Bill Noble, Senior Market Analyst, Token Metrics
The Market Update is centered around using technical analysis to successfully and responsibly navigate the crypto market. It is not intended to be a trading calls newsletter. While technical analysis is an extremely powerful tool, please be aware that it can be temporarily disrupted by large news events.
Total Crypto Market Cap – Intraday Chart
Data as of 2/24/2022 – Past performance not indicative of future returns
In total cryptocurrency market capitalization (TOTAL), short-term support is $1.5 trillion. It is unclear how long that support will hold. We suspect this support can hold for a few days.
Total Crypto Market Cap – Weekly Chart
Data as of 2/24/2022 – Past performance not indicative of future returns
Looking at a longer-term time frame for TOTAL, support is at $1.34 trillion. We suspect that level would act as support if there is a crash in equities after the initial invasion reaction. A crypto winter could take TOTAL down as low as $644 billion on a longer-term basis. The Williams moving average system (red shaded area) shows that this down move may just be starting.
Total Alt Market Cap – Weekly Chart
Data as of 2/24/2022 – Past performance not indicative of future returns
The total crypto market cap excluding Bitcoin and Ethereum (TOTAL3) is currently sitting above support at $567 billion. The bearish head and shoulders pattern is very clearly in effect. $567 should hold on the first time down on the news of the invasion of Ukraine. If
$567 billion does not hold, there could be a crash in altcoins to $323 billion. Any such move could take months to unfold.
AVAX – Daily Chart
Data as of 2/24/2022 – Past performance not indicative of future returns
The $63 to $66 zone is an important zone to focus on off the initial invasion news. $63 could act as support if there is an overshoot of the $66 level of that point off the initial invasion news. If $63 does not provide support, a more dramatic move to $32 could unfold. In our view, that would only happen in the event of a major equity market crash.
Bitcoin 8-hour Chart
Data as of 2/24/2022 – Past performance not indicative of future returns
Looking at the 8-hour chart of bitcoin, the rally’s failure at $38,200 turned out to be devastating. The best tactical support points on the 8-hour chart are at $34,300 and
$30,600. BTC should find support at one of those two levels in the very near term.
Ethereum 8-Hour Chart
Data as of 2/24/2022 – Past performance not indicative of future returns
In Ethereum, if ETH is below $2,400, the next level on the downside is at $2,107. That level should hold unless there is a significant stock market crash.
Ethereum – Weekly Chart
Data as of 2/17/2022 – Past performance not indicative of future returns
On the Ethereum weekly chart, $1,969 is a key level of support. In the event of a stock market crash, ETH could fall below $2,000 and hit $1,969.
Legacy Charts of the Week – ES1 (S&P Futures)
Data as of 2/24/2022 – Past performance not indicative of future returns
The most important tactical support level in U.S. stocks is at 4060 in ES1. This level could hold the first time down. Depending on the extent of a bounce, if any, that could help crypto stabilize. Conversely, if ES1 falls below 4060, it isn’t easy to find support.
SPY – Daily Chart
SPY is the exchange-traded fund that tracks the S&P 500. In SPY, support is at 385. A move to that level would represent a further 10% decline from where the S&P futures were trading early in the post-invasion morning.
Source: Symbolik Data as of 2/24/2022 – Past performance not indicative of future returns
Brent Crude Oil – Weekly
Data as of 2/24/2022 – Past performance not indicative of future returns
Looking at the weekly chart of Brent crude, oil may have more upside. As sanctions kick in and the military situation worsens, it is conceivable that oil can head to its upside target near $114. Crypto may stabilize once oil gets to that point.
10-year Bond Yield – Daily Chart
Data as of 2/24/2022 – Past performance not indicative of future returns
There is a strong technical argument in bonds that the 10-year note yield has topped at 2.00%. The geopolitical events in Eastern Europe may limit how much the Fed can taper to stop inflation. U.S. bonds may also act as a safe haven in the legacy world.
Key Takeaways:
- The biggest risk for crypto is a major crash in equities in early March or a move in oil to $114.
- If support near $34,000 or $30,000 holds as support in BTC, there could be a recovery in crypto. We expect a short term bounce off $34,000 in BTC.
- If $1,900 does not act as support in Ethereum, you have to be careful of panic in altcoins. $63 is a level to watch in AVAX.
- The one positive for crypto is that recent geopolitical developments may allow the Fed to keep printing money for the foreseeable future. So even if interest rates go up, the printing may remain in the ‘on” position.
