One more week we face the challenge of telling you what is happening in the market, and we do it in complicated conditions, as it is not making it easy for us. One could reasonably assume that the result of reading an article like this one would be to end up with a clear idea of the most likely market scenarios that we can find, but in situations like this it is very difficult to assess the probabilities of each of the price movements that can be made.
This week, we have seen how we started with a sideways development with testing of the guideline zone included, to pass a consistent rebound that injected confidence in investors. This rebound pushed the price in the case of Bitcoin, beyond the resistance zone of 41,500 USD.
Everything seemed to be going well for the bulls, until the price turned around in a forceful and swift manner. Events happen very fast, and honestly we have not been able to confirm if this movement was caused by a specific news item or if it happened spontaneously. In the end, as investors we must be a little indifferent, because what is really tangible is the result of this situation, with a significant drop that discounts much of the gains of the week, and literally puts us at the price of 7 days ago.
Inevitably from a technical point of view we can quickly draw two likely scenarios. The problem in this case is that establishing the degree of probability for each of them is highly uncertain.
Repeat diagnosis for ETH
Examination of the ETH chart leads us to similar conclusions with the same pattern, where we have pulled back to previous week’s prices leaving us with a strong short-term pullback figure.
The market is showing us that it is focused on the short term. It is not able to maintain a particular momentum or trend for long.
Risk perception analysis
This situation requires us to keep a close eye on the level of risk, or the market’s and therefore investors’ perception of risk. Our readers already know that an excellent tool for this purpose is the Crypto Volatility Index or CVI.
We can see how the weekly evolution of the indicator has been completely neutral, not deviating from the price trend, moving around 65 points, which, observing the long-term chart (upper right) shows us that we are in the area of historical lows practically
The market still does not have a high risk perception and discounts a low volatility scenario.
Low volatility and minor movements
This is what we are seeing in the charts of the major assets (BTC and ETH), but it is something that we can also see in a multitude of metrics and data, so we will not repeat this message.
We would like to take this opportunity to make a reflection from the trader’s point of view, and that is that these are undoubtedly the most complicated situations to manage because we do not have a clear market direction and we must work with continuous and slight changes in sentiment.
Balances on exchanges: ETH continues to increase, USDT slows down
If we want to highlight a fact that has caught our attention during these days, it is the speed of entry of certain cryptoassets in Exchange. This is an interesting concept, since we are not talking about absolute values, but about the increase in daily contributions to the balances in the places where we go to exchange our cryptoassets.
First of all, let’s discuss what is happening with USDT inflows. This stable coin inflow for possible trading has been slowed down in recent days after a significant increase in the inflow rate.
Does this mean that the objective of these operators has already been achieved – have all the purchases already been executed?
It is a possible scenario… the fact is here, although it is worth noting that the maximum reached has not been extraordinary at all. However, we can say that we believe that this momentum will not continue for the time being.
In contrast, we continue to see a lot of strength in the ETH data. There continues to be a strong inflow of ETH on the exchanges for several days now.
It should be noted that, unless there is an error, these data refer to the market as a whole and are not comparable with those obtained from other sources, where only whale operations appear. On the contrary, perhaps their comparison can allow us to perceive the differences between strong and weak hands in the market.
Increased whale activity
With respect to what we know as strong hands, examining the 90-day data we can see an increase in their activity, as far as transactions are concerned.
Although this does not have a direct impact on their trading operations, there has been no significant increase in either incoming or outgoing balances for these traders.
We continue to monitor the market
The conclusion with which we would like to close this post is that we continue to keep a close eye on the market. The movements are confusing, and even erratic, and do not make our task any easier. It does seem clear that there are strong resistances that are hindering the price increase that still seems to be the underlying trend.
The question is whether that underlying trend will eventually run out of steam and give up on overcoming these resistance levels. But as always, we don’t have the answer… because there is no such thing as a crystal ball.
Caution… and DYOR