Weekly Crypto Analysis: Bitcoin Struggles Below $25K, US NFP in Highlights

2022/08/01 13:22:01

Today, the values of cryptocurrencies plummeted, with Bitcoin trading below the $24,000 threshold. Bitcoin, the world's largest and most popular cryptocurrency, increased by more than 2% to $23,437. The market capitalization of cryptocurrencies on a global scale surpassed $1 trillion today while being nearly flat over the past 24 hours at $1.14 trillion.

Overall, a surge in the cryptocurrency market can be associated with a weaker US dollar amid a series of fundamentals. First, the US economy contracted for a second consecutive quarter, meeting one of the conditions for a technical recession and challenging the Federal Reserve's efforts to combat skyrocketing inflation through a series of solid rate hikes.

During the previous week, the US Commerce Department reported that gross domestic product declined 0.9% annually in the second quarter or 0.2% of the prior quarter. As a result, the US economy shrunk 1.6% in the first quarter of 2022. Consequently, the US dollar experienced a decline, shifting investors from fiat currency to digital assets. For now, investors' focus shifts to the US Nonfarm Payroll figures scheduled to be announced on August 5. The job market in the United States is losing steam, evidenced by the gradual increase in weekly jobless claims. Weaker labor market figures typically boost demand for digital currencies.

Let's delve deeper and take a quick look at the latest crypto market news and Bitcoin's technical outlook.

Crypto Market Overview

Bitcoin's dominance slightly fell from 41.58% to 41.08%; however, BTC jumped 7.08% in the last seven days. The leading cryptocurrency pair, BTC/USD, is trading at $23,290, while Ethereum, the second-largest cryptocurrency by market capitalization, has rocketed to $1,793.19, up 11.80% during the last week.

Filecoin (FIL), Oasis Network (ROSE), and yearn.finance (YFI) remained the top performers from the previous week. FIL increased by more than 96.58% to trade at $10.80, while ROSE increased by 83.06% in the last seven days, holding at $0.09212. Finally, the yearn.finance (YFI) increased by 71.30% to trade at 11,390.6.

Cryptocurrency Market Heatmap | Source: Coin360

On the flip side, UNUS SED LEO (LEO), Fei USD (FEI), and Binance USD (BUSD) remained the worst performers of the week, but the losses on these coins were insignificant. LEO lost 2.27% to trade at $5.02, and FEI lost 0.16% in the last seven days; meanwhile, BUSD is also unpegged slightly by 0.16% to trade at $0.999.

Last week, the market displayed risk-on sentiment as crypto market optimization triggered an uptrend in coins. Even now, the overall trading sentiment in the cryptocurrency market is positive, and a minor downturn can be considered a correction. So let's dig a little deeper to find out what's causing market volatility.

Top Altcoin Gainers and Losers

Top Altcoin Gainers:

⧫ Filecoin (FIL) ➠ 96.58%

⧫ Oasis Network (ROSE) ➠ 83.06%

⧫ yearn.finance (YFI) ➠ 71.30%

Top Altcoin Losers:

⧫ UNUS SED LEO (LEO) ➠ 2.27%

⧫ Fei USD (FEI) ➠ 0.16%

⧫ Binance USD (BUSD) ➠ 0.16%

News Highlights

Here are some of the events that made the previous week's crypto news section stand out:

KuCoin to Become the First CEX to Develop an NFT ETF

KuCoin, a global cryptocurrency exchange, is about to launch an NFT ETF, hoping to attract approximately 20 million customers. The new product aims to boost the liquidity of NFT assets and reduce the investment required for blue-chip NFTs for over 20 million customers. As a result, KuCoin will become the very first centralized cryptocurrency exchange to venture into NFT ETF. Furthermore, KuCoin is proud to be the first global centralized cryptocurrency exchange to handle NFT ETFs. The move will encourage customers to trade more effectively and directly in the leading NFTs using USDT.

The KuCoin exchange has sought a mechanism to provide ordinary investors with fractional ownership of the largest NFTs (non-fungible tokens), including BAYC (Bored Ape Yacht Club). The products will be available as ETFs (Exchange-traded funds) and are made available to users in collaboration with Fraction Protocol.

Fraction Protocol is a business solution that converts valuable NFTs into fungible Ethereum-based ERC-20 tokens. Without a doubt, the product will reach a wide investor range. This news supported the KCS coin, pumping it by 4.49% to $10.16 last week.

Solana Opens up First Physical Store and Web3 Embassy

The financial blockchain project Solana intends to open a physical store in New York City's Hudson Yards district, which will help to raise public awareness of Web3. At their physical store, visitors and guests can find educational resources, blockchain activities, and Solana-based goods such as NFTs.

Users can learn about Web3 and how Solana works. They will also give you a wallet, your first NFTs, and instructions on performing your first on-chain transactions. In addition, visitors who complete the instructional courses at Solana projects will be able to unlock a variety of NFTs and coins, including USDC.

The store will also feature interactive art exhibits, a display of Solana's upcoming Saga phone, cryptocurrency "lifestyle" items such as sweatshirts and T-shirts, and a variety of NFT collections from the ecosystem. Aside from that, the stores offer a 50% discount on orders up to $200 when customers use the Solana Pay app, which intends to change the customer experiences.

The increased usage, integration, and adaptability of cryptocurrency undoubtedly navigates optimization in the cryptocurrency market, driving up prices.

Terra Community Burns LUNC - Eyes on $0.00015

As lawsuits against Do Kwon, Daniel Shin, and Terraform Lab's mount are filed in the United States, the public's attention has shifted to the burning of Luna Classic (LUNC). The Luna Classic is exhibiting a bullish bias, and bears are vying to retake control of LUNC. Proposal 3568, which would add a burning mechanism to Luna Classic, has sparked much discussion in the community.

The proposal specifies a tax burn mechanism to reduce the overall quantity of LUNA Classic and increase the value of the remaining tokens. However, once the total supply of LUNC tokens hits 10 billion LUNC, the burning mechanism will be disabled. Following that, the supply will remain consistent and will not be interfered with immediately.

In response to burning LUNC, the short-term price trend for Luna Classic (LUNC) has shifted from bearish to bullish following the breakout from the falling wedge. After the massive sell-off that followed the demise of Terra's sibling token LUNA-UST, there was intense selling pressure on LUNA Classic.

LUNC/USDT Chart on the Daily Timeframe | Source: KuCoin

LUNC is currently trading at $0.00010 after completing a 23.6 percent Fibonacci retracement at $0.00013. Given the recent uptrend in LUNC, investors appear to be eyeing $0.00015; however, $0.00013 will act as a major roadblock.

Bitcoin Investment Is Still Paying Off, El Salvador’s Finance Minister Says

The digital assets gained support following the optimistic remarks from El Salvador's Finance Minister Alejandro Zelaya. First, he said, using Bitcoin has benefited El Salvador's unbanked population. Despite predictions that Bitcoin would be destroyed entirely, Alejandro supported the country's choice to use it as legal cash.

According to estimates from tweets from El Salvador's president, Nayib Bukele, the government acquired 2,381 Bitcoins, but their current value is just around half of what they cost. According to a survey conducted by the US National Bureau of Economic Research, most firms and consumers in El Salvador prefer utilizing hard cash to conduct transactions and send remittances. However, traditional banking institutions have criticized El Salvador's use of cryptocurrency. In January, the International Monetary Fund (IMF) pressed El Salvador to stop accepting bitcoin as payment.

In a Bloomberg interview last week, Alejandro Zelaya stated that recognizing Bitcoin as legal cash had given a sizable section of the unbanked population access to financial services. He went on to say that it has increased tourism and encouraged international investment. Moreover, he believes in digital currency, despite being rarely used as a medium of exchange, and the government would continue to use blockchain technology to create a Bitcoin-backed bond. These comments not only support Bitcoin but also other cryptocurrencies on the market.

Bitcoin Funding Rate in Positive Zone, Can it Initiate Buying in Crypto Market?

Recalling KuCoin's previous week's brief, the Bitcoin funding rate remains positive, signaling a bullish trend in the cryptocurrency market. Since there is a cost to going long or short, funding rates tend to indicate market sentiment.

Positive funding rates imply that people are willing to pay to be long, which signals a bullish market sentiment. However, when funding rates are negative, it shows a bearish sentiment because investors are now paying to be short.

BTC Funding Rates History | Source: Coinglass

However, if funding rates remain positive for an extended period, Bitcoin buyers will find it prohibitively expensive to pay. As demonstrated in the graph above, whenever the Bitcoin financing rate has reached a somewhat high positive level in the recent several months, the cryptocurrency's price has frequently decreased shortly afterward.

Fear and Greed Index Signals “Fear,” - Crypto Market Exhibit a Slight Optimization

The fear and greed index signals "fear," with an index indicating a 33 score. Last month, the index scored 14, showing extreme fear in the market. The market has been trading with risk-on sentiment since the index shifted from "extreme fear" to "fear."

Perhaps this is one of the reasons for the crypto market's bullish trend.

Fear & Greed Index | Source: Alternative

Crypto Calendar: Events to Watch This Week

➺ 07/08/2022 - ALPHA - Korea Blockchain Week

Bitcoin (BTC/USDT) Analysis on KuCoin Chart

Bitcoin is now trading at $23,008 after being rejected at $24,700. BTC has already completed a 50% Fibonacci retracement, which is now acting as a resistance level at $24,700. The BTC/USDT pair has formed a series of Doji and shooting star candles near $24,750, indicating uncertainty. Such candlesticks typically drive a bearish correction, especially when they form after a strong bullish rally.

BTC/USDT Chart on the Daily Timeframe | Source: KuCoin

Furthermore, at $24,750, the upward channels provide strong resistance. Failure to breach this level has resulted in a bearish correction in Bitcoin. On the downside, Bitcoin's immediate support is at $23,014 per coin. If BTC falls below this level, it will be vulnerable to the next support levels of $21,107 and $19,000. Alternatively, the resistance levels of $24,777 and $26,665 remain unchanged.

Did you know that KuCoin offers premium TradingView charts to all its clients? With this, you can step up your Bitcoin technical analysis and easily identify various crypto chart patterns.