Crypto Market Weekly Analysis (Dec 19-Dec 25)

News and Fundamental

BTC Weekly Dec2021

The bulls have grabbed control of the market momentum on Christmas Eve, with most of the large-cap coins surging in 24 hours. First, let’s check this week’s news:

– According to two European media, ABC Gazetesi and the Daily Sabbah, Turkey’s President, Recep Tayyip Erdogan, will present a crypto legislation to the country’s parliament. According to the ABC Gazetesi, Erdogan told the press in Istanbul, “The bill is ready, and we will transmit it to the Parliament as soon as possible.” In Turkey, where inflation has surged and the country’s currency, the lira, hit record lows versus the US dollar earlier this year, bitcoin and other cryptocurrencies have grown in popularity. Many people perceive cryptocurrency as a solution to protect their assets from inflation.

– In a Bloomberg News interview published Friday, Kraken’s founder and CEO, Jesse Powell, claimed the exchange is working on a marketplace for non-fungible tokens (NFTs). He did say, though, that it will include new features, such as the ability for clients to utilize their digital collections as collateral to borrow money. According to Powell, the exchange is working out how to calculate the liquidation value of NFTs placed so that customers may use them as collateral for loans. As the popularity of NFTs grows, Kraken is following big exchanges like Coinbase and FTX in building an NFT market.

– Jack Dorsey, the co-founder and former CEO of Twitter, as well as the founder and CEO of Square (now Block), expressed his displeasure with the path of Web 3.0 development in a series of tweets on Tuesday. Tesla’s CEO, Elon Musk, joined Dorsey in the ridicule. On a completely different issue, when asked if cryptocurrency will eventually replace the dollar, Dorsey responded, “Bitcoin will.”

– Senator Cynthia Lummis of Wyoming, who has been a driving force behind numerous pro-crypto bills in the US, plans to present a comprehensive bill to deal with digital assets next year. Lummis’ proposed bill, according to Bloomberg, aims to establish regulatory clarity on stablecoins, instruct regulators on which cryptos belong to which asset classes and provide consumer safeguards. In addition, the senator is said to have advocated forming an institution to regulate the crypto market under the joint authority of the Securities and Exchange Commission and the Commodity Futures Trading Commission.

– The decade-long pursuit for a bitcoin ETF is still ongoing. Two additional proposals were rejected by the Securities and Exchange Commission in the United States. According to the official document, the SEC rejected Valkyrie and Kryptoin’s proposals for physically-backed Bitcoin ETFs. Similar market manipulation concerns were raised by the SEC when it came to the listing and trading of shares of the Valkyrie Bitcoin Fund and the Kryptoin Bitcoin ETF Trust.

– Telegram’s crypto project may have been abandoned, but the token lives on. The TON blockchain had a difficult start, but that might soon change. The TON Community has announced a cooperation between the TON blockchain and Donate, a freshly launched Telegram-verified payment service. The current partnership, according to the official statement, enables users to make donations and pay for memberships using the Toncoin cryptocurrency. The admins of the channels, on the other hand, will be able to get their earnings in the same cryptocurrency.

– Former US President Donald Trump is a vocal opponent of cryptocurrencies, as he has previously said. Donald Trump stated in a recent interview with Fox Business that he has never liked Bitcoin or other cryptocurrencies. Trump, like many other opponents and skeptics, didn’t go into great detail to explain why he believes investing in such assets is risky. Even while Melania Trump, the former First Lady of the United States, has become more open to the notion of NFT and digital assets, her husband continues to feel that cryptocurrencies are dangerous.

– El Salvador continues to accumulate BTC, with the country’s president citing various events as excuses. El Salvador marked the 21st of December, 2021, by purchasing an additional 21 Bitcoins valued at just over $1 million.

Onchain Analysis

Active Addresses

BTC Active Addresses Dec2021

Even though Bitcoin reached a new all-time high on November 10th, 2021, the total number of active addresses is significantly lower than it was in the first quarter of 2021. This means that network activity is still low. As a result, we require new capital inflows from new investors and traders.

Estimated Leverage Ratio

BTC Estimated Leverage Ratio Dec2021

The price has been attempting to break over $52K after bouncing in the $46K-$48K region for the past few days. In the meantime, the (adjusted) Estimated Leverage Ratio across all derivative exchanges has reached a new high. Significant increases in this parameter have historically resulted in price volatility, leading to massive liquidations of the high leveraged futures contracts. The important thing to know is that the Open Interest hasn’t increased significantly, so a decrease in the derivative exchange’s reserves could be the main reason for the massive increase in the Estimated Leverage Ratio.

All Exchanges To Derivative Exchanges

BTC All Exchanges To Derivative Exchanges Dec2021

The majority of on-chain indicators support the supply shock scenario in the mid-term. The only factor worth mentioning is the mean transaction size from other exchanges to the derivative exchanges. Retail traders make up the bulk of the perpetual futures market at the lower levels of this graph. As a result, the price movement in the short term is likely to be volatile.

Exchanges Reserves (Update)

BTC Exchanges Reserves Dec2021

Bitcoin’s Exchanges Reserves has been in a downtrend for a long time but recently since BTC has started a bullish leg from the $46,000 zone, this metric has bounced up and started to rise. The metric’s behavior is still bullish in the long-term view, but due to the recent jump up, we can expect a short-term pullback for the price.

Technical Analysis

Bitcoin(BTC)

Daily Time Frame

BTC Daily Dec2021

Last week, the price of Bitcoin (BTC) was approximately $46,000. On Sunday, the initial bullish attempt was denied over $48K, and the price retraced back to $46K. Then things began to look up, and bitcoin began to soar towards $50,000. On Wednesday, it was on the verge of reaching this desired level, but the bears came in and drove it down to $48K. However, everything changed on Thursday and Friday, when the price soared from around $49,500 to about $51,500 intraday. The price is currently barely below $50,000, representing a 6.7 percent rise in just seven days.

When we look at the major corrections over the last year, we can see an intriguing pattern in the daily time frame. Breaking above the 20-day MA line and closing a candlestick above it has typically resulted in an upward trend. This pattern has been repeated six times, with two failures. The first failure occurred because the market had already become overheated. The second unsuccessful event occurred as a result of public outcry over China’s ban on miners and Elon Musk’s famous tweet about Tesla ceasing to take Bitcoin as a payment system. A candlestick has closed above the 20-day MA, which has already been surpassed. So we’ll have to watch if this kicks off a fresh Bitcoin rise.

4H Time Frame

BTC 4H Dec2021

On shorter timescales, bitcoin has broken above the dynamic declining line (seen in red on the chart above) and is now battling the MA-200 line on the 4-hour period, after trading below it for over 40 days. Breaking through this resistance might lead to a run to the static and dynamic resistances of $53 – 54K, on the other hand, Bitcoin has another trendline as a resistance ahead of itself (seen as yellow on the chart). Many analysts believe the price will retrace from these levels but we have to wait to see.

Cardano(ADA)

Daily Time Frame

ADA Daily Dec2021

Cardano has recorded a new all-time high of around $3.1 in September after the major crash in May 2021. But since then, it has started to fall in a descending channel (orange trendlines) and experienced a 61,8% drop in its price. If we take a look at the chart, we can see that ADA is below two critical resistances right now. One is the downward trendline (green trendline) that has been acting as a strong resistance/support based on the condition and the other one is the substantial resistance zone of $1,44-$1,5.

Cardano has to break these two resistances and turn them into supports in the form of a pullback in order to rally toward its ATH and register a new one. Another important thing to mention is that right now, ADA is below its 200-day and 50-day Moving Average and they may act as strong resistance on the way up too.

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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.

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