Digital Asset Insights Digital Asset Insights #97

The New Year is upon us and we must get ready for what is to come especially in the crypto world. This report has the information and thorough predictions to arm you for the new season at hand.

Bitcoin (BTC)

Bitcoin price slid lower on Monday, December 11, after it lost ground over the weekend after the US Producer Price Index (PPI) numbers on Friday showed a slight tilt higher. However, the number was still lower than its last number, which was revised upwards, making the drop even bigger. Nonetheless, traders disregarded this and stayed bearish as the new number came out slightly higher than the median expectations, putting pressure on cryptocurrencies overall.

On Tuesday, Bitcoin price showed applaudable price action as the bulls pulled off a 7% rally. On December 13, the peer-to-peer digital currency spiked to the $18,000 level after finding support from the 8-day exponential moving average. As a profit-taking consolidation occurs, traders are forced to consider the idea that the BTC rally will continue. Bitcoin price auctionrf at $17,784.

Bitcoin was adding 5% intraday on Tuesday, at one point approaching 18K. The primary growth momentum co-occurred as the stock market after US inflation data boosted risk appetite. The price increased a few hours before the release amid an active European session. Perhaps Bitcoin’s buying was facilitated by problems with USDT withdrawals from Binance, which prompted the search for liquid alternatives to Stablecoin. In addition, the first cryptocurrency was trading just 0.8% below Monday’s peak, against a 3% decline in the Nasdaq100, which returned to its pre-release starting point three hours later.

On Wednesday, Bitcoin price was undergoing a steep profit-taking consolidation following the bull’s 8% rally on the week. On December 15, the peer-to-peer digital currency was down 2% on the day as the bears are prompting a breach of the 8-day exponential moving average. Although the BTC price has room to fall, there was still potential for Bitcoin to tackle higher targets. Bitcoin price exchanged hands at $17,784 on Wednesday.

Toward the weekend, Bitcoin (BTC), the leading cryptocurrency by market value, fell 2% to $16,950, extending a retreat from the one-month high of $18,300 reached Wednesday. BTC has been sliding back lower as the reality was still there after a lower but elevated US inflation number.

The positive side of this is that a recession looks inevitable, which means that demand for commodities should start to diminish and see oil, copper and gas decline under falling demand. That, in its turn, is good news for households that will see the energy bill drop further and open up the disposable budget. Of course, a portion then can be relocated again towards investments, which is good news for cryptocurrencies, with BTC set to see an inflow of fresh investors by the middle of next year. Some pre-position in the first weeks of 2023 could bring Bitcoin price up towards $20,000 on the back of that motivation.

Ethereum (ETH)

Ethereum’s price has moved in unison with its Bitcoin counterpart, returning 7% of lost market value to investors on Monday, last week. On December 13, the bulls pierced a descending trend line which acted as resistance on three separate occasions since December 2. Ethereum auctioned at $1,317 as a profit-taking consolidation began near the 50% retracement level.

Ethereum price maintained its uptrend for the last couple of weeks and managed to rise from the lows of $1,083 to trade at $1,314 as of Tuesday, December 14.

Ethereum price was moving along with Bitcoin’s price action as the decentralized smart-contract token was down 3.5% on the day. Earlier last week, the ETH price produced a 7% spike, causing some investors to take profit quickly. On Wednesday, December 15, ETH was retesting the recently established trend line, which provided support on November 28, December 7 and December 12. Ethereum price traded at $1,317.

Ethereum price shot up by 8.8% between 12 and December 14, and set up three equal highs at $1,350. This move showed a lack of momentum from the bulls, resulting in a sudden reversal. As a result, ETH shed 8.4% and hovered around $1,270.

Ethereum (ETH) price had last week one good moment as it was able to rally substantially on the back of a lower US CPI print. Unfortunately, that good vibe faded quite rapidly as the US Federal Reserve issued warnings across the board during its rate statement that it would start hiking with smaller increments of 50 basis points and possibly would need to hike for far longer than what markets currently are anticipating.

Ripple (XRP)

XRP price witnessed no change in price despite the US CPI data release on Monday. Ripple remained coiled between the 8-day exponential and 21-day simple moving averages while dually finding support on a previous resistant trend line. XRP price auctioned at $0.389 on December 13.

On Wednesday, XRP price showed signs of trouble. XRP price witnessed a slow grinding price action in the bear’s favor. On the week, the digital remittance token was down 1% from the prior, as the market provided minimal opportunities for grandiose swing trades.

XRP price traded at $0.379 at mid-week. The southbound price action seemed coherent as the bears produced a classical Evening Star pattern on December 14.

Ripple price had good hopes at the beginning of last week as it was piercing through the 200-day Simple Moving Average (SMA), which was quite important at the end of November. Unfortunately, some cold water got poured on the still premature rally after the US CPI numbers triggered an upbeat market environment. That came from the US Federal Reserve, which warned that the market could get a downside surprise as US Federal Reserve Chairman Powell sees more hikes needed.

At the end of the week, XRP price flirted with its underpinned level at $0.3616. Once that breaks and prints new lows for December, that would mean the risk that XRP enters back into the lower area from 2022. The monthly S1 support level looks like a good reference at $0.3145 to find some support. A small excursion below $0.300 0 is not unthinkable to get the red descending trend line as support for a bounce.

Should Ripple price be able to move back towards $0.400, the 55-day SMA could form an issue for more upside potential. So should XRP be able to close before Sunday evening, that would be a much better position to rally further in the remaining days of 2022, where $0.4974 could be up for grabs by New Year. That would bear roughly 30% gains in just 14 days.

Cardano (ADA)

Cardano price has been trading between the $0.299 and $0.321 barriers for nearly three weeks. While there were multiple attempts to move above this range, the lack of bullish momentum resulted in a retest of the intermediate support level at $0.310. As Cardano price auctions at this level, investors must pay close attention to the Relative Strength Index (RSI).

Cardano price was facing headwinds as central banks do not look ready yet to bring out the champagne and caviar. The euphoria after the negative US CPI number quickly disappeared after the Fed’s rate decision on Wednesday evening. To make matters worse, several industrial production numbers out of the eurozone point to an European Central Bank (ECB) that had its hands tied and might only hike a slim 50 basis points and stop there in order not to break the fragile economic balance at the edge of a severe recession.

Cardano price saw its sell-off accelerate in the morning of last week Friday during the European trading session as global markets were selling off. ADA sheds even 4% in just two minutes of trading at one point. Traders are starting to grasp the harsh reality that a soft landing is not in the cards, a snowball recession is coming, and the avalanche is coming crashing down.

ADA thus printed the lowest lows in almost two years as it trades below $0.297. The only thing between now and $0.265, which is below December 24, 2017, and the monthly S1 support level, is the fact that the Relative Strength Index (RSI) is nearly touching the oversold barrier.

ADA is not in good shape to withstand the current market turmoil, and the fact that it is trading away again from the bearish trend line, hopes for a breakout are evaporating. Traders will start to exit their positions built up after a Christmas rally. This will trigger more selloffs next week and revalue ADA near $0.194 in search of support.

However, Cardano price has been trading for most of 2022 alongside that descending trend line. That means interest has been there throughout the year to get in or participate should a breakout trade occur. Expect to see a downside being limited by traders buying the dip. This should put ADA back around $0.300 quite quickly, as a massive selloff is not materializing.

Solana (SOL)

Solana price endured ping-pong price action since the middle of November. On December 12, the centralized smart-contract token was bound to a range that compressed from a 15% spread down to just 6% within three weeks. Solana’s price traded at $13.12 on Monday, last week.

Solana price jumps over 5% intraday on Tuesday as US inflation numbers came out with both the core inflation and overall inflation lower than the lowest economic estimation. SOL jumped higher and broke the high of December but still remained some cents away from $15.07.

Solana price is traded further away from $15.07, which was the key level to break to the upside to get a continuation in its recovery rally. Unfortunately, sentiment flipped once again on Friday as the dust settled, and traders got the chance to digest what central bankers was delivering as a message last week. The question is whether traders are back to trusting the central banks and will position themselves for that announced recession, or will they stick to the Goldilocks belief that 2023 will be a bull year for risk assets?

Solana price action is not in good health. The weekly traded volume rapidly declined and flirted with the lowest levels we have seen throughout 2022. This decline in volume means that any trader in SOL is at risk of pulling its cash out of there at any given moment. The balance between buyers and sellers is very fragile and could tip the scale quickly with nosedive moves and falling knives.

SOL is thus in desperate need of some risk-on appetite in the markets. But after the messages from the central banks, it does not look that will happen anytime soon. As volume further declines, expect to see price action set to collapse in the coming weeks and dip towards $5.10, bearing 60% losses and a big loss of market cap for SOL.

In case more buyers come in, in the wake of 2023 and build up new positions for portfolios that are set to start with a clean slate, SOL would see uptick moves being enlarged due to the lack of volume. So price action could quickly increase towards $19.04 against the pivotal level and the 55-day Simple Moving Average (SMA). Once broken above, price action could be printing a 140% price increase against the 200-day SMA near $30.

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