The market reacts shyly to the upside

Support at September 2021 levels

This real second business week of the crypto-asset market in 2022, leaves us with a market distribution that confirms the support of the last quarter of 2021.

The market for now has found a bottom zone at these levels. But the price has been high:

Loss of all capital gains generated in the first part of the last quarter of the year (approx 30%)

It is undoubtedly an important amount, but that we could include within the usual volatility that we can see in the crypto-asset market.

One of the lessons we can draw this week is the influence of monetary policy, although this may seem like a paradox. The BTC chart is explanatory in this regard

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We can see how the successive interventions of the FOMC have managed to move the market or make it change direction in a remarkable way. The same effect can be seen in the Ethereum chart

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Cardano leads the DeFi market

Within this recovery movement we can name Cardano (ADA) as the asset that has performed the best during the last week, with a return slightly below 0%

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The market tests the support zone

The market has remained in a lateral range this week, with a bearish hint that has caused an immediate reaction from traders entering the support zone with relative strength.

This leaves us with a stable cryptocurrency market at a distance of 40% from its all-time high, an area from where we can have a favorable odds for an upward momentum.

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But for this momentum to end up leading to a new upward trend, it needs to be of a certain intensity and volume. This is what is absent from the market at the moment. Our assessment is that it will take a piece of news of some importance to change the bias or sentiment and to produce a more massive capital inflow.

From BELOBABA, our Artificial Intelligence division (Subutai) makes an exhaustive follow-up of these movements, measuring and monitoring the activity in social networks about crypto assets

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The information captured on social networks seems to suggest a certain calm in this second part of the week

Calm in the derivatives market

This same calm is what we can see in the derivatives market, analyzing the implicit volatility of the options of both Bitcoin and Ethereum

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This decrease in risk perception can also be seen in the CVI, also known as the Crypto Volatility Index, which we have used on various occasions for these articles. The CVI is an excellent indicator of the perception of risk by the market

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Validation of support zones and control of resistance zone breakage

Undoubtedly, the strategy for this coming week should consist of verifying the possible breaks of the resistance levels and their confirmation (or possible pull-back).

In case the price pierces these levels, the prevailing conditions at the time of the break in the financial markets and the volume with which they occur, will be vital to determine the success of the movement and therefore, a new upward momentum.

If we take Bitcoin as a reference, we would be talking about a price level between $ 44,600 and $ 45,000

In the case of Ethereum, this level would be approximately $ 3,600.

The bearish scenario would be determined by the support zones tested earlier this week

REMEMBER: The market is cyclical and highly dependent on trading volume. These two concepts always have to be in the mind of any operator.