Investors are urged to proceed with caution on the cryptocurrency markets as we are now in a momentum trade.
With Europe’s rising gas costs at the heart of concerns, the global financial market has been in the red for the previous several days. This summer, it’s projected that heat waves and a lack of natural gas would raise gas costs. Although gas costs are rising in the US and Asia as well, Europe is the region most impacted. The DXY index has been rising as a result of investors moving their money into US dollar reserves due to concerns about a possible global recession.
This then had an impact on all other markets, including those for cryptocurrency assets. In this post, we will quickly examine the price movements of the most important cryptocurrencies as well as the near-term prospects for Bitcoin (BTC).
Bitcoin struggles
BTC swiftly declined 10% in only one day after falling below the 200-week moving average (WMA) in the middle of last week. The loss of the 200 WMA at $23,120, which the bulls had viewed as lifeline support, has heightened unfavorable sentiment among cryptocurrency investors. BTC reversed intraday at $20,836 and finished last week at $21,500.
Holding over $20,000 is regarded as a show of strength in this negative environment, despite losing crucial support. The 20-day exponential moving average (EMA), which is the first short-term resistance level, is around $22,600. The next level is $23,000. The $20,836 horizontal level continues to provide important support for the present trend. BTC is now up 0.5% over the previous 24 hours, trading at $21,400.
Ethereum follows the same
Last week, Ethereum (ETH) lost 12% in one day, following in the footsteps of Bitcoin (BTC), before turning around locally about $1,500. After a 128% increase from its June lows to the Merge upgrade, ETH had a sharp rejection from the $2,000 level of the 20-week moving average. Even if the Merge upgrade is set for mid-September, ETH’s inability to demonstrate strength is seen as a warning indication that markets may suffer.
The 50-day EMA and $1,642 act as ETH’s first significant resistance levels, followed by $1,712. If this rebound runs out of steam, ETH may drop back to the $1,300 range. Despite a pause in the market, ETH may have another eye-catching price increase if it is successful in switching from a proof of work to a proof of stake method.
With the exception of Tron (TRX), BNB (BNB), and XRP, all of the top 20 cryptocurrencies have lost more than 10% in the past seven days (XRP). With more than 20% in its pockets, Dogecoin (DOGE) suffered the most as investors shied away from high-risk, low-utility assets. EOS (EOS), which is now priced at $1.34, was the sole notable cryptocurrency asset in the top 100. High performance, flexibility, security, and developer experience are prioritized by the open-source blockchain platform EOS. Since EOS Global is now cooperating with hundreds of blockchain projects that require quick transactions and an adaptable decentralized application (dApp) platform, EOS has increased by 34% over the past week, and trading volumes have skyrocketed.
Investors are relying on a hawkish tone from the US Fed on Friday, and with the oil, crisis looming and the 10-year Treasury yield topping 3% for the first time in a month, all signs point to an approaching recession. Quantitative tightening is expected to have a negative impact on Bitcoin’s short-term recovery. Investors are urged to proceed with caution in the cryptocurrency markets as we are now in a momentum trade (entering a trade as it is picking steam). Momentum trading is not strictly governed by technical principles and is susceptible to volatility from outside causes.
