This weekly piece of cryptocurrency price analysis and thought leadership is brought to you by the expert team at CEX.IO, your crypto guide since 2013. At CEX.IO, we’re committed to providing the latest industry developments and potential price scenarios to help our users make the most informed decisions along their crypto journeys.
In this week’s update, we explore the price movements of BTC, ADA, ZIL, and SAND. Additionally, this recap includes other notable market news over the last seven days.
Read along for in-depth breakdowns, and enjoy reviews of correlated markets.
Notable market events
Ethereum developers confirmed the Shanghai update launch window
During their first virtual meeting of the year, Ethereum developers said they are pushing ahead with the Shanghai upgrade that will let users withdraw staked ETH. The developers confirmed that they are planning to roll out the upgrade in March 2023.
However, core developers decided to remove all EVM Object Format (EOF) changes, and reject any EIPs that might be proposed to replace EOF as a part of the Shanghai agenda. This was done to ensure timely staking withdrawals, and as such, staking withdrawals will be the only major instrument added with Shanghai’s activation. To make this process smooth and resource-efficient, the developers are going to launch public testnets later this month.
It is believed that withdrawals will significantly reduce the risk of ETH staking, and could encourage more users to participate in it. As a result, it may provide more opportunities for liquidity staking protocols like LidoDAO (LDO) to grow. Developers’ plans toward the Shanghai release helped the LDO price remain among the top performers of the last week.
U.S. authorities are investigating DCG over internal transfers
According to Bloomberg, the U.S. Department of Justice’s Eastern District of New York (EDNY) and the U.S. Securities and Exchange Commission (SEC) initiated investigations against Digital Currency Group (DCG). The trigger is alleged to be internal transfers to its subsidiary Genesis Global Capital. However, the report said that neither Genesis nor DCG “has been accused of wrongdoing.”
Over the last week, DCG also continued to be under the spotlight for a variety of other reasons:
- DCG closed its wealth-management division.
- Genesis sent a letter to its clients saying it would be “reducing costs and driving efficiencies,” and that it would need more time to sort out company finances.
- Genesis laid off an additional 30% of its staff.
- There are claims that Genesis is considering a potential bankruptcy filing.
Nevertheless, Grayscale’s Bitcoin Trust (GBTC) shares jumped over 10%, narrowing the discount. The potential catalyst could be Morgan Stanley’s European Opportunity Fund. It purchased $3.6 million worth of GBTC on behalf of its customers. However, the company also warned that the value of GBTC may drop “precipitously” to zero due to regulatory changes and a crisis of confidence. Grayscale is also owned by DCG.
Huobi experienced a wave of withdrawals after a 20% headcount reduction
On December 30, crypto reporter Colin Wu, citing insider sources, tweeted that Huobi would cancel all year-end bonuses, cut employee salaries, and prepare for layoffs. A few days after that, Justin Sun, who joined as an advisor for Huobi in October 2022, denied layoffs. However, soon after Sun’s statement, the Huobi team confirmed the staffing reductions. There were also reports that Huobi shut down internal employee communication groups and feedback channels.
This led to speculation about the overall health of Huobi, and the safety of customer funds. As a result, the platform experienced outflows of $64 million. Nansen noted that the highest outflows came from stablecoins and Ether wallets that had high balances.
The event negatively affected the prices of Huobi token (HT), Tron (TRX), and USDD (the latter two are typically associated with Justin Sun). Over 50% of Huobi’s reported reserves are stored in HT and TRX.
Mastercard allied with Polygon to deploy a musical artist accelerator program
Payments giant Mastercard has partnered with Polygon to help emerging musical artists create their personal brands through Web3. The accelerator program plans to kick off in spring 2023.
Participants will obtain exclusive access to events, music releases, and can receive training on issuing their own non-fungible tokens (NFT). Mastercard will also release a limited NFT collection called Mastercard Music Pass, which will give fans access to educational resources along with program members.
A breakout of $18,347 is crucial to confirm the BTC recovery
Bitcoin moved above the $17,000 resistance line (orange line), after three weeks of failed attempts to do so. The bulls pushed the price to the resistance area between $17,350 and $17,550, or 0.5 and 0.618 Fibonacci levels (cyan channel). A breakout of this area helped the bulls touch the local high near $18,347 (purple line). However, the asset has already reached the overbought zone on lower timeframes, meaning the upward movement may fade away soon.
Although the bullish momentum has the potential to continue, the trend is considered bearish. The price needs to break the descending resistance line (blue line) to confirm a potential bearish-to-bullish trend reversal.
ADA reached a descending resistance line
The ADA price surged by 20% over the last week, reaching the upper border of the descending channel (blue lines). Shortly before the bounce off the support line, MACD indicated a strong bullish divergence (white line).
Another catalyst of the upward movement could be an increased interest in the Cardano ecosystem. According to DefiLlama, the total value locked (TVL) across the Cardano ecosystem surged by over 30% this month. The top five DeFi projects on Cardano experienced double-digit gains, including the Minswap DEX which has a 41% market share.
If the price manages to sustain above $0.33 (orange line), the bulls may push the price to $0.42 (green line) which previously acted as a major support level. If failed, the price could go back to 20-day EMA on a daily chart.
ZIL jumped above dynamic resistance
The ZIL price surged by more than 35% over the last week, becoming one of the top performers. A potential driver of this movement could be an initiative to make the Zilliqa network compatible with Ethereum Virtual Machine (EVM).
In December, the developers introduced EVM features on the Zilliqa testnet. EVM compatibility is expected to be deployed on the mainnet in the first quarter of 2023. This will allow developers to build decentralized applications (dApps) and tokens that can be transferred on multiple blockchains.
The ZIL price experienced a sharp price movement after breaking the 20-day EMA on a daily chart. It has acted as a major dynamic resistance since mid-August 2022. However, the asset also rapidly entered the overbought zone. Long tails on candles indicate that significant selling supply may take place above the 0.236 Fibonacci level.
If the price manages to consolidate above 0.236 Fibonacci level, then $0.028 and $0.0325 could be the next target for the bulls. Otherwise, the price may return to the 20-day EMA.
SAND could be in danger due to unlock of 348 million tokens
On February 14, 2023, Sandbox will unlock 348 million SAND tokens, or approximately 12% of the total supply. Unlocked tokens will be distributed to seed and strategic investors. This could increase selling pressure on the market despite the 94% drop from its all-time high. The previous token unlock, which happened on August 14, 2022 (white line), re-established the downward movement that still dominates the market.
At the moment, SAND is trading within the descending channel (blue lines). Its price surged by 15% over the last seven days and has the potential to break the upper border of the channel. If successful, the next target for the bulls could be $0.724 (yellow line), which previously acted as major support. However, the asset may go back to $0.37 (orange line), or even $0.17 (red line), when the 348 million SAND tokens become unlocked.
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Disclaimer: Not investment advice. Seek professional advice. Digital assets involve risk. Do your own research.