TA Tuesday: Low volatility here to stay as BTC and ETH hold steady

The 2022 year-end for crypto went as expected: quiet price action.

  • BTC: USD 17,718 (-1.17% WoW)

  • ETH: USD 1,215 (-0.98% WoW)

  • ETHBTC: 0.0727 (+0.51% WoW)

Since Dec 24th, BTC has been trading range bound: between USD 16,330 and USD 16,960, and ETH between USD 1,180 and USD 1,230.

The 30-day RV dropped from 32% to 27% for BTC, and from 53% to 43% for ETH, both of which are in the bottom 1% of the 1-year historical observations.

Looking at the spillover effects with NDX: 30-day beta and 30-day correlation for BTC are 0.61 and 0.51, respectively, and for ETH they are 0.86 and 0.46, respectively.

The beginning of the year typically brings new capital to the markets (i.e. net inflows), which results in higher prices. Given the current circumstances, my bias is that new capital in crypto will not be deployed soon. Instead, I would rather expect portfolios to be rebalanced from small caps to big caps (i.e. from small coins to BTC and ETH), which would result in lower prices across the board, with BTC and ETH holding steady in a low volatility environment, and with correlation and beta and Nasdaq hitting new lows.

  • Looking at BTCUSD 1d:

    Support is at USD 15,400 and resistance is at USD 18,500.

  • Looking at ETHUSD 1d:

    Support is at USD 1,050 and resistance is at USD 1,350.

On the macro side:

This week, the FOMC minutes will be released on Wednesday, the ADP Payroll preview will come out on Thursday, and the NFP figure will be released on Friday. I am not expecting anything extraordinary, but we could see some volatility as we approach the press releases.

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