Konstantin Anissimov, Executive Director at CEX.IO, shares his insights about the Bitcoin (BTC) and Ethereum (ETH) weekly recap.
Bitcoin Enjoys Crucial Endorsement Closing the Week In the Green
Bitcoin opened Monday’s trading session, January 25th, in a good posture. Its price quickly rose by 8.04% from a low of $33,569.60 to reach an intraday high of $34,865.90 by noon, according to CEX.IO’s exchange rate. Despite the significant upward price action that BTC saw at the beginning of the week, market participants turned their attention to the stocks market.
A group of retail traders led by Reddit’s r/wallstreetbets community bought GameStop stocks en masse, flushing hedge funds out of their short positions. The massive increase in buying pressure pushed GME’s market value by a whopping 460% before the U.S. Securities and Exchange Commission (SEC) was forced to announced trading restrictions.
By the time the financial watchdog announced that it would closely monitor and evaluate the high volatility of certain stocks, more than $5 billion in losses were generated.
Given the amount of attention that shifted towards GameStop, it seems like investors lost interest in Bitcoin. As a result, the flagship cryptocurrency saw its price drop by more than 16.40% from Monday’s high of $34,865.90. By Wednesday, January 27th, BTC had reached the lowest price point of the week at $29,230.60.
Sidelined investors seem to have taken advantage of the downward price action to get back into the market. As buy orders began to pile up, Bitcoin was able to rebound from the $29,000 support barrier towards the $33,500 resistance. The upswing represented a 14.80% price increase, sending BTC holders back into the green by the end of Thursday’s trading session, January 28th.
What came next was a 19.60% price jump that was triggered after Tesla and SpaceX CEO Elon Musk suggested that he now endorses Bitcoin. Market participants seem to have entered an irrational FOMO state pushing BTC’s market value to a weekly high of $38,647.40.
But as time went by, the hype around the pioneer cryptocurrency faded, and prices plummeted by 14.40% to close Friday, January 29th, at a low of $34,306.40. Investors were able to generate 6.10% in profits from Bitcoin’s weekly price action.
Ethereum Investors Shift Their Attention Generating 1.00% in Weekly Losses
Ethereum enjoyed a brief bullish impulse following Monday’s open, January 25th. Indeed, the smart contracts giant saw its price rise by nearly 4%. It went from $1,392.21 to hit a high of $1,474.99 within hours, according to the exchange rate from CEX.IO.
Regardless of the early weekly gains that Ether was able to grasp, its uptrend was also jeopardized by the turmoil that was happening on Wall Street. Ethereum suffered a steep correction due to the lack of interest from investors who were flocking to different stocks such as GameStop and AMC Entertainment.
By Wednesday, January 27th, at 12:00 UTC, ETH has lost more than 16.60% of its market value to trade at $1,210.00, which market the lowest price point of the week. A new wave of capital flooded the cryptocurrency market from that point on, helping Ethereum regain some of the lost ground. The bullish impulse pushed prices back above the $1,400 level.
As a matter of fact, Ether reached a high of $1,439.55 on Friday, January 29th, at 12:00 UTC, representing a 19.60% upswing from the weekly low of $1,210.00. As the weekly trading session was coming to an end, it seems like traders began to exit their long positions, increasing the downward pressure behind the second-largest cryptocurrency by market capitalization.
The spike in sell orders pushed Ethereum’s market value down by 4.36%. Therefore, its price closed on Friday, January 29th, at $1,379.00. ETH holders incurred a 1.00% loss throughout the week of January 25th due to the erratic price action.
Uncertainty Reigns in the Cryptocurrency Market
Even though Bitcoin and Ethereum seem to be going through a consolidation phase, multiple on-chain metrics suggest that a steep correction is underway.
For instance, the Entity-Adjusted Spent Output Profit Ratio (a-SOPR) indicator, which represents the profit ratio of BTC tokens moved on-chain, recently reached its highest value ever recorded. As the a-SOPR surpassed the 1.24 mark while Bitcoin made a new all-time high of $42,000 on January 8th, these prices became too attractive for investors to book profits.
If this on-chain gauge proves to be as accurate as it was in the past when it anticipated the market top of April 2013, December 2013, and December 2017, Bitcoin could be bound for a devastating retracement.
Likewise, Ethereum is about to flash a sell signal on its weekly chart based on the Tom Demark (TD) Sequential indicator. The bearish formation will likely emerge as a green nine candlestick, which is indicative of a one to four weekly candlesticks correction before the uptrend resume. A spike in sell orders may help validate the pessimistic outlook pushing Ether’s market value towards the $1,000 support or lower.
From a technical perspective, the only way Bitcoin can invalidate the bearish thesis and rise to $50,000 is if it regains $40,000 as support. Meanwhile, Ethereum would have to close above $1,440 decisively to advance towards $2,000.
Executive Director at CEX.IO. His area of responsibility includes customer relationships with institutional and VIP-clients, overseeing the creation of the company’s development strategy, new products, markets and partnerships. As a member of the board of directors, Konstantin is also responsible for corporate governance.