January 31, 2022

​​$BTC 24 Hour High $38,400 / Low $37,362    |   $BTC -0.5% Past 24 hours; +4.2% Past 7 days

$ETH eyes $2,730 ceiling; recovery has some way to go

Good morning. Over the weekend, $BTC traded higher and consolidated around the $38K level but struggled to break through the $39-40K region. Once it breaks through, the crucial indicator suggests a forthcoming trend reversal towards $41K. The trading volumes must go hand in hand to confirm a reversal, however, stay cautious given the light trading volume. The daily RSI is currently standing at the resistance level, but if we break this level, this can be another indicator of a continuation of a next leg higher. At the same time, we may potentially see a retest of the support. 

Funding rates are extremely stretched among shorts at present. We are looking for some short squeeze once $BTC starts to trend higher, but we need market participants to return to the market for that to happen. Otherwise, $BTC will continue trading sideways or even see another leg down to $30K. 

Currently, ETH is finding support at $2,530, while the daily RSI encounters resistance at his level. Our short-term upside target is the 0.382 Fibonacci retracement level between May-high and July-low. In short, we need to break the resistance levels at $2,727 and $3,000 before we consider a trend reversal. Like $BTC, funding rates of $ETH are very stretched among shorts. A return in demand is much needed as a catalyst for a short squeeze. Otherwise, the No. 2 digital asset is expected to trade sideways for a period or even trade down to $2,000.

The correlation of digital assets to equities has become so high that market participants should lay more emphasis on the potential impacts of the latest development of traditional finance to the markets. Interestingly enough, the digital asset market seems to have decoupled from the U.S. Dollar Index. Though the index moved higher, implying the USD is gaining strength, the digital asset market has held firm over the last week.

According to on-chain analyst Will Clemente, BTC whales, entities with more than 1,000 BTCs, are finally starting to add to their existing positions after months of selling. In a recent newsletter, the analyst reported that large transactions are dominating volume and have been gaining a bigger presence since 2020. $BTC seems to have found steady support at around the $30K level when $BTC reached local lows of under $33K. However, the markets may see a breather when market participants start going offline to prepare for the Lunar New Year that commences tomorrow. 

Learn more from today’s Trader View video

Digital assets market:

  • Total crypto market capitalization stands at $1.8T, -1.0% from yesterday
  • $BTC is -0.6% at time of writing; 24H liquidations and funding rates: $19.54M, +0.00623% average
  • $ETH is -0.74% at time of writing; 24H liquidations and funding rates: $17.79M, +0.00028% average
  • Stablecoins market dominance: USDT 44.81%; USDC 28.54%; BUSD 8.6%; TerraUSD 6.46%; DAI 5.24%

Alts and DeFi watch:

  • DeFi TVL: $189.85B (-0.01% over last 24h)
  • $SOL -3.2% in the last 24 hours, -6.9% in the past week 
  • $SHIB -3.7% in the last 24 hours, -6.4% in the past week
  • $SAND -5.0% in the last 24 hours, +22.4% in the past week
  • $ENJ -1.5% in the last 24 hours, +10.4% in the past week

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OSL Trader View is contributed by Stefan von Haenisch & Ethan Fu.

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