoin on a daily scale (1D)
The price of Ethereum against Bitcoin on a daily scale (1D)

To Ethereum, the situation is different as the asset against Bitcoin did not hold above the 0.073 BTC support. Also, losing the trio of EMAs, the price lost the single day MA100 as well as the EMA200, showing underperformance of Ethereum against the king of cryptocurrencies.

From now on, it will be necessary to monitor Ethereum’s ability to hold up against Bitcoin despite the rise of its dominance. The first challenge is to take the EMA200 that the price is below. If Ethereum gets there and resumes support, it could go back to 0.076BTC. However, this will not change the current dynamics since Ethereum is currently within reach.

The level to watch for in case of an impossible recovery of the EMA200 is the support 0.068BTC. Lower terminal of cleaned up currently, a loss of this zone will cause Ethereum to enter a stronger bearish momentum than we are currently experiencing. This could ultimately bring the price to 0.0651BTC.

Cryptocurrencies in the DeFi sector are in bad shape

Decentralized Finance Cryptocurrency Capitalization Price on Daily Scale (1D)
Decentralized Finance Cryptocurrency Capitalization Price on Daily Scale (1D)

To conclude our crypto update for the weekend, we can conclude with a small analysis of the total capitalization of decentralized finance, calculated by TradingView. What should be noted is the impossible return of the price above the trio of EMAs 13, 25 and 32. From then on, the capitalization lost the support, which had been preserved at $34.8 billion, confirming the strength of sellers over buyers.

Entering a new low confirms prices bearish momentum, leading us to maintain a fairly “negative” bias in exposure to assets from this sector. With price acceptance below current support, this opens the door for price to bounce back towards $18 billion. However, due to lack of history, and therefore technical levels, it is not impossible to get a rebound in prices before you get there.

The analysis of this Sunday is now coming to an end. What should be noted is that this week was important in the financial markets. The reaction of prices after the release of data on inflation and central bank interest rates shows that the market had been waiting for several weeks. This week will probably provide momentum for late 2022 as well as early 2023. Some assets in the cryptocurrency ecosystem have lost their support, these need to be regained as soon as possible if we want to see a price recovery. At the same time, note that Bitcoin is gaining strength against the rest of the market, which demonstrates the need to have some of it in your portfolio if one wishes to limit the fall of the latter.

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