Cryptocurrency Market Round-Up

Typically, cryptocurrencies use blockchain technology to record every transaction and are termed digital currencies. There are ~9k+ crypto coins available in the market. Theta (THETA) is an end-to-end infrastructure network built for video streaming purposes. THETA mainnet was launched in March 2019 that serves as a decentralized network for users to share bandwidth and computing resources on a peer-to-peer (P2P) basis. THETA has a market capitalization of ~USD 2.94 billion (as per TradingView as of January 27, 2022). Polygon (MATIC) formerly known as Matic Network is an Ethereum scaling and infrastructure development platform that supports building different types of applications. It can be used to create infra required by the developer such as optimistic rollup chains, standalone chains, ZK rollup chains, etc. MATIC has a market capitalization of ~USD 11.19 billion (as per TradingView as of December 27, 2022).

Last week, the benchmark S&P Cryptocurrency Broad Digital Market (BDM) Index started on a negative tone and maintained a strong bearish momentum for the entire week. The index dropped by 613.99 points (~14.48%) to 3625.83 for the week ending January 21, 2022. In the current week starting January 24, 2022, the index is trading with negative momentum. While other major cryptocurrencies such as Bitcoin and Ethereum witnessed positive momentum for the week.

Having understood the S&P Cryptocurrency BDM Index movement over last week and scenario for the upcoming week, two cryptocurrencies that seem ‘Attractive’ or ‘Non-Attractive’ at the current levels are Theta Token (THETA)  and Polygon (MATIC) Perpetual Futures basis the below technical parameters: -

Theta Token (THETA) 

Noted below are the generic insights, indicative entry price, resistance levels, and stop-loss for the next 1-2 weeks duration for the THETA:

Entry level and Resistance Levels as mentioned herein are only indicative in nature as per trend analysis and further evaluation is required when looking at cryptocurrency under discussion.

Note: The reference Information in this report has been sourced from TradingView.

THETA Technical Analysis Summary (On the 4 hourly Chart):

On the 4 hourly chart, Theta Token price witnessed a breakout of the downward sloping trendline resistance at USD 2.72 level on January 26, 2022. After the breakout, prices have sustained above the downward sloping trendline support level. Moreover, the leading indicator RSI (14-period) is trading at ~51.46 level, indicating bullish momentum. Further, the prices are trading above the trend-following indicator 21-period, indicating positive momentum in the cryptocurrency.

4 hourly Chart

The momentum indicator MACD is showing a positive crossover, indicating a bullish stance. Moreover, the prices are trading above the Parabolic SAR indicator, which may act as a crucial support level. Now the next resistance level appears to be at USD 3.38, and prices may test that level in the coming sessions (1-2 weeks).

Noted below are the key positives and negatives when looking at Theta Token in the cryptocurrency space: -

THETA:

Key Positives:

• Trade Benefit: THETA token is a native token of Theta, blockchain technology for P2P decentralized video streaming. These tokens are paid to users for sharing bandwidth. Users can stake THETA coins to become a Validator or Guardian node and contribute to the governance. THETA token can be traded for other cryptocurrencies and fiat money. In addition, advertisers can use THETA tokens to purchase ad space and sponsorships on the theta.tv platform.
• Gaining Prominence: THETA tokens boast popularity with co-founder from YouTube and partnership arrangements with Samsung VR that aims to lower viewing costs and generate higher revenue for content creation.

Key Negatives:

• Illiquidity: THETA coin has limited liquidity. The maximum number of coins issued is set at one billion. Besides, a large number of tokens are with early investors who may cash out by selling the coins which may influence the trading price. (Source: Coinmonks)
• Centralized Distribution: In the initial distribution of tokens, only 30% of tokens are for trading, while the rest are with stakeholders like partners, advisors, network seeding, Labs Reserves, etc. This may affect the trade volume and price.

Conclusion:

Based on the above-mentioned price action analysis and technical indicators outlook, THETA may witness movement in an upside direction. The trend looks to be in an interesting space and the currency looks ‘Attractive’ given the current price of USD 2.878 (as on January 26, 2022, at 10:40 PM, (GMT-5) Time in Eastern, KY, USA). However, volatility in the price should be borne in mind when looking at further evaluation for investment scenarios.

Polygon (MATIC) Perpetual Futures:

Noted below are the generic insights, indicative entry price, support levels, and stop-loss for the next 1-2 weeks duration for the MATIC:

Entry level and Support Levels as mentioned herein are only indicative in nature as per trend analysis and further evaluation is required when looking at cryptocurrency under discussion.

Note: The reference Information in this report has been sourced from TradingView.

 MATIC Technical Analysis Summary (On the Daily Chart):

On the daily chart, Polygon prices are sustaining below the horizontal trend line at USD 1.785 level and facing resistance of the trendline. Moreover, the prices are trading below the trend-following indicators 21-period and 50-period SMA, indicating bearish momentum in the cryptocurrency. Further, the leading indicator RSI (14-period) is trading at ~32.27 level, indicating negative momentum.

The momentum indicator MACD is trading in negative territory, indicating a bearish bias. Moreover, the prices are trading below the Parabolic SAR indicator, which may act as a resistance zone. Now the next support level appears to be at USD 1.26, and prices may test that level in the coming sessions (1-2 weeks).

Noted below are the key positives and negatives when looking at Polygon in the cryptocurrency space: -

Key Positives:

• Secure and Scalable: The four layers, namely, Ethereum layer, Security layer, Polygon Networks layer, and Execution layer, made smart contracts reliable and more secure in the Ethereum blockchain platform. The Plasma Chains solves the scalability issue in Ethereum that allows developers to build their own decentralized apps. It also helps transactions to be taken off from the main blockchains into secondary chains making transactions faster and cheaper.
• Developers Strength: Due to its ability to create decentralized applications, it had attracted handful of projects on Ethereum platform such as Aavegotchi, Neon District gaming application, Decentraland virtual world, Polymarket prediction market, and SportX gambling application. It is also collaborating with Trace Network to bring transparency for retail brands to shift to token-based purchases.
• Faster Transactions: Polygon handles 65,000 transactions per second with a block confirmation time of below two seconds (Source: coincircle). It uses ERC-20 token as a settlement currency between users in the transaction.

Key Negatives:

• Threat of Ethereum 2.0: The transition to Ethereum 2.0 to take effect by the end of 2021 or early 2022 is expected to boost transaction speed from 15-20 TPS (transaction per second) to whopping 100,000. This will significantly affect Polygon as users may migrate to Ethereum.
• Limited Scope and High Competition: The Polygon is simply created to widen the scale of Ethereum. It faces competition from Polkadot and Chainlink offering same scalability solution as Polygon.

Conclusion:

Based on the above-mentioned price action analysis and technical indicators outlook, Polygon perpetual futures may witness movement in the downside direction. The trend looks to be in an interesting space and the currency looks ‘Non-Attractive’ and might witness correction given the current price of USD 1.5919 (as on December 27, 2022, at 04:15 PM, (GMT-5) Time in Eastern, KY, USA. However, volatility in the price should be borne in mind when looking at further evaluation for investment scenarios.

Investment Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.80:1.00), however, returns are generated within 1-2 weeks’ time frame. This may be looked at by Investors with sufficient risk appetite looking for returns within a short investment duration. Insights provided in this report are solely based on technical parameters; however, there are other factors which could impact Cryptocurrency prices which include market risks, regulatory risks, interest rates risks, and social and political instability risks, etc.

Note 1:  When a Cryptocurrency price is expected to move upward in the short-term (1-2 weeks), it is termed as 'Attractive’, while if a downward movement in prices is expected in a Cryptocurrency it is termed as 'Non-Attractive'. In general, for an ‘Attractive’ cryptocurrency an exit position can be considered if the Resistance Levels or Indicative Stop loss mentioned as per the technical analysis has been achieved. If the cryptocurrency looks ‘Non-attractive’ an exit position can be considered if the Support Levels or Indicative Stop loss mentioned as per the technical analysis has been achieved.

Note 2: How to Read the Chart?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50-period SMA. SMA helps to identify existing price trends and if the prices trade above the 21-period and 50-period SMA, then in general it shows an uptrend trend.

The Black colour line in the chart’s lower segment is a 14-period Relative Strength Index (RSI) which indicates momentum in trend. A reading of 70 or above suggests overbought status, while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the Cryptocurrency. The volume is the quantity that changed hands during the given period. Cryptocurrencies with high volumes are more liquid compared to lesser once and higher volumes help in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level where-in the cryptocurrency prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the cryptocurrency prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the cryptocurrency prices.

Risk Reward Ratio: The risk reward ratio is the difference between an entry point to a stop loss and profit level. It is suggested to monitor the price carefully looking at ~80% Stop Loss of Resistance 1 from the entry point.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. It is suggested to Trail the Stop-Loss as per the aforementioned levels if the Cryptocurrency price achieves more than 60% of the Resistance 1. Investors, in general, might consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 60% of Resistance 1. However, these indications need further evaluation basis associated risks and any change in trends.

The reference date for all price data, volume, technical indicators, support, and resistance levels is as of January 27, 2022, at 04:15 pm, (GMT-5) Time in Eastern, KY, USA.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any Cryptocurrency evaluation. The above are illustrative analytical factors used for evaluating the Cryptocurrency; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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