Crypto newsletter: Bitcoin broke above $50,000 during Christmas break

• Bitcoin reclaims $50000 level
• Ripple sales rose sharply through 2021
• US Senator Cynthia Lummis reveals plans for a cryptocurrency overhaul in 2022

The last seven days were very positive for Bitcoin, which price rose almost 10% and broke above $50000 level as ‘Santa rally’ gripped crypto markets on Friday. Also some altcoins like Polkadot and Cardano outperformed BTC. Moves on the global financial markets are muted following a Christmas weekend. Liquidity conditions are expected to be thin this week with numerous banking holidays observed in the developed world this week. In spite of cryptocurrency markets being open seven days a week, volatility on the digital currencies market also decreased in recent days. On the other hand, it is worth noting that the end of the year, and first days of January are usually positive for Bitcoin. Seasonality shows that the 10-year average return for Bitcoin in the last week of December was around 15% and for January it is around 11%. In December 2020 Bitcoin price jumped nearly 50%. However, the market was in a clear upward trend back then and now bears still remain in control. 

Bitcoin:

• Crypto trading activity was mostly muted on Christmas day and the day after. Bitcoin’s trading volume across major centralized exchanges was low

Trading activity dropped during the Christmas season. Source: Coindesk/CryptoCompare

• On-chain indicators which monitor bulls and bears behavior are showing signs of a potential turnaround. “Big thing I keep my eyes on is for when the trend for both net realized profit and loss decrease to low levels,” Twitter account On-Chain College noted Sunday, highlighting data from on-chain analytics firm Glassnode. “Tells me that sellers may be exhausted, and we potentially could have more drastic price movement if buyers step in.”

Bitcoin net realized profit/ loss annotated chart. Source: On-Chain College/ Twitter

The Crypto Fear & Greed Index fell from last week's high of 45 and currently stands at 40, which corresponds to the "fear" mode which shows that sentiment has been particularly sensitive to even small price fluctuations in recent days. Therefore even news that under normal circumstances would not significantly affect the market or any price jitters could lead to more emotional reactions from investors.

Crypto Fear & Greed Index. Source: Alternative.me

• Bloomberg has reported that Sen. Cynthia Lummis, a Wyoming Republican Senator, proposes legislation to appoint a new regulatory entity for oversight of cryptocurrencies in 2022. The legislation is yet to be filed and includes a mandate for the new organization to be formed under the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). The focus of the legislation remains on stablecoin regulation and consumer protection. 

BITCOIN price managed to break above the psychological $50 000 level and is currently testing another major resistance at $51,000 which coincides with downward trendline, 200 SMA (red line) and previous price reactions. Should break higher occur, the next target for buyers is located around $54 000 level which is strengthened by 38.2% Fibonacci retracement of the upward wave launched back in July 2021. On the other hand, if sellers manage to regain control, then nearest support is located at $49 100. Source: xStation5

Ripple:

• 2021 has been one of the best years for Ripple as its On-demand liquidity (ODL) platform witnessed 25x growth in transactions.
• The ODL platform was first launched between Japan and the Philippines, followed by the Middle East. On-chain activity on the platform continued rising, increasing the utility and adoption of XRP since it is the native token. 
• The spike in on-chain activity and increase in the number of partner countries on the ODL network points to Ripple’s growth and support of bullish sentiment despite ongoing lawsuit with SEC. 

Ripple sales rose sharply in 2021 mainly thanks to high demand for ODL services. Source: www.cryptelites.com

Ripple, like the entire cryptocurrency market, has experienced strong declines in November and beginning of December, however buyers managed to halt declines around major support zone at $ 0.70, which coincides with 78.6% Fibonacci retracement of the last upward wave, lower limit of the 1:1 structure and upward trendline. Ripple rose sharply last week and tested psychological $1.00 level, however buyers failed to uphold momentum and price pulled back to $0.90. Nevertheless as long a s the price sits above, further upward impulse may be launched. On the other hand, should sellers regain control, downward move may accelerate towards aforementioned support at $0.70 may be launched. Source: xStation5

Cardano:

• Input Output Hong Kong, the software firm that developed Cardano has revealed plans to bring assurance to decentralized applications. 
• New plan could benefit smart contract developers and end-users by introducing certification levels.
• Cardano’s security checks will ensure that user funds and project reputation is protected from exploits.

CARDANO price bounced off the $1.22 level which is marked with lower limit of the 1:1 structure and is currently testing the earlier broken lower limit of the triangle formation which coincides with 50 SMA (green line). Should a break higher occur, the next target for buyers is located at $1.79. Source: xStation5