Are cryptocurrencies turning red for this end of the year?

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

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A troubled market facing major resistance

Price of the total market capitalization of cryptocurrencies on a daily scale (Bitcoin, Ethereum and altcoins).
Price of the total market capitalization 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 at the total market capitalization 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 the MA100, which presaged volatility to come.

This observation has been confirmed since the last few days have been rather hectic on the markets. The courses opted for a bearish momentum with yet another rejection below resistance at $835 billion. Thus, cryptocurrencies are still evolving in the range that has been built since the fall in prices in November.

For now, the price manages to stay above the old all time high from 2017 to $761 billion. 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 cause the market to return to levels that have not been seen since 2020 with a new bearish leg.

A complicated situation for altcoins

Cryptocurrency market capitalization price on 3D time unit (excluding Bitcoin and Ethereum).
Cryptocurrency market capitalization price on 3D time unit (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 the downtrend strength with a lack of vigor from the buyers, who were unable to take prices above the EMA13.

All the more so, in view of the weak rebound having taken place in recent weeks when 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 resumption of $320 billion will be a positive sign: a strong recovery by 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 envisage a return of altcoins, initially, to $240 billion.

Bitcoin is gaining strength against other cryptocurrencies

Course of the dominance of Bitcoin against other cryptocurrencies on a daily scale
Course of Bitcoin dominance against other cryptocurrencies on a daily scale (1D)

About the bitcoin dominance, the latter preserved its bullish momentum by freeing itself from the range in which it was evolving. We had underlined in the previous crypto points the need for the course to overcome the upper limit to seek the 41.32%. This observation was confirmed since the course passed the first key level without difficulty before returning to the EMA200, which is a first since July 2022!

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

If dominance regains 42.56% of dominance, it can take the path of the pivot at 43.2% which is shown in blue. However, we should expect some price reaction on the upper key level. It could mark a downtime for bitcoinwhich would allow other cryptocurrencies to do well at the end of 2022.

Ethereum is being challenged by Bitcoin’s surge of dominance

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

For Ethereum, the situation is different since the asset failed, against Bitcoin, to hold above the support at 0.073 BTC. Also losing the trio of EMAs, the price lost in a single day the MA100 as well as the EMA200, which demonstrates the 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 in its dominance. The first challenge is to take the EMA200 under which the price is. If Ethereum gets there and resumes support, it could go back to 0.076BTC. However, this will not change the current dynamic since Ethereum is currently in range.

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

Cryptocurrencies in the DeFi sector are in bad shape

Decentralized finance cryptocurrency capitalization price on a daily scale (1D)
Decentralized finance cryptocurrency capitalization price on a daily scale (1D)

To end our crypto update for the weekend, we can end 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 dollars, which confirms the strength of sellers against buyers.

By entering a new low point, prices confirm the bearish momentum, which leads us to maintain a rather “negative” bias in exposure to assets from this sector. With price acceptance below current support, this opens the door for price to return towards $18 billion. However, for lack of history, and therefore of technical levels, it is not impossible to have a rebound in prices before getting there.

The analysis of this Sunday is now coming to an end. What should be noted is that this week was important on 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 give the momentum for the end of 2022 as well as the beginning of 2023. Some assets in the cryptocurrency ecosystem have lost their supports, these must be regained as soon as possible if we wish to see a price rebound. At the same time, note that Bitcoin is gaining strength against the rest of the market, which demonstrates the need to hold some of it in your portfolio if you wish to limit the fall of the latter.

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