Updated: Dec 14, 2021
The crypto market has started the week on a down note after not moving much over the weekend with all top twenty cryptocurrencies in the red as of this writing. The market seems to have acknowledged that there will most likely not be a blow-off top to end the year and that the more likely course will be range-bound choppy behavior. Sentiment remains subdued as the Crypto Fear & Greed Index, as of this post, is sitting at 28 (out of 100) indicating fear, whereas on Saturday as well as this time last week, it was sitting at 16, indicating extreme fear. The total crypto market cap is currently standing at $2.15T, slightly below where it stood this time last week according to CoinMarketCap.
Bitcoin (BTC) was rejected at the key $50K level multiple times over the weekend. It briefly fell below $47K on Saturday before buyers rushed in to take advantage of the drop. Also over the weekend, BTC’s hashrate surpassed 181 EH/s - a new all-time high. Moreover, an additional milestone was achieved Monday morning as now 90% of the maximum total supply has been mined, with the final Bitcoin expected to be mined in 119 years. Further helping the strong on-chain fundamentals is the behavior of the miners as their BTC reserves have been growing, indicating a reluctance to sell at current prices according to CryptoQuant. Over the weekend, the number of Bitcoin addresses sending BTC to exchanges also hit a new 13-month low according to Glassnode. All on-chain indicators are flashing bullish, but many price levels need to be overcome before a new surge can gather any momentum.
The first major resistance level that needs to be reconquered is the psychologically important $50K level. After that, the $53K level is key as it corresponds to the short-term holder cost basis as well as the $1 trillion market cap. On the downside, support exists at the 0.5 Fib retracement at $47,000 as well as at the 0.618 Fib retracement at $44,200. BTC is trading at $47,200 as of this writing.
Ethereum (ETH) has been struggling to hold the super important $4K level over the past few days after it was rejected from advancing above $4,500 last week. The smart contract leader appears to be breaking out of a rising wedge, a bearish technical pattern. The downside target accompanying this bearish signal is $2,800, close to ETH’s 50W EMA. The bears seem to have the momentum, but a demand wall has come up pretty consistently around the $3,800 area. Staying above $4K this week will be key. Significant resistance exists around the $4,500 level and at the all-time high of $4,868. ETH is trading at $3,800 as of this writing.
Is Solana (SOL) losing its charm? Despite the positive news associated with the new partnership with Opera, the chatter has been dominated by the alleged DDoS attack last week that highlighted security flaws in SOL’s Proof-of-History consensus framework. These flaws are said by some to be quite serious in that they “sacrifice security for speed while ignoring the consequences of the trade-off.” Developers appear to be shrugging off the concerns for now as Solana surpassed the daily GitHub submission rates of Polkadot and Cardano to become the leading blockchain over the past month. Notwithstanding the network issues, Kraken exchange expects SOL to trend higher. In a recent report, Kraken stated that “it appears in the early innings of a fourth wave of price discovery, potentially continuing the trend along the wedge pattern.” The report also stated that the current consolidation period has its positives as the longer SOL consolidates, the higher it could go. It even stated that SOL could be trading at $600 by January 2022.
Price-wise, SOL has a lot of work to do. SOL needs to reclaim the key $170 level to trend higher, otherwise the bears could inflict more damage. SOL is trading at $158 as of this writing.
How much more downside is in store for Cardano (ADA)? The network fundamentals just keep improving while the price doesn’t seem to reflect the positive developments. For instance, according to CryptoCompare, the number of active addresses quadrupled from October’s 50,506 active addresses to November’s 216,072 active addresses while average transaction fees also dropped from $0.45 to $0.38. Monthly transactions also hit a new all-time high in November at 46.2 million.
Looking ahead, support is present at $1 and at $1.20 while resistance exists at $1.30 and $1.50. ADA is trading at $1.25 as of this writing.
Will this week’s final batch of Polkadot’s (DOT) parachain auctions generate investor excitement? The winners of the first four auctions were Moonbeam, Acala, Astar, and Parallel with the final slot set to be determined later in the week. Following the last auction, the winners will be onboarded on December 17 for the period of December 17, 2021 to October 20, 2023. Additional auctions are expected to happen in the future. These parachain auctions are a big deal that bring DOT much closer to its goal of a scalable multi-chain architecture. DOT is trading at $26.58 as of this writing.
Lastly, investors should pay close attention to the Federal Reserve’s two-day policy meeting beginning on December 14. Current expectations are for an increase in the pace of its bond buying taper as well as a signal on interest rate hikes next year. An increase in the pace of tapering would weaken the “money printer go brrr” narrative that has led many investors to the crypto space.
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