Crypto market analysis : On chain data and open interest pointing towards consolidation
October 6, 2022
Data from TradingView shows the largest cryptocurrency Bitcoin currently trading just above $20,000 after successfully rebounding from its current support of $18,500. This is the first time Bitcoin has crossed the $20k mark after the hard rejection from its 100 daily at $22,400 last month as RSI and MACD finally turn positive pointing to the recent buying trend.
It is important to note that after several weeks of sideways trading Bitcoin is finally approaching its diagonal resistance line since its all time high of $69,000. A successful breakout followed by reclaiming the $21,200 level could boost the price to $25,000 in the short term. However, on-chain analytics tracker Whalemap pointed out that the $21,500 level represented a big resistance based on recent whale selling activity.
The derivatives market and the open interest shows traders piling up longs in expectation of a breakout above the year long diagonal resistance line as open interest sits just below all time highs at 604k BTC. A rejection at the current levels just above the 50-daily moving average could however lead to a violent move downwards to the immediate bullish support at $19000.
Ethereum saw another 7% rally from its current support at $1270 in the last 4 days but the current price level does not seem compelling enough to trigger any bullish activity from derivatives traders. Derivatives data suggests that pro traders are not expecting Ethereum to retest the $1500 resistance just yet as the futures contracts have been trading lower than spot market prices which indicates a lack of interest in leveraged longs.
Ethereum futures open interest is at $7.7 billion currently dominated by bearish bets as the post-merge public sentiment remains neutral to bearish largely due to the overall macroeconomic and regulatory uncertainties in the ongoing bear market. A surprise rally could easily lead to a massive short squeeze potentially driving the price above $1500 and closer towards a retest of the 200 daily average.
The Q3 report from DappRadar highlighted a 12% increase in unique active wallets across the cryptocurrency ecosystem over the last quarter with unique wallet addresses in the blockchain gaming sector rising by 8% in September as the total cryptocurrency market capitalization saw a 8.5% increase in the third quarter. The decentralized finance (DeFi) ecosystem also showed signs of consolidation along with the broader crypto market, with the total value locked (TVL) increasing by 2.9% in the third quarter to just under $70 billion.