Crypto Market Weekly Analysis (23-29 Jan)

News and Fundamental

Market Weekly Analysis 23-29 Jan 2022

Bitcoin (BTC) was trading at over $37,000 on Friday, up approximately 3% in the last 24 hours. Meanwhile, after a volatile week, several alternative cryptocurrencies have begun to settle. Let’s check the recent news:

-In a blog post published Thursday, Google Cloud announced the employment of a team of blockchain experts to capitalize on the shift to decentralized Web 3 apps. While Internet and cloud companies like Google and Amazon represent the pinnacle of Web 2 centralization, Google sees emerging decentralized blockchain technology as a potential.

-The Bitcoin (BTC) craze among legislators has now reached Belgium, with Brussels member of parliament Christophe De Beukelaer being the first European politician to convert his salary to Bitcoin. According to Bruzz, the Brussels MP’s monthly salary of EUR 5,500 ($6,140.75) will be converted to Bitcoin using the Bit4You cryptocurrency trading site. Beukelaer, who is a member of the Humanist Democratic Centre (CDH) party, thinks that his action will encourage other politicians in the region to take an interest in the emerging technology.

-Flushing Financial Corporation, the parent company of Flushing Bank in New York, has teamed up with crypto startup New York Digital Investment Group (NYDIG) to provide Bitcoin (BTC) services to its clients. The bank was formed in 1929 and had more than $8 billion in assets by the end of 2021, according to its Q4 report, with a net income of roughly $200 million. According to the release, the agreement with NYDIG would allow the bank to provide “safe and secure” BTC buying, trading, and holding services to its customers.

-The US Securities and Exchange Commission has rejected asset management Fidelity’s proposal for a spot exchange-traded fund (ETF) called Wise Origin Bitcoin Trust. The SEC has denied a proposed rule change from the Cboe BZX Exchange to list and trade shares in Fidelity’s Wise Origin Bitcoin (BTC) Trust, according to a Thursday filing.

-According to a recent study, the cryptocurrency sector is keen to comply with the Financial Action Task Force’s (FATF) so-called Travel Rule and is prepared to collaborate with regulators to speed up the process. According to a poll done by Notabene, a New York-based crypto compliance service, by Q2 2022, the majority of the crypto sector will be Travel Rule-compliant. According to the research, around 70% of respondents are either following the regulation or expecting to complete compliance in Q1/Q2 2022.

-According to a recent analysis by Cathy Woods’ Ark Invest, Ether (ETH) will reach or perhaps surpass a $20 trillion market capitalization in the next ten years, equating to a price of about $170,000–$180,000 per ETH. According to the research, Bitcoin (BTC) will “likely grow when nation-states recognize (it) as legal cash… the price of one bitcoin might approach $1 million by 2030.”

-The Securities and Exchange Commission has extended the deadline for the ARK 21 Shares Bitcoin exchange-traded fund (ETF) to be approved, which was previously set for July 2021. According to a Tuesday filing from the Securities and Exchange Commission, the deadline for approving or denying the ARK 21 Shares Bitcoin ETF will be pushed back from Feb. 2 to April 3.

-Valkyrie, a cryptocurrency asset management, has applied to the US Securities and Exchange Commission to list a Bitcoin mining-related exchange-traded fund (ETF) on the Nasdaq Stock Market. Valkyrie said in a Wednesday SEC filing that its Bitcoin Miners ETF will not invest directly in Bitcoin (BTC), but that at least 80% of its net assets will be invested in securities of companies that “derive at least 50% of their revenue or profits” from BTC mining or provide mining hardware or software.

-Turkish President Recep Tayyip Erdogan and leaders from the governing Ak Party met earlier this week to discuss the metaverse, with Erdoan urging more investigation. According to the Daily Sabah newspaper, Erdoan has ordered the Ak Party to research the metaverse, cryptocurrencies, and how transactions are done using them.

-Members of the International Monetary Fund’s executive board are pressing El Salvador’s legislature to decertify Bitcoin as legal cash. Though digital payments have the potential to expand financial inclusion in the Central American country, the IMF warned on Tuesday that using Bitcoin (BTC) as legal cash posed “significant risks” in terms of financial stability, financial integrity, and consumer protection. The executive board directors requested El Salvador’s government to “limit the scope of the Bitcoin law by eliminating Bitcoin’s legal tender status,” as well as raise concerns about the hazards of issuing Bitcoin-backed bonds.

-LeBron James, an NBA player, has teamed up with CryptoCom to develop bitcoin instructional programs for kids. Approximately 1,600 students from the sportsman’s “I Promise School” will get the opportunity to learn more about bitcoin and the blockchain technology that underpins it. In the future, the project may include the students’ families.

-Following the news of record $34.63 billion quarterly earnings, Apple shares soared 5% in after-hours trading on Thursday. Apple Inc announced its metaverse goals on Thursday, along with a record $35 billion quarterly profit and an 11.2 percent increase in sales to $124 billion. CEO Tom Cook discussed the company’s ambitions and preparations to extend its footprint in the augmented reality market during a conference call with investors.

Onchain Analysis

Network’s Difficulty

Bitcoin network difficulty 23-29 Jan 2022

Despite the likely bear market, the Bitcoin (BTC) network has set a new all-time high mining difficulty of 26.643 trillion with an average hash rate of 190.71 exahash per second (EH/s), indicating significant community support.
The difficulty of verifying transactions and mining Bitcoin is dictated by the aggregate processing capacity of the Bitcoin network. The network difficulty decreased between May and July 2021, as demonstrated by CryptoQuant statistics, owing to a variety of factors, including China’s total ban on crypto mining.

Hodl Waves

Short-Term Hodlers

bitcoin short term holders  23-29 Jan 2022

According to Glassnode statistics, addresses that held bitcoin for less than a month reduced their supply when the price of bitcoin dropped $10,000 in less than a week. Long-term BTC investors have a history of sticking to their investments throughout recent turmoil. Several even purchase the dip, as evidenced by some whales and even El Salvador, the first jurisdiction to legalize the asset.
According to the Hodl Waves Indicator, bitcoin investors who held for less than three months lowered their total BTC supply by 36% on a monthly basis.

Long-Term Hodlers

bitcoinn Long-Term Hodlers 23-29 Jan 2022

The graph above illustrates the Bitcoin balance held by Hodlers, who are long-term investors who have held the currency for more than a year. This graph shows the accumulation trends over the course of the Bitcoin cycle. While most retail customers were afraid after the March 2020 fall, these addresses gathered almost 1 million BTC until the rally began in October 2020. During the early 2021 surge, they gradually liquidated a tiny percentage of their assets, and when Bitcoin began to fall in November, they started to accumulate again.

Exchange Balance

bitcoin Exchange Balance 23-29 Jan 2022

Exchange outflows have pushed the exchanges balance indicator to a multi-year low. The exchanges reserves is down almost 9% since the last time we were at these price levels. Given the continuation of the downtrend in the metric, it can be concluded that people still believe that the $30K-$40K price area might be the local bottom, and they find it a great buying opportunity.

Technical Analysis

Bitcoin

Daily

Bitcoin Daily technical-analysis - 23-29 Jan 2022

On the daily chart of Bitcoin, we can see that the price has been recovering since it plunged over 50% after setting a new ATH. Bitcoin is under two substantial resistances right now, first, the blue bearish trendline that has been pushing the price down each time BTC touched it, and the second is the red price range ($39,000-$41,000). Moreover, the daily RSI has broken out of the multi-month downward sloping resistance. The two previous breakouts during the past year have led to massive bullish moves.
However, we will have two scenarios:

  1. The price will break out of both the trendline and the red rectangle (which is around the $40,000 zone), consolidate above the zone for a while, generating a pullback to the resistance, and then begin a rally into the $50-60K channel.
  2. The price will be rejected from both the trendline and the resistance, forming a new lower high in confirmation of the bearish trend, and then dropping to lower price levels and testing support zones in order to form a new local bottom.

4H Time Frame

Bitcoin-4H-technical-analysis 23-29 Jan 2022

Bitcoin has multiple resistance levels in smaller time periods, as indicated in the graph. The price has been creating lower highs and lower lows in a strong bearish descending channel. The price is now trading below the 100Ma and the channel’s upper trendline. As a result, if the market is to bounce back and begin a fresh bullish rally, it must break out of the trendline and make a new higher high, as shown by the green path.
The other scenario is that the price touches the trendline, registers a new lower high, and then gets rejected from there to lower price levels. (Red path)

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I'm Shayan(mostly known as Greatest Trader) an onchain analyst, Bitcoin lover, and Crypto enthusiast. I am currently a verified author and community specialist at CryptoQuant.