While last week the cryptocurrency market was rather quiet, with not much happening in terms of large and unpredictable moves, this week has been a direct contrast. We’ve seen the markets roil over the current technical and fundamental aspects which have affected the markets in such an adverse way. Just take what has happened to Dogecoin over the week, where it dropped heavily after Elon Musk’s appearance on Saturday Night Live.
Speaking of which, Musk has also had a hand to play on BTC. While the week for Bitcoin has been rather uneventful, the same consolidatory movement between $60,000 and $53,000 has continued to play out with each side keeping any kind of momentum in check. That could also be seen through the movements of the 50, 100, and 200-SMAs (Simple Moving Averages), which have been converging around the $56,500 level yet the strength of this level as either a resistance or a support was nothing to write about.
Then Elon Musk and Tesla decided to move the market. The largest electric vehicle manufacturing company has decided to stop accepting payments in BTC. A while ago, Tesla had been buying a lot of BTC to store on its balance sheet, and in a move to increase this section, it began to accept payments in BTC for its vehicles and services. However, all of that has stopped which caused bitcoin to drop like a rock in an ocean breaking through several important supports such as $53,000 and $50,000 before finding some support at $46,000, which in turn allowed the instrument to rise above $51,000.
While bitcoin has been in a somewhat of a wide consolidating range, Litecoin has been continuing to move higher. The cryptocurrency was able to break above the $360 resistance level that we’ve talked about in our last market brief, and found enough bullish momentum to continue moving higher reaching the $420 level. However, while reaching that level, it began to show signs of divergence between the price action and the RSI (Relative Strength Index), as the price action was showing a solid upward trend, but the RSI was not, in fact it was showing somewhat of a downward trend.
This divergence caused the first retracement lower, but the 50-SMA on the 4-hour chart was able to keep the bullish presence in check and allowed a modest bounce to $400. But the momentum was already gone. That’s when the news of Tesla stopping accepting payments in BTC occurred. Litecoin was not spared, as it too broke below the 50-SMA support and below the 100-SMA reaching the $300 level before bouncing back a bit. Yet, it would seem that the bullish momentum has been gone with the RSI printing below the 40 level.
Ethereum has had a great week, as the instrument has managed to climb above the $4,000 mark for the first-time in its history, establishing an all-time high at $4,385. The bullish momentum has been strong with this instrument, however, the possibility of more upside is strongly diminishing, especially after the drop in BTC that catalyzed the drop in ETH. However, the momentum has long been unsustainable as the RSI and price action were showing strong divergence.
Just like in LTC, ETH was showing a strong upward trend ever since the 23rd of April. The move higher was showing great bullish momentum and the RSI supported this move until ETH reached the $3,500 high. This caused the RSI to enter into overbought territory, but the price action continued to move higher reaching the all-time high at $4,385. But the recent move lower has helped set the record straight and we are seeing the correction happening on both accounts.
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