Good morning. Here’s what’s happening:
Market moves: Bitcoin rose to its highest point in a week; most of the leading altcoins also saw increases.
Technician’s take: BTC’s sell-off appears exhausted as buyers attempt to reverse a short-term downtrend.
Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis.
Bitcoin (BTC): $43,907 +2.5%
Ether (ETH): $3,369 +3.7%
Bitcoin (BTC) rose to its highest price in a week, recovering somewhat after last week’s abysmal start to the year.
At the time of publication, the largest cryptocurrency was changing hands around $43,900, after dipping a few days ago below $40,000 for the first time since September. The bitcoin price is still down 5.2% so far in 2022.
The bitcoin market may have gotten a boost from a U.S. Labor Department report Wednesday showing that the Consumer Price Index, a key inflation gauge, rose to an annual clip of 7% in December, the highest since the early 1980s.
Bitcoin is viewed by a growing number of investors as a hedge against fast inflation, and the price has climbed since the Fed started printing money – more than $4 trillion so far – and pursuing ultra-loose monetary policies since the coronavirus hit in March 2020, roiling markets and the economy.
“The market reaction to this new data might be a bit confusing as we see the crypto markets taking a victory lap,” Mati Greenspan, founder of the cryptocurrency and foreign-exchange analysis firm Quantum Economics, wrote Wednesday in his newsletter. “This time however investors seem a lot more relaxed about the Fed.”
U.S. stocks closed higher, also due to cooling concerns that the Fed might get more aggressive in tackling inflation, according to Reuters.
In cryptocurrencies beyond bitcoin, the Near Protocol’s NEAR token rose Wednesday to an all-time high, on signs the up-and-coming blockchain might be undervalued as it attracts more activity.
Some analysts warned that NEAR might be looking frothy on some metrics, and that bullish bets on another popular blockchain token, Fantom’s FTM, have become a “crowded” trade.
Ether (ETH), the native cryptocurrency of the Ethereum blockchain and the second-largest overall, rose 4.2% over the past 24 hours to about $3,370, based on CoinDesk pricing.
The recent bounce suggests the cryptocurrency is starting to recover after a near-30% decline from its all-time high around $69,000 in November.
The relative strength index (RSI) on the four-hour chart is approaching overbought levels, similar to what occurred in late December, which preceded a brief pullback. The RSI on the daily chart, however, continues to rise from oversold levels, which means buyers could remain active on price dips.
Still, given the short-term downtrend, upside appears limited toward the $45,000-$48,000 resistance zone. And on weekly and monthly charts, momentum signals remain negative, which means price rises could be limited for now.
2 p.m. HKT/SGT (6 a.m. UTC) Japan machine tool orders (Dec. YoY)
5 p.m. HKT/SGT (9 a.m. UTC) European Central Bank Economic Bulletin
9:30 p.m. HKT/SGT (1:30 p.m. UTC) U.S. producer price index (Dec. MoM/YoY)
11 p.m. HKT/SGT (3 p.m. UTC) Speech by Federal Reserve Board member Lael Brainard
“First Mover” hosts spoke with PwC Global Crypto Leader Henri Arslanian for his analysis on the crypto markets as the U.S. December consumer price indexes increased 7% from a year ago, the highest level in four decades, and he shares his top crypto prediction for 2022. Plus, former SEC Branch Chief Lisa Bragança shared insights into the current state and outlook for SEC crypto regulation.
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Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio manager at Cannon Advisors, which does not invest in digital assets. Damanick does not own cryptocurrencies.