Crypto Weekly: Bitcoin Stagnates Around Previous Levels

Jan 17, 2022
06:01
2 min reading

Choise.com team

Over the last week, the Bitcoin price has increased by 2%, and currently, it is about $43,000. At the same time, altcoins reached more significant gains, as many of them have risen by 5-10% in 7 days. As a result, the Bitcoin dominance declined to 39.5%.

Significant news for the crypto industry came from Tesla. Last week, the automobile concern allowed accessory purchases for Dogecoin. Against the backdrop of this news, the DOGE price soared 30% to $0.21. Recall that last year Tesla made it possible to buy cars for crypto, but abandoned this decision already a few months later.

Jack Dorsey continues to increase his presence on the crypto market. This time, his company Block (formerly Square) announced the launch of a new fund to provide legal defense to Bitcoin developers when it comes to lawsuits. The company is ready to be of service to advocate on behalf of them and will take care of all the costs. Earlier this week, Block started hiring the developers for creating a new ASIC miner and a hardware crypto wallet.

The popular crypto derivatives exchange FTX has launched a venture fund of $2 billion to invest in crypto projects. The management says that any venture which somehow deals with amounts from hundreds of thousands to hundreds of millions of dollars are considered. One of the priority areas for investment will be the industry of games and metaverses.

The largest US crypto exchange Coinbase has acquired a regulated crypto-derivative exchange FairX. Thus, the company wants to provide access to the crypto-derivative instrument for retail and institutional investors. Another US crypto exchange, Gemini, has announced the acquisition of Bitria, a cryptocurrency portfolio management platform. Transaction amounts remain undisclosed.

Last but not least, a landmark event took place on the largest NFT marketplace OpenSea. For the first time in its history, more than 1 million users were registered at this platform. The trading volume has amounted to almost $15 billion over 2021, which is 90% of all NFT trading volumes in general.

The disappointing news came from the smart contract auditor company CertiK. According to their data for 2021, almost one and a half billion dollars were lost in DeFi protocols. This is 2.5 times more compared to the same indicator in 2020. Most of the vulnerabilities are related to the use of centralized solutions in DeFi projects.

However, all these announcements had almost no effect on the crypto market. Active growth is associated with the price correcting itself after the fall that has recently occured. Let’s take a look at the review chart and try to figure out what direction the price will take in the near future:

Earlier, the Bitcoin price dropped to $39,650. On the last occasion, we saw such levels at the end of September in 2021. A few days later, Bitcoin was already up 12% and approached the key support level of $42,000 – $44,000 where the downward trend line passes. So far, the price has failed to break out.

Moreover, as of today, the market still remains almost empty. This is indicated both by sharp market movements within one day and by decrease in volatility, which is especially notable during weekends. All this speaks against the new cycle of growth for cryptocurrencies.

We think that the drop may begin again already today or tomorrow and Bitcoin will go down to $40,000. The $37,500 – $40,000 zone is very viscous and here we will witness strong resistance. If the price goes below $37,500, this will lead to mass liquidations and the entire market may plunge 20%. We cannot rule out such a scenario, although it is currently improbable.

In case of Bitcoin drop, the whole market will repeat its movement with greater stability. In addition, the largest altcoin, Ethereum, also has negative dynamics and does not demonstrate any signs of a reversal in the coming days.