Dear Teroxx Community,
This week we saw a digital asset market that experienced a bullish breakout around the turn of the quarter.
Weekly overview
As usual, we are also providing detailed videos for those who want to delve deeper into the subject.
Latest crypto news
The International Monetary Fund (IMF) has issued a set of suggested actions for emerging and developing countries on how to deal with cryptocurrencies. The goal is to use them to ensure global financial stability.
The IMF sees cryptocurrencies as having the potential to become an important tool for faster and cheaper international payments, despite weaker market conditions since May 2021. The IMF also notes that the crypto market is now much more than just Bitcoin (BTC), with stablecoins in particular gaining popularity. In turn, the report infers from risk-adjusted data over the past three years that cryptocurrencies are now earning comparable returns to established financial products such as the S&P 500 (stock market) or real estate market!
The market’s “extreme fear” was overcome by a whopping jump in the price on Thursday. As data from Cointelegraph Markets Pro and TradingView shows, BTC/USD is continuing quietly for now after the sudden jump from $3,000 on Friday.
The classic “short squeeze” over the weekend has not yet been followed by a downward counter-reaction, allowing Bitcoin to currently hold a price above the close from August. In addition, the analyst points to the “fear barometer” Crypto Fear & Greed Index, which currently suggests that fear is slowly disappearing from the market again.
“After yesterday’s great jump, crypto investors are no longer afraid for Bitcoin,” the expert says. To which he adds, “Extreme fear is often followed by upswing.”
The Joe Biden administration is reportedly working on a legislative framework for stablecoin issuers that would put them on par with banks. As the Wall Street Journal reported yesterday (Friday), citing internal sources, the administration is looking to convince Congress of a “special authorization” for stablecoin issuers and similar crypto companies. American policymakers and regulators have increasingly called for increased regulation of U.S. dollar-pegged stablecoins in recent months. For example, Federal Reserve Chairman Jerome Powell opined this week that stablecoins such as Tether (USDT) and USDC Coin (USDC) should be subject to the same regulatory requirements as money market funds. Powell nonetheless rejects a blanket ban on cryptocurrencies like Bitcoin (BTC). These statements support the positive trend of digital assets and could ensure broad adaptations.
Technical term of the week
Bullish breakout: Describes the scenario that an asset overcomes a resistance and subsequently experiences another major upswing. Therefore, buy orders are often placed above half of this resistance in order not to be invested in the market in case of an unsuccessful attempt, but only in case of positive confirmation of the trend.
Crypto Market
After the market failed to hold previous levels and was exposed to sell-offs due to the various “China issues” (digital asset ban and Evergrande), there were strong bullish counter-moves away from the support zones. At the beginning of the week, the entire market lost buying power and staggered towards $40,000, but just above this important support level, the selling was stopped and large buybacks set in. These drove the market by almost 20% upwards, not least strengthened by the positive statements from America, which deliberately oppose the Chinese government and want to bring further positive regulations on the way. Thus, the quarterly change also represents a change in trend. The “fear” has given way and the bullish outlook currently dominates this asset class.
Bullish outlook: $45,000 – $47,000 to establish as a support zone would be a confirmation of the bullish trend to re-attack resistance at ~$50,000.
Bearish outlook: Sell-offs below $45,000 would end this bullish trend in the short term.
