Alejandro Zala, the Country Manager of Bitpanda Spain, as usual every friday, shared Cointelegraph in Spanish his weekly analysis of the cryptocurrency market according to what happened during this week in which, according to him, the current market conditions can only be described as extreme since the ongoing corrections have caused the price of the main cryptocurrencies to fall to levels They hadn’t seen each other in almost two years.
Firstly, Zala commented that during this economic downturn, the total market capitalization has fallen below €850bn, a drop of more than €2tn from the peak. Likewise, he also highlighted the fact that there were also falls in traditional financial markets, which were driven, he says, by fears of galloping inflation, the imminent rise in interest rates and the prospect of recession in the main economies.
“The current drop in prices is largely driven by changes in the macroeconomic situation and geopolitical tensions. Interest rate hikes coupled with quantitative tightening have pushed asset correlations closer to 1 and we are seeing asset price sell-offs across all financial markets. Europe has registered record levels of inflation and inflation in the United States stood at 8.6%, the highest year-on-year growth in more than 40 years”, Zala argued.
On the other hand, Zala also mentioned the Crypto Fear and Greed Index, which plummeted to 7% taking into account several factors to determine the general conditions among investors. It is worth noting according to Zala, that the last time it was this low was in August 2019, at which time Bitcoin was struggling to stay above the level of 10,000 euros and the indicator bottomed at 5%, which was the absolute minimum of all times tracked by this index.
“Last week, cryptocurrency platform Celsius added fuel to the fire by suspending all customer withdrawals to stabilize liquidity and operations. Three Arrows Capital, a major cryptocurrency fund, is also rumored to be facing massive liquidations as ETH prices continue to fall,” he said.
“The news has compounded the negative sentiment prevailing in the market following the May collapse of Terra, and a similar story is now playing out with USDD, which is the Tron DAO stablecoin. USDD broke off from the US dollar and Tron DAO is trying to stabilize with a massive buying program,” Zala added in his analysis.
Bitcoin at December 2020 levels
As for Bitcoin, in a week that has been dramatic for the entire cryptocurrency market, it has fallen below 20,000 euros to levels not seen since December 2020. “The price has touched 19,150 euros, which represents a decrease of almost 70% from the maximum reached in November last year. On the downside, Bitcoin has tested the long-term final support region, defined by the 200-week moving average,” Zala explained.
According to Zala, Bitcoin had historically not stayed below this key threshold and used to trigger sharp pullbacks soon after the retest. “Although the past is never a guarantee of future performance, it is essential to look at this 200-week benchmark as the region of long-term support, which will play an important role going forward once the market stabilizes,” he stressed. .
“The capitulation event seems to have arrived with the Crypto Fear and Greed index at 7, but the process of bottoming out will take some time. Amid escalating fears and panic selling, the charts are littered with large wicks in the daily candles indicating a large amount of volatility,” Zala added.
Ethereum is trading below the 2018 high
For the price of Ethereum, Zala has said that Ether was one of the biggest losers in the last week, falling 40% in just seven days to a low of €950. In this sense, he points out that the second most important cryptocurrency is trading at its lowest level since January 2021 and below the historical maximum of 2018.
“Ethereum printed 11 consecutive red candles on the weekly chart, the last positive close was in March,” he commented.
Altcoins Suffer Double-Digit Losses
On altcoins, Zaha has mentioned that major altcoins are deep in the red this year as macro pressures combined with strong sellers are pushing them into oversold positions.
In his analysis, Zala has pointed out that ADA has followed the general sentiment of the market, but has lost less in the recent drop compared to other larger cryptocurrencies. “ADA has been outperforming Ethereum in recent weeks and is already up over 88% against ETH after making a recent low. The price fell below the support trend line, but the bulls are trying to push it back above,” he commented.
“Cardano developer Input Output Global (IOG) recently announced two products that could contribute to ADA price strength in the near term. The company revealed a new wallet called Lace, and the deployment of a new Ethereum virtual machine (EVM)”, Zala detailed.
“It is down 87% from its all-time high and currently remains at its support level above €5.8.” Zala said emphasizing that LINK lost its place among the top 15 coins and is currently in 21st place, with a market capitalization of about 2.6 billion euros.
For SOL price, he has said that it has underperformed due to the number of cuts so far this year and this in turn has caused the bulls to be having trouble turning the tide. “The price made a local bottom at 25 euros and is trading below the resistance trend line. The bulls need to flip these resistance and support levels to change the negative trend,” Zala argued.
Zala has singled out TRX as one of the biggest losers as it fell 25% on June 15 alone after the project’s stablecoin, USDD, lost its dollar peg. “USDD uses an algorithmic mechanism to maintain its peg to the dollar by burning its cryptocurrency TRX, a system similar to that of the Terra stablecoin that collapsed last month. USDD holds reserves in TRON (TRX), Tether (USDT), USD Coin (USDC), and Bitcoin (BTC),” he explained.
“Price touched the €0.45 level, its lowest level since December 2021, but quickly bounced back to a dynamic resistance line at €0.65,” he said.
Disclaimer: This material is intended as a commentary on economic or market conditions and does not constitute financial analysis or recommendation. The analysis presented here corresponds to the Country Manager of Bitpanda in Spain and under no circumstances is an investment recommendation by Cointelegraph. Anyone, before investing, must carry out their own research and is responsible for their own decisions.
It may interest you: