Forrest Przybysz, Director of Research, Token Metrics
The Market Update is centered around using technical analysis to navigate the crypto market successfully and responsibly. 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 – Monthly Chart
The total cryptocurrency market cap currently sits at $2.23 trillion, down roughly 25% from its all time high of $3 trillion. As measured from its fair value trendline, the risk premium currently stands at 434 DTFV (days to fair value) which is a small decrease compared to the previous 2 weeks DTFV measurements. 434 DTFV simply means that if the market were to crash today, it would take 434 days for the long-term trendline to catch up to the current $2.23 trillion level, meaning the maximum expected length of a bear market from this point forward would be 434 days. Thus far this market cycle, local peaks have occurred around 600 to 700 DTFV, with total crypto market cap peaking at $3 trillion.
I’ve marked the bull run from May of 2020 to May of 2021 to highlight the shift in the market from aggressive upward momentum to the volatile consolidation we’ve seen over the last 7 months. We are currently in a different market from what we experienced at the beginning of the market cycle, and must adjust accordingly. Many altcoins continue to fair well, however, because we are in a volatile market, we must take care to pick fundamentally strong projects at lower risk entry points.
Bitcoin – Weekly Chart
Bitcoin continues to test the red logarithmic regression band, finding support at $45.6k. Historically, this red logarithmic regression band has been a crucial place to hold support in bull markets and has frequently acted as a reversal point for corrections. It has also been a key support level preceding large rallies in previous market cycles.
Bitcoin – 4-hour Chart
As predicted, Bitcoin continues to consolidate onto its $46k margin pressure level. $46k is the price at which 3x leveraged shorts can no longer keep their liquidation points above the BTC all time high of $69k. Bitcoin is currently ranging between $51k and $46k while the altcoin market remains speculative, with many altcoins performing well on an individual basis. A significant breakout below $46k would be bearish.
Ethereum – Weekly Chart
Ethereum has broken below the support of its long-term bull market trendline. This break below support has been a slow bleed rather than a steep, fast correction which reflects the overall sideways nature of this market. Ethereum has moved sideways, consolidating slightly above and below the $4k level for the past several weeks.
Ethereum 4-hour chart
Zooming in, Ethereum’s price has broken above its downtrend line and made support on top of it, which is a common initial sign of a reversal. In order to look bullish, Ethereum needs to move above $4150 and make a new higher high. A breach above $4150 would be an indication of a bullish reversal, with the $5300 price target remaining in play.
ETH/BTC – 1D Chart
ETH continues to demonstrate strength against BTC with ETH/BTC breaking upwards above both downtrend lines on the above chart. While BTC lies on critical support of $46k, ETH is attempting to reclaim $4k. Should ETH continue to outperform BTC and break to new highs, a scenario where ETH flips BTC will become very realistic.
Key Takeaways:
- Total cryptocurrency market cap has chopped in a large volatile sideways pattern over the last 7 months.
- Bitcoin is testing a critical support level of $46k yet again.
- Ethereum continues to show strength against Bitcoin, and may threaten to move to even higher levels against Bitcoin despite Bitcoin’s poor performance.
