Crypto newsletter: Will cryptocurrencies reverse the downward trend?

Cryptocurrencies continue to rise today. Bitcoin soars above $22,000, and Ethereum continues its rise to near $1,500. The resurgence of digital assets again correlates with improving sentiment on indices and a rebounding Wall Street futures. Will the earnings season of technology companies and a rising NASDAQ prove to be a wheel for the entire cryptocurrency market?

• Bitcoin slipped below the 200-session weekly average 200 SMA in June, and now the price is struggling to get back above it and trying to break the $22,600 mark. The previous support has become resistance for the cryptocurrency. Ethereum has been reacting better than Bitcoin in recent days, weakening its dominance. The second largest cryptocurrency has crossed the 200 SMA and is trying to return to an upward trend;

• The market reacted markedly positively to the date communicated by Ethereum's developers for the blockchain's transformation to version 2.0, which is expected to take place on September 19, this year. In August, the 'new' Ethereum still awaits testing on the Goerli network, after which ETH is expected to be ready for the awaited 'the merge'. For the moment, the 'difficulty bomb' has been postponed again due to technical problems, but the developers have indicated that the launch is only a matter of months away (it remains the foundation for a successful transition to Proof of Stake forcing miners to stop mining);

• Major stock markets are reacting with gains at the start of the week, with US indices positioning themselves higher which is helping crypto markets. Ahead of us is another week of stock market results from Wall Street companies fraught with comments from analysts and CEOs. This week's results will include the still Bitcoin-owned Tesla. Markets are clearly hoping for a weakening of the Federal Reserve's hawkish narrative and are pricing in a gradual withdrawal of its aggressive monetary tightening policy (this has happened in the past) which is manifested in improved sentiment around risky assets like cryptocurrencies, among others;

• On the other hand, expectations are still just speculation, and the Fed is by no means bound to capitulate against the backdrop of good data from the US economy, improving consumer sentiment and inflation at historic peaks. Meanwhile, cryptocurrencies are taking advantage of the short-term improvement in sentiment and trying to reverse the trend.

The number of Ethereum addresses holding more than 100 ETH tokens has been rising since mid-May 2022 after almost a year of consolidation, forming a saucer-like formation. It can be seen that the number of addresses above 100 ETH has increased significantly after the declines of late May and early June this year, holders decided to take advantage of the declines of June and July to accumulate. This all points to a growing interest in Ethereum as 'the merge' approaches. Currently, the number of addresses is trying to rise above the average at 45,000. Source: Glassnode

The chart (daily moving average) shows a spike in active Bitcoin supply (above 1,500 BTC). Some addresses are clearly using the current unwinding as a selling opportunity, and BTC's dominance unexpectedly continues to fall in favor of altcoins. Source: Glassnode

The chart shows the volume transfer in the loss, which caused a spike in Bitcoin's price each time. The situation occurred after Luna's bankruptcy and in the face of BTC drops below $20,000. The market looks oversold, and 'fatigue of recent active supply' justifies the current return of buyers. Source: Glassnode

Ethereum is currently struggling to break out above the upper limit of the downtrend marked by the red line. A test of the psychological level of $1500 may prove to be no less important from the perspective of technical analysis. Currently, we can consider the zone around $1300 as local support. Source:xStation 5

On the D1 interval, Bitcoin is heading towards important resistance zones, defined by the SMA 50 (blue curve), the upper limit of the local uptrend and the level of the June 14 and 16 peaks. The key support is still the lower limit of the previously mentioned trend. Source: xStation 5 

Bitcoin is struggling to break out above the 200-week moving average (golden curve). Source: xStation 5