First Mover Asia: Bitcoin, Ether Regain Ground Sunday After Early Weekend Battering

Good morning. Here’s what’s happening:

Market moves: Bitcoin was trading at over $36,000 on Sunday after continuing its recent decline earlier in the weekend.

Technician’s take: BTC is stabilizing on intraday charts, although $30,000 is a more significant level to watch given the decline in long-term momentum.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis.

Prices

Bitcoin (BTC): $36,202 +3.4%

Ether (ETH): $2,532 +5.4%

Top gainers

Asset
Ticker
Returns
Sector

Cosmos
ATOM
+3.4%
Smart Contract Platform

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Top losers

Asset
Ticker
Returns
Sector

Internet Computer
ICP
−9.2%
Computing

Litecoin
LTC
−9.2%
Currency

Filecoin
FIL
−9.0%
Computing

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Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.

Markets

S&P 500: 4,397 -1.8%

DJIA: 34,265 -1.3%

Nasdaq: 13,768 -2.7%

Gold: 1,834 -0.2%

Market moves

Bitcoin capped a forgettable three days, dipping below $34,400 at the start of the weekend, before mounting a small comeback on Sunday.

At the time of publication, the world’s largest cryptocurrency by market capitalization was trading well above $36,000, a nearly 3.4% gain over the previous 24 hours but well off its all-time high near $69,000 set in early November. Trading volume was light with many investors continuing to assess troubling economic conditions and a pronounced decline in equities markets.

The tech-heavy Nasdaq fell 2.7% on Friday as investors continued to veer away from stocks that led recent years’ charge in stocks. Two other major indexes, the Dow Jones Industrial Average and S&P 500 fell 1.3% and 1.8%, respectively. The market slump has stemmed from widespread concerns about interest rates, supply chain inefficiency and the ongoing coronavirus, which has been gathering strength in many parts of the U.S. even as it wanes in others.

Ether dipped below $2,400 on Saturday before returning to a base camp above that level, where spent the remainder of the weekend. At the time of publication, the second largest crypto by market cap was trading above $2,500, an almost 5.5% rise. Most of the major altcoins spent Sunday in the red.

“The market is holding its breath as investors look to the opening of the Asian markets for a sign of what equities will do this week,” Joe DiPasquale, the CEO of crypto fund BitBull Capital told CoinDesk. “If Asian markets open strong, we can expect demand for crypto to go up, and even more so if the U.S. markets have a strong Monday.

DiPasquale added that “crypto is still finding its way as to whether it is a digital gold-like hedge that moves inversely with equities, or whether it’s a risk-on asset that will fail if equities continue to fail on Monday as many equity indexes did on Friday. While those most bullish on the investment case for crypto cite longer-term data that point to Bitcoin not being correlated with other asset classes, data over the last two years has shown a correlation in the price of Bitcoin and equities.”

Technician’s take

Bitcoin Sell-Off Deepens Below $40K; Minor Support Nearby

Bitcoin (BTC) failed to hold short-term support at $40,000 as sellers maintained the two-month long downtrend.

Intraday oversold signals were not enough to sustain bids, which means longer-term indicators are more reliable to determine bitcoin’s price direction.

BTC was trading around $36,200 at press time and is down 17% over the past week.

The slowdown in upside momentum on monthly and weekly charts has been a persistent theme since December. As the long-term uptrend weakens, sellers typically outweigh buyers despite occasional oversold signals.

Further, when drawdowns (percent decline from peak to trough) become severe, short-term traders tend to reduce their position sizes and tighten trade parameters around intraday support and resistance zones.

Bitcoin is roughly 40% below its all-time high of $69,000, which is a significant drawdown. The previous drawdown extreme was in July when BTC settled near $28,000 after falling roughly 50% from its peak.

For now, initial support is around $35,000-$37,000, which could stabilize the current sell-off. The relative strength index (RSI) on the daily chart is the most oversold since May 19, which preceded two months of sideways trading before a rebound occurred.

If selling pressure accelerates this week, BTC could find stronger support around $30,000.

Important events

8:30 a.m. SGT/HKT (12:30 a.m. UTC): Jibun Bank manufacturing purchasing managers index (PMI) (Jan. preliminary)

5 p.m. SGT/HKT (9 a.m. UTC): Euro Zone Markit Manufacturing PMI (Jan. preliminary)

10:45 p.m. SGT/HKT (2:45 p.m. UTC): U.S. Markit Manufacturing PMI (Jan. preliminary)

11:30 p.m. SGT/HKT (3:30 p.m. UTC): Dallas Fed manufacturing index (Jan.)

CoinDesk TV

In case you missed it, here is the most recent episode of “First Mover” on CoinDesk TV:

Bitcoin Drifting Below $40K, Fed Releases White Paper on Central Bank Digital Currency, SEC Chair Gary Gensler Wants More Control of Crypto

“First Mover” hosts were joined by Congressman Tom Emmer (R-MN) as he introduces a new bill aimed to limit the Federal Reserve’s ability to issue a digital currency. This comes as the Fed has just released a long-awaited white paper on the digital dollar. Bitcoin crashed to a five-month low. Managing Director of MarketGauge Group Michele Schneider provided her analysis. Plus, former SEC Commissioner and Patomak Global Partners CEO Paul Atkins gave his take on the latest regulatory signal from SEC Chair Gary Gensler.

Latest headlines

Bitcoin Heads for Worst Week in 8 Months as Traders Lament ‘Pikachu Pattern’: The price appeared to stabilize around $35,000, but gallows humor filled social-media sites as more than $1.5 billion of tradition positions were liquidated.

No, Tech Stocks Aren’t Driving Crypto Prices: The relationship between bitcoin and the Nasdaq is there, but it isn’t as strong as some suggest.

Here’s Why Bitcoin Tumbled 11% in 24 Hours: Bitcoin is currently trading around 45% below its all-time high of $68,700.

Crypto Market Cap Falls Below $2T Amid Sell-Off: As bitcoin and ether breach $40,000 and $3,000 support levels, some altcoins are trading 60%-80% down from cycle highs.

Ethereum Could Hold Lead as Dominant Smart-Contract Blockchain: Coinbase Analysts: The only real “ETH killer” might end up being Ethereum 2.0, according to analysts for the U.S. exchange Coinbase.

Crypto Trader Tantra to Liquidate After ‘GBTC Discount’ Widens to Record: The Grayscale Bitcoin Trust (GBTC) has been trading at a steep discount since last February, but a further widening proved too much for one trading firm.

Twitter Seeks Senior Crypto Role on Heels of NFT Verification Announcement: The job posting advertises “NFT tooling, membership tokens, DAOs and more!”

Longer reads

Simpin’ Ain’t Easy: The Business Sense Behind IreneDAO: Crypto seems poised to magnify existing financial relationships between influencers and their obsessive fans.

Today’s crypto explainer: What is SegWit

Other voices: Money in the Metaverse

Said and heard

“What we would hope is that, as we get into the next weeks to month or so, we’ll see throughout the entire country the level of infection get to below what I call that area of control.”….(Anthony Fauci on ABC’s This Week)….”Now some executives say supply challenges are worse than ever. The lack of workers leaves a broader range of products in short supply, food-industry executives said, with availability sometimes changing daily.” (U.S. Food Supply Is Under Pressure, From Plants to Store Shelves/The Wall Street Journal)…”Hunt offers an analogy here: Our future engagement with the metaverse could mimic how, with the help of science, we came to accept the real existence of an unseeable “microverse:” that realm of viruses, parasites and other microbes that we’ve since learned how to manipulate, sometimes in sinister ways.” (CoinDesk Chief Content Officer Michael Casey)…”Many altcoins are into support at their summertime 2021 lows, making it critical that bitcoin holds support as it sets the tone for the cryptocurrency space.” (Katie Stockton, managing director of Fairlead Strategies, quoted by CoinDesk)

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