TA Tuesday: Cryptocurrencies inch higher due to low volumes and lack of selling

Crypto momentum remains high on the wave of short liquidations, lack of selling, and quiet macro and microenvironments.

  • $BTC: $21,110 (+22.76% WoW)
  • $ETH: $1,562 (+18.51% WoW)
  • $SOL: $23.42 (+44.03% WoW)
  • Total Market Cap: B$943.71 (+17.08% WoW)

Excluding some outliers, most digital assets printed high returns over the last week, with BTC and ETH outperforming the crowd.

I typically never like/trust price actions that come with low volume, and even less so when they come over the weekend. As many others have already pointed out, this price action is the result of short liquidations, and even more so, by a lack of selling. With BTC miners starting to accumulate, and the hash rate hitting new highs, buyers have literally been hitting the LoB (Limit Order Book).

Similarly, the lack of news – both in terms of macro and crypto-specific events – have been proven to be a fertile ground for higher prices.

As we mentioned last week in “Crypto trading higher on the wave of better-than-expected macro”, crypto sentiment looked good from many different points of view. Now, I believe it looks too good.

The next two weeks will tell if BTC and co. are able to sustain these prices, as I would expect many traders to take profit into these highs.

Looking at the derivatives side, the market looks a bit too optimistic to me.

The 25-delta skew (P-C) is in negative territory, and this has rarely been the case. We are now in a high vol-of-vol environment with weekly straddle now implying a +/- 3.95% move. I am biased towards low volatility again until new US Figures and crypto-specific news come out.

Chart 1: BTC 25-delta Skew (Put-Call), source: laevitas.ch

Looking at the charts:

  • BTCUSD broke the $18,500 resistance and is now trading in an area of consolidation between 19,800 and 22,150. RSI is overbought, and therefore we might see some range-bounded prices in this area.

  • ETHUSD broke the $1,350 resistance, and is now approaching $1,660, which has been an important support/resistance level since May 2022. RSI is overbought and it might find consolidation above $1,400.

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