Weekly Bitpanda Pro market recap #74

Highlights of the week:

• Weekend drop and consolidation
• Ethereum dipped more than BTC
• Sentiment slightly worse
• Smaller coins outperformed the rest
• Smart contracts major coins trading in range

Weekend drop and consolidation

Things took a turn for the worse in the past seven days as the leading cryptocurrencies plunged before the weekend. The total market capitalisation dipped some €100 billion in seven days as most of the major coins dropped by double-digit percentages. Bitcoin lost its strong uptrend momentum and had a steep correction on Friday. The price fell under the trendline support and is now trading under €22,000, its lowest price in the last four weeks. Bitcoin’s dominance – the metric that tracks BTC’s share relative to that of the entire market - is slowly decreasing, but as of the moment still sitting above the 40% level. In the last week its dominance fell by less than 1%, meaning that the altcoins failed to capitalise on Bitcoin’s price reduction.

The pattern breakdown was validated by higher-than-normal volatility as well as in the percentage drop: BTC dropped by almost 10% in a single day, wiping out overleveraged traders in a matter of minutes. There is a chance for an upwards pullback in the form of a breakout retest. But if the retest fails and the price action of Bitcoin continues downwards, it could dip even lower and test the €19,150 support zone. On the upside, resistance is at €22,000, followed by an €24,000 area.

Ethereum dipped more than BTC

Ethereum saw an even steeper sell-off than Bitcoin, likely because of extended bullish sentiment ahead of the Ethereum Merge. The price crashed by about 12% in a single day and it is currently trading around €1,700, down €300 from the peak reached on August 14th.

The daily RSI is slowly picking up and is pointing to the 50 level, which is considered neutral territory.  ETH, which significantly outperformed BTC in the past couple of months, saw its market share peak above 21% seven days ago, but has underperformed against all the major cryptocurrencies over the past seven days, leading its market share to drop by almost one percentage point.

The ETH/BTC pair dropped to the support area of 0,0732 and then moved back up above 0,0784. The moving average is still pointing upwards, suggesting ETH is still stronger than BTC on higher time frames charts.

Sentiment slightly worse

Market sentiment has worsened slightly following the recent breakdown. The Fear and Greed Index has been slowly climbing from the extremely fearful territory towards the neutral/greedy area in recent weeks as the index hit a peak of 47 in the middle of August. Now, at 25 points on the scale, the sentiment among investors can be again classified as extreme fear. Typically, the more extreme the fear environment becomes, or the stronger the retail investor’s opinion gets, the higher the chances for a contrary movement, and the better the opportunity for the contrarians to benefit from it.

Smaller coins outperformed the rest

A few smaller coins performed very well in recent days and outperformed the rest of the market. CHZ rallied over 50% from August 21th and cleared the €0,22 level, its highest since mid-April. Fan token has been increasing since June 18, followed by a breakout from a falling wedge. CHZ is up almost 200% since bottoming out in mid-June.

EOS broke out from the descending trendline and proceeded to reach a high of almost €2. The price is up some 35% from August 20th. However EOS has been decreasing since September last year and has lost almost 90% from top to bottom.

Smart contracts major coins trading in range

SOL is facing a strong resistance near the €36 level. A close above that level might push the price back up towards the €40 mark. On the downside, the next support stands at the €32,40 level. RSI is under 50, indicating bearish momentum.

ADA failed to gain strength above the €0.50 level and is now trading above the €0.45 support zone. The price has been moving in range since June. Once this range is broken, it may lead to bigger moves, but as the range is still intact the movement cannot be clearly predicted.

Disclaimer
This content is for informational purposes only and is not to be taken as financial advice. We highly recommend taking the time to do the necessary research before making any investment. Be aware that past performance is no indication of future results.