We’ve had a wild month in crypto thus far. We saw prices fall from 60k level after failing to close above this psychological level until most recently price falling to 42k levels. While growing fears of inflation have now come to pass the outlooks on the markets continue to be “bearish in the short term”. On Dec 4th we experienced a large flash crash that sent the entire market tumbling, spiking through major areas of support before closing above some of these important support levels. Since then bitcoin has struggled to close above the 200 day moving average. Many say the market manipulation continues because of futures, options and as well as big players (institutions) have the liquidity to control the markets more than ever before. Below is btc/usd pair and highlighted are levels of support and resistance. We can clearly see price struggling to recover the 200 day moving average with support levels at 46k and 42k where see the large wick of institutional orders grabbed liquidity. Until we are are able to stabilize we can continue sliding to downside.
As the correlation of bitcoin continues with equities we must point out that something different is happening during this cycle compared to others and that is the eth/btc pair. This coincides with the BTC.D (bitcoin dominance) chart. What this is showing us is bitcoin continues to lose its dominance over the crypto market as alt-coins whose focus is on utility continues to eat way at the overall marketcap. The eth/btc pair is showing bullish momentum and we can come to a few conclusions; The outflow of money is going into Ethereum, Layer 1 & 2 blockchains and their ecosystems. Aspects of the market such as defi, gaming, metaverse and play-to-earn continue to lead the way for activity in the crypto space. We shall continue to watch the development of these sectors and how it will influence the market in the mid to long term.
We are 18 days before the yearly close which can provide is much needed data for the continued trend of bitcoin, the development of eth/btc pair and what happens with bitcoin dominance going into 2022.
