Groundhog Day

End of the upward momentum? This is a question we should ask ourselves looking at the chart. The market reaction has been forceful and once again shows us the relevance of the level of 45,000 USD in Bitcoin and also that when we talk about price levels in technical analysis are price areas with a certain range of elasticity.

This fact has caused the price of bitcoin to reach a high of 48,000 USD and then suffered a sharp decline to around 40,000 USD.

Return to the distribution zone

The movement returns us to the distribution zone of which we have spoken so much these months and which is the one that is marking this 2022, as can be seen perfectly in the graph

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This movement shows evidence that we are still inside this distribution channel.

The market is still sideways in this 2022

Looking at the hourly chart we can see more details of the movement, highlighting the area near 38,000 USD as the reference support in this distribution movement.

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Dominance Analysis

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A detailed examination of the dominance shows that the main victim of this correction has been bitcoin, while part of the dominance has shifted to Ethereum. It should be noted that this in no way implies that Ethereum has risen, but simply that it has fallen less. 

DEFI: Slight decrease

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The examination of the Decentralized Finance market offers us a curious scenario: the rise of Compound (COMP). This has been the standout performer of the week, while the ecosystem has held on to slight losses that we could call modest when compared to the impact of seeing this price move

ATH. Strong resistance at 60 points

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On a macro level, we can move the 45,000 USD Bitcoin level to that 60-point zone of our ATH Oscillator, which has proved insurmountable up to that point.

But…. given the situation we are going to take the opportunity to analyze what this strength of 60 points means in this indicator. Simply that it is going to take much more volume, more bullish muscle to overcome this zone and continue to advance.

When the market reaches a distance to its all-time high of less than 40% it implies the start of a Bull Run or a strong bullish period.

This is the main reason why the price slows down at these levels, and as we can see, here we are not only talking about the price of Bitcoin 

Whales lead the way

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There has not been a significant activity of entry and exit of balances of exchanges by whales or large traders, but we do have a prominent movement. Specifically yesterday at 18h we saw a significant movement of extraction of non-stablecoins cryptoassets that as you can see coincides with the end of the bearish movement.

It is always necessary to analyze this kind of movements, in order to have an accurate view of the market sentiment. 

Stable LTV ratios

Finally, we do not want to close this analysis without commenting on the performance of Decentralized Finance’s financial products. To do so, we will use a comparative ratio between the capitalization of each of the assets and the blocked capital under management.

The blocked capital or LTV is a data that gives us a lot of information about the users’ perception of each of the protocols. Its comparison with the capitalization of the asset gives us a good relationship between this use or utility and the price assigned by the market to the project,

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In this sense, we can see how at a general level,

the DEFI market has a multiple of approximately 7 times blocked capital over capitalization.

This can be an excellent reference to evaluate and compare each of the projects. At the market level, the historical analysis of this ratio allows us to see how it seems that we are reaching a clear ceiling zone.

The market brings us back to reality

This has been a week of realism, in which the market has brought us back to reality. We have had a bullish momentum that at times has broken important resistances, but it has not been able to maintain the cadence and intensity necessary to consolidate the movement.

The market is not yet ready for it, so we have to reset our perception of investor sentiment, and return to a sideways-bullish scenario waiting for the next opportunity.

This should translate into some caution when exposing ourselves to the market, until we see the market’s bullish turn consolidated.

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