Weekly Crypto Analysis: Top 8 Things to Know, BTC and ETH Gearing Up for Correction

2022/05/23 12:47:30

During the weekend, most cryptocurrencies pushed slightly to the upside as the global crypto market cap increased by 1.83% to $1.26 trillion. Over the past 24 hours, total crypto market volume soared from $48.82 billion to $62.50. Since Monday, the total crypto market cap has been reduced by approx $35 billion, and it now stands at $1.26 trillion.

Let's delve deeper and take a quick look at the latest crypto market news and Bitcoin's technical outlook.

Crypto Market Overview

Bitcoin's dominance has remained mostly unchanged, with a slight increase from 44.4% last week to 44.5% today. The leading cryptocurrency pair, BTC/USD, is trading at $30,164, while Ethereum, the second-largest cryptocurrency by market capitalization, has risen to $2,028.39, up 2.97% in the last 24 hours.

KNC logo Kyber Network Crystal v2 (KNC), Klaytn (KLAY), and Kucoin Token (KCS) remained the top performers from the previous week. KNC increased by more than 49.70% to trade at $2.42, while KLAY increased by 22.71% in the last seven days, holding at $0.49. Finally, the KuCoin Token (KCS) increased by 22.71% to trade at $16.80.

Cryptocurrency Market Heatmap | Source: Coin360

While TerraUSD (UST), the stablecoin that has experienced a massive plunge lately, continues to be the worst performer. TerraUSD lost 56.30% to trade at $0.07618 and Kadena (KDA) lost 15.74% in the last seven days. Whereas, Waves (WAVES) fell 15.15% to trade at $5.86.

The crypto market's trading sentiment has shifted negatively due to risk-off sentiment, and digital assets are struggling to rise.

Top Altcoin Gainers and Losers

Top Altcoin Gainers:

Kyber Network Crystal v2 (KNC)49.70%

Klaytn (KLAY)0.50%

KuCoin Token (KCS)0.13%

Top Altcoin Losers:

TerraUSD (UST) ➠ 56.39%

Kadena (KDA)15.74%

Waves (WAVES)15.15%

News Highlights

Here are some of the events that made the previous week's crypto news section stand out:

Tether Reveals 17% Reduction in Commercial Paper, Q1 2022 Report

Tether, the company behind the USDT stablecoin, reported a decrease in reserves allocated to commercial paper assets and an increase in reserves allocated to US Treasury bills in the first quarter of 2022. Tether stated that its reserves were "fully backed," presumably to assuage users' concerns about USDT briefly depegging from the dollar on May 12.

According to the stablecoin issuer, its commercial paper holdings fell by 17% in Q1 2022, from approximately $24 billion to $20 billion, with an additional 20% reduction to be reflected in the firm's next quarterly report. Tether also increased its holdings of money market funds and US Treasury bills by 13% during the same quarter, from around $34.5 billion to $39 billion.

According to the company, the average rating of its commercial paper and certificates of deposit has risen from A-2 to A-1, while secured loans have decreased by $1 billion. Consequently, the USDT has gained 0.03% to trade at $0.9991, However, it is still not matching the peg level of $1, which may cause concern among most investors. Overall, the Q1 2022 report boosted USDT and may help support its price.

Ethereum Climbs Back Above $2K, Investors Hope for $4K Soon

The risk-off sentiment driven by Terra LUNA seems to have faded a bit as investors are getting back to crypto trading. The recovery in the crypto market continues as Bitcoin, which had fallen to $27,000, has now risen to around $30,000. Ethereum, on the other hand, which had fallen to around $2,000, has now risen above this level.

Ether rallied to a high of $2,100.80 after falling below the 50-day exponential moving average line. On the 4-hour timeframe, Ether has completed 50% Fibonacci retracement near the $2,079.09 level, and it's struggling to slice through this level. The rise in Ethereum today is attributed to bulls using the current support of $1,950 as a starting point for their moves.

Furthermore, the ETH/USDT has already crossed the RSI 50 ceiling, and the RSI value is now near 61, indicating that the uptrend is continuing. Although some of the earlier bulls may have cashed out, the bears are likely to continue putting pressure on the pair as the week progresses.

ETH/USDT Chart on the Daily Timeframe | Source: KuCoin

On a monthly timeframe, the ETH/USDT pair has completed a 61.8% Fibonacci retracement at $1,900. Failure to break through this level usually results in a bullish reversal. So, it's making the market more optimistic, and the ETH price may stay above $1,900. On the upside, ETH/USD is facing major resistance at $2,500 and $3,735; if these are breached, ETH exposes itself to $4,000 and even $4,887 in the long run.

Market Angst Over Fed FOMC Meeting Minutes This Week

Concerns about the Federal Reserve's monetary policy and the economy and the renewed threat of more stringent regulatory oversight strained support for bitcoin and the broader market.

The Federal Open Market Committee (FOMC) Meeting Minutes are a comprehensive record of the committee's policy-setting meeting, which took place about two weeks ago.

The minutes provide detailed insights into the FOMC's monetary policy stance, so currency traders carefully examine them for clues about the outcome of future interest rate decisions.

The US Federal Reserve will release its Meeting Minutes later this week, on Wednesday. Investors will be watching it to speculate on the dollar's demand and its eventual impact on crypto pairs.

StepN “Move-to-earn” is the Latest Crypto Gaming Craze

StepN (GMT), an application that allows users to walk and run to earn tokens, has swiftly become a household name in the play-to-earn blockchain gaming, or GameFi, the world since its December launch. StepN's co-founder Jerry Huang told TechCrunch that the app now has two to three million monthly active users worldwide.

That figure is nowhere near the hundreds of millions of players enjoyed by popular web2 titles, but it's a significant milestone for a five-month-old app in the world of cryptocurrency. StepN's native token GMT market cap is around $860 million as of today.

Crypto Calendar: Events to Watch This Week

25/05/2022 - EOS Hard Fork

25/05/2022 - KAVA Mainnet Launch

30/05/2022 - RUNE Mainnet Release

Fear and Greed Index Signals “Extreme Fear”, Crypto Market on Hold

Although risk-off sentiment has waned and the crypto market is in a bullish correction, the crypto fear and greed index signals "extreme fear" among crypto traders.

Fear & Greed Index | Source: Alternative

As discussed in the Weekly Crypto Analysis - May 16, extreme fear can indicate overly concerned investors and oversold cryptocurrency markets. Typically, investors look for a buy entry at this point because the coins are already cheaper. So, as the bulls are expected to enter soon, look for buying opportunities.

Although risk-off sentiment has waned and the crypto market is in a bullish correction, the crypto fear and greed index signals "extreme fear" among crypto traders.

WEF 2022: Blockchain and Digitization in Highlights at Davos

The World Economic Forum (WEF) annual meeting was scheduled for May 22–26, highlighting the first in-person WEF global leadership event since the pandemic got underway.

The annual meeting was originally scheduled for January but was later rescheduled as a virtual event due to increased COVID-19 infections during the winter. Major world leaders appealed for cooperation in addressing major global socioeconomic issues at the Davos Agenda 2022 virtual event, which took place from January 17–21, 2022.

This meeting is attracting 300 world leaders and hundreds of businesses and policymakers. More than 50 state and government leaders are expected to share their vision for the world among the 300 governmental representatives. Over 1,250 private sector leaders will attend, as will nearly 100 Global Innovators and Technology Pioneers — the world's most promising tech and business start-ups.

Blockchain technology, the involvement of central bank digital currencies (CBDCs), Web3, and nonfungible tokens are among the topics being discussed by world leaders (NFTs). We never know; this could be the primary driver of bullish sentiment in the cryptocurrency market this week. So let's keep an eye out for WEF updates as the event concludes on May 26.

Bitcoin (BTC/USDT) Analysis on KuCoin Chart

Bitcoin is currently worth $30,484 and has a trading range of $31,150 to $29,000. Bitcoin's trading bias appears to be shifting from bearish to bullish as the BTC bounced off the triple bottom support level of $28,700.

On the 4-hour timeframe, the BTC/USDT has formed a symmetrical triangle pattern, indicating investor indecision. Market participants appear to be looking for a solid fundamental to determine Bitcoin's next trend.

In any case, the technical outlook for BTC/USD has shifted from bearish to bullish. The BTC/USDT has crossed above the 50-day exponential moving average (EMA) at $30,000 and is now on route to the next resistance level of $30,750. The RSI and MACD have crossed above the 50 and 0 levels, indicating a bullish trend.

A surge in BTC demand and a break above $30,750 exposes digital assets to resistance levels of $31,600 and 31,750.

BTC/USDT Chart on the Daily Timeframe | Source: KuCoin

On the downside, the leading cryptocurrency, Bitcoin’s immediate support stays at the $30,000 (Psychological support) level. A decline in demand and a bearish break below $30,000 expose Bitcoin to $29,600 or $28,730 support levels.

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