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. FTX Token (FTT) is a cryptocurrency token of the crypto derivatives trading platform FTX. It was launched by some of the largest crypto traders who found issues with mainstream crypto futures exchanges. Some of the distinguishing features of FTT are a centralized collateral pool, clawback prevention, and universal stablecoin settlement. FTT has a market capitalization of ~USD 5.62 billion (as per TradingView as of January 20, 2022). Elrond (EGLD) is a blockchain protocol launched in August 2019, and its mainnet went live in July 2020. EGLD offers remarkably fast transaction speeds by using sharding. EGLD has a market capitalization of ~USD 3.53 billion (as per TradingView as of January 20, 2022).

Last week, the benchmark S&P Cryptocurrency Broad Digital Market (BDM) Index started on a negative tone but settled in the green. The index advanced by 139.29 points (~3.40%) to 4239.82 for the week ending January 14, 2022. In the current week starting January 17, 2022, the index is trading with negative momentum. Moreover, other major cryptocurrencies such as Bitcoin and Ethereum witnessed bearish momentum for the week.

Having understood the S&P Cryptocurrency BDM Index movement over last week and scenario for the upcoming week, one cryptocurrency that seems ‘Attractive’ at the current level appears to be FTX Token (FTT) basis the below technical parameters: -

FTX Token (FTT)

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

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.

FTT Technical Analysis Summary (On the Daily Chart):

On the daily chart, FTX Token price witnessed a breakout of the falling channel pattern at USD 44.30 level (on January 15, 2022). Since the breakout, prices are sustaining above the channel pattern, which indicates bulls are in action. Moreover, the leading indicator RSI (14-period) is trading at ~63.70 level, indicating bullish momentum. Further, the prices are trading above the trend-following indicators 21-period and 50-period SMA, indicating positive momentum in the cryptocurrency.

Daily Chart

The momentum indicator MACD is trading in a positive territory, 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 55, and prices may test that level in the coming sessions (1-2 weeks).

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

Key Positives:

• Discount and Privileges: FTX Token (FTT) is a native token of FTX, a crypto derivatives trading platform. FTT offers huge discounts on trading fees to users from 3% to 60% based on FTT Holding. Besides, these tokens can be placed as collateral for trading in futures. The stakeholders are eligible to get extra votes on the FTX platform based on their trading volume and number of tokens held.
• Underlying Value: The value of FTT is derived from the rapidly growing FTX platform. With over 300 cryptocurrencies (as per coinbureau.com), FTX caters to both retail and institutional traders with a variety of innovative products that includes Bitcoin options, 45 leveraged tokens, 20 perpetual swaps, MOVE contracts, and prediction markets.
• Preferential Rights to Users: The users will have the benefit in the token burning process with one-third portion of fees paid are utilized to repurchase FTT tokens. In addition, users are backed by the Backstop Liquidity Provider Program, which protects against bankruptcy.

Key Negatives:

• Token Restrictions: U.S. residents are not legally allowed to trade on FTT tokens. It is not listed on top cryptocurrency exchanges in the U.S. Further, trading in the FTX platform is not legally available in Cuba, Syria, Iran, North Korea, Antigua or Barbuda, Crimea and Sevastopol.
• Not Suitable for Novice Investors: FTT tokens are restricted to professional traders in spot and futures. FTX is relatively a new platform started in 2019. Investments in leveraged tokens are risky and are not recommendable for the novice.

Conclusion:

Based on the above-mentioned price action analysis and technical indicators outlook, FTT 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 47.11 (as on January 20, 2022, at 12:15 AM, (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.

Elrond (EGLD):

EGLD Technical Analysis Summary (On the Daily Chart):

EGLD prices broke its crucial support level of USD 259 in December 2021, and the prices are sustaining below the mentioned level in January 2022. However, prices have come down to its golden Fibonacci ratio from where correction might occur. There is a positive RSI divergence as clearly visible on a daily chart that also indicates prices might recover from lower levels. However, the candlestick pattern does not provide any clear reversal sign yet. The immediate support levels are USD 152 and USD 135 while the immediate resistance levels are USD 183.50 and USD 205.80.

Daily Chart

Conclusion:

Considering the above price action and technical indicators, there is no clear direction for the EGLD so it is prudent to 'Watch' the cryptocurrency for any action near support and resistance levels indicated above. Investors might consider EGLD crypto currency near the support of USD 152 for a resistance level of USD 183.50 based on their risk appetite. We will further evaluate the currency as per the direction it takes within the next few weeks.

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: In general, an exit position can be considered if the Resistance 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 20, 2022, at 12:15 am, (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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