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 – Weekly Chart
Data as of 1/27/2022 – Past performance not indicative of future returns
The total cryptocurrency market cap currently sits at $1.53 trillion, down roughly 52% from its all-time high of $3 trillion. After the Federal Reserve decision on raising the effective federal funds rate (but waiting to decide about the issue of printing money), support should hold at either $1.53 or $1.33 trillion. Translating that into Bitcoin movements, it seems likely that $33,000 will continue to act as support. Worst case, BTC could drop to either $31,000 or $29,000.
Total Altcoin Market Cap – Weekly Chart
Data as of 1/27/2022 – Past performance not indicative of future returns
Total crypto market cap excluding Bitcoin and Ethereum is currently sitting below $700 billion. This chart has a bearish head and shoulders top formation. It needs to close above resistance at $700 billion for this chart to flip to bullish.
So what could make that happen? Well, big Layer 1 and Layer 0 projects would have to have a sharp rebound. That means ETH, SOL, NEAR, AVAX, FTM, ATOM, and DOT would have to rebound sharply. The good news is that we believe this is possible during February. Our reasoning is simple: the Fed said nothing about when and how they would end the money printing regime.
It is also possible that the metaverse could lead an altcoin rally. Coins like SAND and MANA showed signs of promise in the wake of the Fed decision.
All this said, altcoins have to get going. If the total market cap excluding Bitcoin and Ethereum started to drop again, it could be very negative for crypto. We are hoping for a bullish outcome.
Bitcoin 8-hour Chart
Data as of 1/27/2022 – Past performance not indicative of future returns
For a new uptrend to begin, Bitcoin needs to move above $38,400. It may take the market a week or so to move past the uncertainty of the Fed and fear over the geopolitical tensions in eastern Europe. It is possible that Bitcoin can move to $49,000 during February. The Fed has not done anything that could hurt crypto further. Yes, the dollar is rising along with U.S. short-term interest rates, but this may run its course over the next two weeks.
Conversely, if BTC drops because of a disturbance in the stock market, Bitcoin could fall to support at $29,500.
Ethereum – Weekly Chart
Data as of 1/27/2022 – Past performance not indicative of future returns
Ethereum has held support on a major trendline near $2,200. That level was also the takeoff point from the bottom in July of 2021. This picture seems constructive. This chart makes us hopeful that the total altcoin market cap can recover above $700 billion.
Ethereum 8-hour chart
Data as of 1/27/2022 – Past performance not indicative of future returns
Ethereum’s price has found support near $2,400. This support seems strong. ETH could bounce to $3,250 or even $3,400. A move that level would unwind the crash that occurred before the January FOMC meeting. This chart makes us very optimistic that Layer 1 solutions have a lot of room on the upside. As of now, we are optimistic enough to imagine Ethereum could go back to $4,200.
ETH/BTC – 1D Chart
Data as of 1/27/2022 – Past performance not indicative of future returns
ETH/BTC has reached strong support to the point that ETH could start to outperform BTC. Looking at the chart, ETH/BTC held support near .063. ETH/BTC could move up to the top of the linear regression band near .09. ETH could also lead a rally in Layer 1 protocols, and any such rally could see ETH rise as high as $4,200.
Key Takeaways:
- The Fed has not stopped printing money. At least, not yet. If stocks do not go down sharply and the Dollar Index (DXY) stops at 98, that could be positive for crypto.
- The crypto market may be ready to start a major speculative rally that could last until mid-March or late April.
- There could be a negative development in Ukraine in early February. We could see this being a buying opportunity.
