In this review, we will be giving a summary of what happened in the Crypto world in the past week (31st Jan to 5th Feb 2022), and close with a chart analysis of one of the popular Crypto coins. We will look at the BTC chart and give views on what we believe might happen next after the recent pump seen on Friday.
This week has been a bull vs bear tug of war, with bears dominating at the beginning of the week then bulls stepping in by the close of the week, to break key support-resistance levels for most of the coins. Similarly, the rallies were driven by a mixture of both positive and negative market news, which I may say has been one of the busiest and most volatile weeks.
The crypto vs regulation woes continued to dominate this week with the US SEC rejecting the Fidelity bitcoin ETF proposal, citing concerns about its impacts. This was the 6th dismissal since Nov 2021 and continues to put a hurdle to mainstream adoption of Cryptocurrency. If that was not enough, a KYC proposed bill that is expected to be enforced on unhosted or self-hosted crypto wallets might be considered. The bill first emerged in 2020, and was quickly dismissed but now seems to be resurfacing. If enforced, it would prompt crypto exchanges to collect personal data, including home addresses, for anyone wishing to move his/her crypto holdings to a private wallet. Don’t forget that one major advantage of crypto is its enforcement of privacy and anonymity during transactions. However, this rule pushes a step back concerning the privacy benefits.
Still, on regulation, the week also presented some good news to crypto traders, with India coming out clear on digital assets, ending the uncertainties which have existed for a long time. India made a legal stand on holding and transacting using cryptos in its territory by announcing a 30% tax on income generated from the transfer of any digital asset. While the stated rate is relatively high, this is one step towards the mainstream adoption of cryptocurrency. India follows Russia which eased regulation on Bitcoin, and crypto mining at large after Putin advised to consider crypto mining for stabilizing energy grids in the country. The US also wasn’t left behind in delivering some good news as a bipartisan group of US house members reintroduced a bill exempting crypto payments of less than $200 from taxation.
Arizona, a US state has introduced a bill that could make Bitcoin a legal tender if passed. The bill requires to go through the Senate and House of Representatives before being signed into law by the Governor. However, the US constitution doesn’t allow individual states to create their own legal tender.
Another crypto-based hack saw $320 million being stolen in the Wormhole hack, making it among the biggest crypto hacks and exploits of all time. Wormhole is a bridging protocol connecting Solana and Ethereum networks. The bridge was exploited by hackers who took about 120,000 wrapped Ether tokens and SOL reacted to the news dipping by 14.26% within 24 hours. However, the parent company, Jump Trading replaced all the wrapped Ether tokens in their entirety and announced ongoing operations to beef up the bridge security, news which made SOL jump to hit $104 levels, before continuing its rally the whole of Friday. Still on Solana, Paradigm, a venture capital firm led a $109 million series B in Phantom, the company behind Solana’s top wallet that debuted on iOS and Android early this year. Phantom is now valued at $1.2 billion. Also, SOL rose after Coinbase listed native coins of Orca and Bonfide, which are Solana based exchanges.
Lastly, Texas miners will close down operations during this winter following a request by Governor Greig executives to power down in order to stop the grid from being overwhelmed this winter. The state of Texas is careful to avoid a repeat of what happened last February 2021, when 10 million people went without power. Riot Blockchain is among the miners who will be temporarily shutting down.
As stated earlier, we will be looking at BTC in this week’s chart analysis. BTC opened the week trading at 38k, went ahead to dip to 36k before rallying to 40k. There have been mixed opinions with some believing that it was a dead cat jump and others calling for a trend reversal. While no one is 100% sure of what will happen in the next few weeks, Intelligent Zombie has the following opinions on the recent pump:
This week, the monthly MACD flipped negative signalling for possibilities of another bear run. A double top also on the monthly chart has its neckline at 30k. This leaves the chances of retesting or breaking the 30k support level very high.
On the weekly chart, the H & S (head and shoulders indicator) should complete the structure at 30k, again increasing the chances of retesting 30k levels sooner than we think.
While we recently broke the never broken Trendline SR, and are currently trading near the 40.5k SR, I am still bearish (short term) on BTC. I also think that we can test the 30k level before we see trend reversal. However, I will retract my Bearish stance if we consolidate above 40k level, then try breaking out upwards or if the current pump continues, to break 45k SR. With these conditions, I can confidently confirm a trend reversal. Anything else feels like a major pullback making HL. Next month, March 16th, the FOMC is expected to hike the interest rates, the first one in 5-rate hikes expected this year. This could initiate another bear run, and the recent pump is not something to be excited about yet.