Market update: CVI, Total Market Cap, $BTC and $ARPA

This week has left us with a slight correction in the crypto market which continues with a fairly low volatility, as we can see in the Crypto Volatility Index (CVI) which is still in that 54 zone, which we can interpret as a support zone in its chart.

If we look at the historical volatility chart, we can see how every time volatility settles at low levels near the 50 zone, there is an increase that causes a disruptive impulse in the price chart, as we can see in the following total capitalization chart, in which I have marked with vertical lines the moments in which the minimum volatility peaks are set.

The first examples are in 2020, in July and in October. In both cases, volatility was in this low zone near 50 and the total capitalization chart was in a short-term resistance zone, which ended up breaking to the upside with the increase in volatility. In the case of October, the breakout was very strong and led to all-time highs over the next year.

The next example is in April 2022, in this case the price was bouncing from its ATH at $3T and was at the $1.8T conflict zone, which had acted as support but had already been pierced in both directions. On this occasion the price broke to the downside triggering the period of declines we experienced last year.

The latest examples are this year, in January and March. In the first case, the price was holding at the $750B support and ended up rejecting from the support and breaking the downtrend line to the upside. In the March example, the price was fighting the $1.10T resistance and ended up breaking it even though it is the same area where it is now after the pullback.

Therefore we can foresee that when the increase in volatility occurs (which in each of the examples has had a different latency period, ranging from two days to four weeks) the market will make a decisive decision between our main scenario, which involves the consolidation of this area with the creation of a higher high than the previous one set at $1.26T or the pessimistic scenario that would imply the break of the uptrend of the last half year.

We will see what happens in the coming weeks, as the corrective movement can still reach the $1T zone in search of support at the trend line, without implying any variation in the scenarios proposed.

What is clear is that this correction we see in the total capitalization chart has left a week with red as the dominant color, where the great part of the market closes with losses ranging between -2% and -15%, a clear example of this is $BTC, down -5%, respecting our main scenario exposed in recent weeks.

This correction has led to a new short-term low that has given way to what could be a Shoulder-Head-Shoulder formation on the 4h chart, but as we can see on the chart, the neckline breakout has occurred with little volume, so we can not give veracity to the figure until the volume increases in the downward movements.

Therefore our main scenario remains active and we are still waiting to see how far the price goes in this corrective movement, which as I have indicated in previous weeks could reach the $24k-$25k area.

Finally I would like to highlight the result obtained by $ARPA, the token of @Arpachain has been one of the few that has closed with a positive result that exceeds +20%.

$ARPA had been in a sideways channel between $0.025 and $0.05 for almost a year, but last Friday’s move has led it to pierce that area, reaching $0.06.

If we look at the chart, we can see how the upward movement has occurred with increasing volume and has caused the RSI to cross the 70 zone, which increases the chances of seeing a consolidation after this break. This scenario would see a pullback correction that could reach the $0.048/$0.04 area, and then generate a new upward momentum in search of a new high.

Finally, remember that nothing discussed in our articles can be considered as investment advice, everyone must do their own analysis and develop their own trading strategy, from the Belobaba team we only show our analysis and investment tools and how they help us in our operations when making decisions.