August 31, 2022
Cryptocurrencies: Weekly Update
August is coming to an end and we’re coming up on the worst month of the year for both the Stock and Cryptocurrency markets. Unfortunately, macro conditions aren’t getting any better for the market so things are still looking pretty bleak for the foreseeable future at least when it comes to crypto.
Prices have been volatile as of late, especially as the most significant cryptocurrencies continue to give up important support levels.
Bitcoin is below its significant moving averages (50 & 200 periods) on Monthly, Daily, and Weekly timeframes:
Right now Bitcoin looks likely to retest support lower around $18,900, but will likely hold up there instead of putting in new 2022 lows.
We pointed out the past few weeks that September is historically Bitcoin’s worst month and we’re prepared for exactly that to happen.
The S&P 500 doesn’t look any better than crypto, as both are likely to remain rangebound for the next few weeks with limited upside potential.
It also seems likely that the more speculative QQQ will lead the way down for the market as it has already closed below the crucial $300 level as of today.
BTC, SPY, and QQQ are all now in Bearish phases on a daily time frame, stacked below both their 50 and 200-day moving averages.
Things really aren’t looking great for risk assets, especially as news of an approaching energy crisis in Europe and deeper global inflationary pressures continue to mount. Fortunately, the CryptoPulse Quant got us out and has kept us in cash to avoid giving the profits we made this year.
It seems that the crypto market is likely to remain rangebound for the foreseeable future with limited upside potential, but that’s ok because we’re still expecting October to be a great month for crypto providing a light at the end of the tunnel.
Ethereum’s merge to proof-of-stake is now only about 13 days away and actually may lead to a short-term rally in the coin’s price. Although ETH’s price is now Bearish and in a downtrend after breaking back below its 50-day moving average, the underlying momentum according to Real Motion actually looks to be improving.
Long-term momentum is actually showing a Bullish divergence despite both price and short-term momentum being Bearish.
Ethereum’s recent outperformance over Bitcoin (ETH / BTC) is also now flagging and unlikely to remain at these levels for much longer.
All in all, Ethereum’s merge looks likely to result in a buy the rumor sell the news event where we’ll see ETH finally crack and break down with the rest of the crypto market.
If you have a short-term outlook, you could try riding a quick ETH breakout that could easily result in the lead-up to the actual merge date, but it would be wise to take your profits before the actual event happens.
Check out our new CryptoPulse Twitter account @MGCryptoPulse for daily tweets and updates about the crypto space!