Building a new cryptoassets market

This week may be the week of change in the cryptoactive market. Really and beyond the simple difference between the maximum and minimum of the period, the market has another bias, another mood, and this is beginning to be noticed in investors, who seem to leave behind a period of insecurity and sales

This does not mean that we are at the gates of a Bull Run, far from it, but we can see solid upward movements with a series of characteristics that invite us to think about the continuity of this movement

Respecting the key levels

No alt text provided for this image

Naturally, we remain cautious… and therefore take into account the possibility of unfavorable scenarios recurring. Although we emphasize again that for now, this impulse has respected each and every one of the support levels, unlike other recent movements that showed a manifest and premature weakness after the first impulse.

In this sense, the zone of 22,600 USD as the previous resistance and upper zone of the distribution channel, becomes the real zone of reference.

We have the old channel ceiling area that marks a clear border between a bullish context and one that is not. In addition, we can rely on areas such as the upward trend of the movement that continues to support the price in a very clear way.

Ethereum, the advanced student

No alt text provided for this image

We already know that the main engine of the market is bitcoin, but in this case it is especially relevant how the prices of the rest of the assets are evolving. The reader should already know by now the relevance of data such as dominance, which we will comment on later.

And in this sense, the graphs for example of Ethereum bring more good news. And it is that in this case, the perforation of the distribution channel is already history, having occurred much earlier than in the case of Bitcoin

We are no longer talking about consolidating the breakout of the distribution channel, but rather we are working on support zones of a short-term uptrend

Ethereum has already passed that stage, and has even allowed itself the luxury of piercing the next resistance zone, showing a clear upward trend, both from the point of view of the strength that allows it to pierce those resistances and that of respect to uptrend guidelines

Dominance as a leading indicator

Before we have commented on the prominent role that we give to the dominance of Bitcoin. It should be remembered that this asset alone accounts for more than 40% of the market capitalization right now, so it is the true reference to follow

No alt text provided for this image

The evolution in the last few days of the weight of Bitcoin in the market has been clearly downward. And this would fall within the story of Bitcoin as a market reference.

It is very interesting to study the role that this data can have as a leading indicator

Significant increases in bitcoin dominance can be an excellent sign of changes that may occur in the market

This is a theory that we cannot confirm today, but that could be perfectly valid considering the position of this asset as a reference asset.

No alt text provided for this image

The market is still on alert

Despite all the data exposed, it remains to be seen if we will see upward movements of the same size and intensity as in the past. It must be borne in mind that the crypto ecosystem is closing (hopefully) a hard transition stage that brings with it a series of transformations in the market, in its product offering, and surely in the profile of the investor.

It remains to be seen how all these factors fit together and if the result is a market configuration like the previous one (Extremely difficult fact), or on the contrary, we see the emergence of a new market based on other principles, premises, and seeking other priorities.

It is not at all clear that you can continue to work to capture the attention of investors only by offering double-digit returns. With all certainty, the market will demand much more, especially from the side of feasible and tangible facts that add value, and from the side of risk control

No alt text provided for this image

A clear case of this situation is an indicator such as the PutCall Ratio, which continues with a wide spread between BTC and ETH of 29bp at this time, in addition to having a higher risk perception for bitcoin than for eth

We will have to wait to see a market with full bullish capabilities

Little movement by the whales

No alt text provided for this image

In this context, we have been able to appreciate this calm and tranquility among the large operators, with hardly any notable events during this week, except for a movement of medium intensity yesterday, 07/21/2022

The result, as we say, shows inactivity on the part of these operators at this time.

For now, capital inflows of significant dimensions still do not appear

Stabilization of the TVL in the ground zone

We can also see that slow market return in the data referring to DeFI protocols.

No alt text provided for this image

With TVL levels at a minimum, we have a TVLMCAP ratio close to 6 times, levels that we saw near the ATH of November of the previous year.

The TVLMCAP ratio allows us to see the relationship between the operation of a protocol, and the valuation of it made by investors

It should be noted that the structure and distribution of this blocked capital has also undergone changes compared to the previous period, and we see how other types of protocols are the ones that are attracting capital at this time

game by game

As an intelligent football coach would say, we are in a phase of exit from the distribution channel where our only ambition has to be that we are better in the next game than the previous one.

This is not the time to set large and spectacular objectives, it is time to observe the movement of the price in the short term and to see how it is consolidating reference levels, if this is the case. Now the priority is for the price to be able to take advantage of each of the areas on the chart to consolidate and increase the current trend, so that the short-term upward momentum becomes a medium-term momentum and so on.

We’ll see soon… When the flow of entry and demand for these assets increases and becomes constant again, we will have the signal that we are really starting a bullish period.