Relief Rally Lifts Risk Appetite

24.11.22 12:37 AM By Stormrake

Crypto markets have taken a pause from relentless selling as participants assume most market contagion has been identified. The relief rally has brought along with it an increased risk appetite as traders and investors find ways to claw back losses from a brutal 2022.

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

Altcoins Catching Bids

Interactive chart: click on image for higher resolution

A wild variety of altcoins have recently caught some attention and have been getting a nice lift in market prices. It includes Proof-of-Work asset, Litecoin as it has recently undergone it's own halvening cycle and had it's supply emissions reduced. DeFi token, Curve has recently undergone a short squeeze, as Aave (lending protocol) has been exploited. The attacker borrowed a significant amount of CRV tokens by posting USDC as collateral and let the debt turn toxic, as the smart contract would have had to liquidate the attacker's USDC and buy back CRV. This causes a short squeeze as the position was on-chain and traders started to pile into CRV long positions. Even embattled tokens such as Apecoin and Solana have managed to catch a bid in this risk-on environment but it would be wise to proceed with caution, markets are trading on a knife's edge and won't take much to turn sentiment around.

Layer 2 Wars Rage On

With all the chaos in the wider crypto markets, the layer two wars have taken a backseat but they continue to rage on. Over the last 6 months, Layer two solutions have overtaken Ethereum maninnet transaction settlement, with Arbitrum counting for nearly half of all layer 2 transactions. Layer 2 solutions have also onboarded 1 million new users over the last 30 days, showing the need for cheaper and faster on-chain transactions, have only accelerated despite the savage bear market. We will keep on watching this space, as the next 6 months will bring plenty of opportunities for traders to take advantage of and etch out some alpha.

BTC/USD key levels

Bitcoin has found support at $15,588 USD and now just trades above our pivotal key level of $16,500. It's decision time for Bitcoin for if it holds above $16,500 it can make a run higher and retest $17,189. If it manages to close above $17,189 on the daily chart, watch out for a sharp move to the $18,217 handle. To the downside, if it loses $16,500 it will head right back to its 2022 low of $15,588. Should a risk-off environment pop up over the next few days, a move towards $14,444 cannot be ruled out.

ETH/USD key levels

Ethereum had a stellar session overnight and now flirts with our key level of $1,190 USD. If we can close above $1,190 then we will watch for an explosive move to $1,333. Reclaiming $1,333 on the daily chart and a retest of $1,472 by week's end cannot be ruled out. To the downside, if we fail to close above $1,190 on the daily chart, we will look for a retest of the double bottom level of $1,071. If we slice through, $1,071 it can melt a further 6% to the $1,000 handle before finding meaningful support.

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

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