07 February 2022
Crypto Roundup: Crypto market trying to stabilize
Cryptocurrencies have been struggling so far in 2022, but prices are once again on the rebound. Following January’s dip, which knocked more than 20% off Bitcoin’s price, the king of cryptos is now holding near $37,000, while altcoins such as Solana and Ethereum continue to outperform.
Volatility is to be expected when dealing with cryptocurrencies, and in some cases embraced. The new wave of investors coming in to buy the dip are boosting investor confidence and the outlook is improving overall.
This week, the crypto markets have been torn apart by the idea of the Federal Reserve tightening monetary policy, thereby driving up the value of the US dollar. As tightening monetary policy makes markets somewhat risk-averse, this has had a direct correlation to what happened with Bitcoin, and other cryptos. That being said, it does look as if the markets are trying to stabilize, and perhaps even in some cases, after falling as much as 70%, the crypto market may be trying to turn things around.
Below, we’ll be taking a look at what the technical picture has to say about Bitcoin, Litecoin and Solana and how they might perform in the near term.
Bitcoin markets have been trying to stabilize near the $37,000 level, an area where we have seen a lot of noise in the past. At this point, the weekly chart has shown a piercing of the bottom of the Bollinger Band indicator, which shows a move of over two standard deviations away from the mean. This may suggest that a bounce is approaching, and if bulls manage a breakout from the next resistance level at $39,000 - which acted as the main resistance level over the last couple of weeks - we could see Bitcoin heading toward $40,000 for potential resistance. A break above that level could attract more inflows back into the marketplace.
Litecoin has shown a bit of stability as well, as the $100 level has offered significant support. The previous weekly candlestick was a hammer, and it’s an area that has been tested more than once. This suggests there’s significant buying pressure, and therefore the importance of the $100 level should not be overlooked, especially since round numbers always have a major gravitational pull.
As long as Litecoin can stay above that level, it’s possible that we could see a bit of consolidation and accumulation lifting the market. Breaking above the $117 level could open up the possibility of a move towards the $150 level over the longer term. Keep in mind that crypto has been battered by the tighter monetary policy coming out of the United States, and of course Litecoin will need Bitcoin to rally in order to bring risk appetite back into the fold.
Polkadot has been grinding sideways over the last couple of days, hanging around the $19 level. It’s worth noting that we have been in a downtrend for a while, and of course Polkadot will follow some of the other altcoins, in the same way that Bitcoin has struggled. However, Bitcoin is starting to stabilize, so it’s not surprising that Polkadot prices are trying to do the same.
If we can break above the $20 level, it’s likely that the market goes looking towards the 50-day EMA, which currently sits just above the $24 level.
On the other hand, if we break down below the lows seen in the last couple of weeks, it’s likely that Polkadot could dip toward the $15 level instead, and possibly even to $12 after that, since $12 proved a major support level in the past.