Barring Bitcoin and dollar-pegged stablecoins, all other seven out of top-10 digital tokens were trading lower at 8.30 am IST. Gains in Bitcoin were capped. Solana was down 3 per cent.
The global crypto market cap was down by almost a per cent to $1.96 trillion compared with last day. The total crypto market volume, meanwhile, zoomed about 44 per cent to $102.63 billion.
Bitcoin had breached $40,000 levels on Monday, before making a quick recovery. However, the derivative data shows that traders lack confidence and crypto winter is likely to last longer.
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Policy advisers and legal experts say most countries are unable to formulate a policy on virtual currencies as there are no precedents apart from bans, which have been largely ineffective.
Crypto’s growing popularity has caught lawmakers’ attention as it could undermine state oversight over monetary policy, capital flows, and illicit activity if left unchecked.
Confidence of investors seems to be shaken following the United States Federal Reserve’s December Federal Open Market Committee session.
The monetary policy authority showed commitment to decrease its balance sheet and increase interest rates in 2022. Fed’s chair Jerome Powell is scheduled to testify before the US congress today.
El Salvador’s President Nayib Bukele has claimed officials will be able to use geothermal energy from one of the country’s inactive volcanoes to power its Bitcoin City project.
Edul Patel, CEO and Co-founder, Mudrex said, Bitcoin slipped below the $40,000 mark but the trend suggests that with the downfall of major cryptos, there has been a rise in the supply of stablecoins.
“A lot of investors are shifting towards these stable currencies to hedge out volatility. The sharp dip is not only experienced in cryptocurrencies but tech stocks and software stocks too,” he added.
Tech View by Giottus Cryptocurrency Exchange
Ethereum (ETH), the second-largest cryptocurrency, had a phenomenal run in 2021, going from $1,000 to $5,000 within a few months. It also instituted important upgrades and became deflationary, cementing its long-term prospects. Here’s what to expect from Ethereum in the short term.
ETH has formed several bear flags since November, which successfully played out to result in a steep dip from the $5,000 territory to near $3,000 today. However, with the daily RSI now at near-bottom and selling volume drying up, indications of a reversal seem imminent. The ETH/BTC ratio also hit an important support line on the higher time frames (at 0.073), indicating that Ethereum may outperform the biggest crypto in the market in the short-term.
Currently, ETH must tackle the high-time frame resistance at $3,370, followed by one at $3,655. In the shorter time frame, even flipping $3,130 should provide optimism. On the downside, ETH has already reclaimed support at the $3,000 psychological level. Thus, confidence in an upward move remains high.
Support: $2,908, $3,000
Resistance: $3,130, $3,370, $3,655