Cryptocurrency Market Analysis: New Alarm Signals?

Cryptocurrency Market Analysis: New Alarm Signals?

There is a lot of nervousness today, but both Bitcoin and Ethereum are holding on to important levels, without any panic, although inflation, stocks, rumors of war are important issues that will occupy the minds of many for some time.

The overall situation in the markets is not the best. We have inflation, which “bites”, and which we have already talked about several times on our pages.

Inflation should trigger a reaction from central banks, and they all point to a recession, the scale of which, at least at the moment, is difficult to calculate.

This is the reason why Bitcoin closed so ”ugly” on Friday. Additional negative elements were added to the forecast:

  • Whipping up the hysteria of the invasion of Ukraine

At one time, like a bolt from the blue, a statement was made from the White House, frankly and with full seriousness speaking about the certainty (which later became a high probability) of a Russian invasion of Ukraine. A probability that, according to the Western press, would be almost “certain”, and that was enough to cause panic in all markets.

  • Oil at the highest level since 2014

This situation has further pushed up oil prices, which are at their highest level since 2014. This is also not very good news for the work of stock exchanges. Growth, already staggering and less intense than the central banks told us.

In such a situation, it was more than reasonable to expect a small sell-off even of what in these situations is considered in all respects a risky asset.

Oil prices are the highest since 2014. Source:TradingView
Oil prices are the highest since 2014. Source:TradingView

The good news: they are holding positions

Nevertheless, the fundamental support remained, and those who expected the collapse of the crypto world turned out to be wrong. Of course, this end of the week was unpleasant, but the signals coming from the Bitcoin market, at least in our opinion, are encouraging.

All this is taking into account the good overall performance of this category of assets during the week.

Again, there is an obvious correlation with stocks. Source: TradingView
Again, there is an obvious correlation with stocks. Source: TradingView

It is interesting for us to observe, especially in the afternoon, what will happen when New York wakes up, with volatility that can be used by those who prefer short-term trading. And in the case of lower prices than we have seen during the week, there may be an opportunity to shop in the long run.

Central banks have no room for maneuver

Something that few people talk about openly, because, perhaps, it would contribute to whipping up even more panic. It will not be easy to at least partially withdraw the huge liquidity that the markets are flooded with. There is no recovery, which was boasted a few weeks ago.

It will be a game of balance, very difficult for both the Fed and the ECB. Bitcoin has a great opportunity to offer itself as an alternative asset and a safe haven in times of great uncertainty. Correlation with risky assets was not always observed last week, perhaps this is a sign that the time for repayment is not so far away.

And what confuses you about the fact that Bitcoin can be taken as an alternative to the dollar?

This is the strongest offer, and it is also one of those that cannot be read in the traditional press. Among the sanctions that the US has threatened to apply are restrictions on the US dollar market for Russia. With an important geopolitical difference today, there are alternatives.

Bitcoin is consolidating between resistance and support as the market is still undefined

BTC at the moment seems to have broken out of the uptrend that began three weeks ago, after falling to $33,000. The price failed to close even above the critical $43,000 mark for the week. This does not mean that the rally is over, but indicates that the market is still very uncertain.

As we said above, the price of Bitcoin fell sharply on Thursday and Friday, and still has not been able to recover. This decline followed the release of inflation data in the US and was accompanied by volatility and a fall in the stock market, as well as a rise in the dollar (DXY).

Bitcoin briefly fell below $42,000 on Saturday. After that, the price was able to recover a little, but yesterday’s resistance in the area of 42,650 US dollars turned out to be excessive. Then the BTC dropped to $ 42,300, but after that it made a small rebound. This time, Bitcoin was rejected at $42,750, and then began to fall again.

Again, the BTC was able to rebound slightly to $42,000, and its price was able to rise above $42,500, and then rose to $42,700, which is good news, since, for example, in recent days the price has made a series of lower lows and lower highs.

Bitcoin price chart. Source:
Bitcoin price chart. Source:

Bitcoin Data on the Network Is Still Optimistic

Despite the fact that recent growth has stalled, in fact, little is happening yet. Currently, the price is consolidating between resistance and support, as well as between the 50-day moving average and the 50-day exponential moving average. Meanwhile, we see that investors and miners are still accumulating BTC, which is a very optimistic sign.

The amount of Bitcoin coming to the exchanges from miners is at a historically low level. The selling pressure from miners is low, and it has been declining macroeconomically for a year. The only missing component is the demand catalyst.

However, there is still no new demand, and in the uncertain political situation, this may last longer. If something gets out of control in a political context, it is likely to cause greater volatility in financial markets, including cryptocurrencies. The EU central Bank is frantically trying to find a way out.

The European Union accelerates the implementation of plans to create a digital euro

The European Union has announced that it will propose a CBDC project, but in about a year. According to the European Commission, it will become the legal basis for the digital euro, which the European Central Bank (ECB) has been considering for a long time. Initially, it was announced about the trial stage of the introduction of the currency in July 2021, which will last up to 24 months.

However, after the official announcement of the bill, it became clear that the regional authorities want to move forward quickly with the introduction of a digital currency, as the situation in the financial markets is rapidly deteriorating. The bill will still go through discussions and negotiations with the capital and the EU Parliament before it is adopted. The report also notes that a public consultation on the benefits of the digital euro will begin next month.

The president of the European Central Bank, Christine Lagarde, who has warned against cryptocurrencies in the past, also spoke about the digital currency, emphasizing its ability to improve payment systems. She and other EU leaders clearly believe that there is no time to lose, as the popularity of cryptocurrencies and stablecoins grows.

Growing Concern about Stable Coins

In recent months, there has been a flurry of news related to the development of digital currencies of central banks (CBDC). On the one hand, governments are doing this because they are aware of the benefits of technology. But many are also experiencing growing concerns about stablecoins and cryptocurrencies. India, Jamaica, South Korea and Malaysia are just some of the many countries that have announced plans to create a CBDC.