Bitcoin, the largest cryptocurrency, started its September run very well. The first week was pretty positive as the asset skyrocketed to nearly $ 52,900 on September 7, after which it corrected nearly 20%. History tends to repeat itself and just like last year, September brought the historic negative returns for Bitcoin.
Evergrande Group, the largest real estate company in China, would likely default on its debt, and so BTC fell from $ 48,500 to $ 39,600. The asset bounced back from this phenomenon, hitting the $ 45,000 level, and tipping Twitter in BTC certainly helped. The announcement that Evergrande is paying off the debt and that the Fed’s monetary policy will remain the same also contributed to the comeback. However, BTC fell to $ 40,700 in an hour as an old news article circulated on the internet about the Chinese ban stating that all cryptocurrency activity except possession will be criminalized. This month we also had good news for BTC, El Salvador started building an infrastructure that would enable BTC as legal tender. The United Arab Emirates are running the crypto miracle with trading in Dubai Free Zones approved by regulators, and even Ukraine has passed laws that facilitate the circulation and use of cryptocurrencies.
Technical outlook: Bitcoin
BTC started the month with bull power and ended with a bear attack. Tech-wise, over the weekly timeframe, the asset has made a bearish engulfing pattern at the high of ~ $ 59,500 and experienced a sharp correction of nearly 25% to hit the low of $ 39,600. BTC is seeking support in the key support zone from $ 40,000 to $ 37,500 (the last time there was an upside break from these levels) and the longer lower shadow also suggests a buy. If prices hold and hold above these levels, we can expect some recovery rally.
Ethereum, the leading altcoin, saw an amazing rally in the first week of September, hitting the 4k mark. However, a market correction soon ensued and the asset fell 25%. Then it continued to fluctuate between $ 3,000 and $ 3,500. It was followed by BTC and falling sharply on the Evergrande news. But it took heavier losses, reaching a low of $ 2,656 from a level of $ 4,000. With the Bitcoin bull piling up at $ 43,000, Ethereum began to rebound too, until yesterday’s more stringent announcement by China pushed it back into bearish zone. This month also brought some good news for the asset, where the data showed that with the price of gas rising again, Ethereum Layer 2 scaling protocols have gained wide acceptance and are processing more transactions on a daily basis compared to the BTC network.
Golem Network has launched an app that allows users to mine Ethereum on their personal laptops, but the profit cannot be made until a much later date. The Ethereum futures are trading at a premium, investors are switching from Bitcoin-based products. The Thai SEC licensed an Eth-based real estate project, in which the company would use Eth’s blockchain technology to allow traders to invest even as small as $ 150 in costly real estate projects. By the end of October, Ethereum Optimism would have updated its protocol, which allows developers to provision networks with just one click. AMC Entertainment has announced that it will accept cinema ticket payments by the end of 2022, not only in Bitcoin, but also Ethereum and Litecoin.
ETH, which created a dark cloud cover on the weekly timeframe after a high of $ 4,027, correcting almost 34% to a low of $ 2656. Since then, the asset has traded in the lower top lower bottom formation. ETH has very strong support at $ 2,602 (61.8% Fibonacci retracement level). If prices hold and hold above support levels, we could expect the bulls to continue their bullish move. If the support breaks, the asset could slide further to $ 2,400 levels.
Other
Other leading altcoins were generally quite volatile this month. In early September, large altcoins saw good inflows from institutional and private investors. In the first 10 days of September, several altcoins traded in the green, some even saw rallies of over 20%. However, post that a turnaround in the widespread crypto market has taken a blow due to several fundamental developments mentioned above. As of today, both bears and bulls are fighting to take control of these assets, which is why most altcoins are sector-bound. At the current level, however, the altcoins landscape appears to be attractive, which is reflected in the higher volumes for several coins in the past few days. It is safe to say that altcoins generally have a lagged response to BTC and ETH, but ultimately follow the trend of these leading assets.
Key levels:
(The author, Nirmal Ranga, is the Chief Revenue Officer of ZebPay. The views are his own)
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