Crypto Market Round-Up

Typically, cryptocurrencies are termed as digital currencies and use blockchain technology to record every transaction. NEAR Protocol (NEAR) was created by NEAR Collective, a community that works on initial coding and releases updates to resolve blockchain constraints such as slow transaction speeds, inferior throughput, and poor interoperability. NEAR has a market capitalization of ~USD 8.21 billion (as per TradingView as of May 30, 2024).

Last week, the benchmark S&P Cryptocurrency Broad Digital Market (BDM) Index started on a positive note and maintained a bullish momentum for the entire week. The index advanced by 261.37 points (~5.78%) to 4786.65 for the week ending May 24, 2024. In the current week starting May 27, 2024, the index is trading with negative momentum. Moreover, other major cryptocurrencies, such as Bitcoin and Ethereum, are witnessing bearish momentum for the current week.

Having understood the S&P Cryptocurrency BDM Index movement over the last week and the scenario for the upcoming week, one crypto that seems ‘Bearish’ at the current level appears to be NEAR Protocol (NEAR) Perpetual Futures based on the below technical parameters: -

NEAR Protocol (NEAR) Perpetual Futures:

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

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.

NEAR Technical Analysis Summary (On the Daily Chart):

On the daily Chart, NEAR’s prices are trading below the falling trend line resistance zone at the USD 8.35 level and continuously facing resistance from the trendline, indicating negative biasness in the price action. Moreover, the prices are trading below the trend-following indicator 21-period SMA, indicating downside momentum in the cryptocurrency. Further, the leading indicator RSI (14-period) is showing a reading of ~49.09 level.

The momentum indicator MACD histogram is trading below the centerline, supporting a negative stance. However, the prices are trading above the Parabolic SAR indicator, which may act as a support level. Now the next support level appears to be at USD 6.48, and prices may test this level in the coming sessions (1-2 weeks).

Noted below are the illustrative points as key positives and risks when looking at NEAR Protocol (NEAR) in the cryptocurrency space: -

Illustrative points as Positives:

• Widely Used Application: NEAR is a native currency of NEAR Protocol, a proof-of-stake blockchain technology that helps to execute smart contracts and to host DApps. It is a widely used application with a ‘Nightshade’ mechanism that uses sharding technology to ensure infinite scalability. NEAR tokens are distributed to developers who create smart contracts and to validators.
• Seamless Integration: NEAR’s integration with the TERA network took the price of the NEAR coin off the charts during late December 2021. NEAR network runs with Ethereum, Polkadot, Cosmos thus ensuring seamless communication between networks.

Illustrative points as Risks:

• Distorted Distribution: Of the total tokens, 36% were distributed to the core team and initial fund sponsors, and only 12% is available to the community making it less liquid (cryptovantage.com). The validators require to get a ‘seat’ depending on how much NEAR is being staked by others thus making validation expensive.

Conclusion:

Based on the above-mentioned price action analysis and technical indicators outlook, NEAR Protocol (NEAR) perpetual futures may witness movement in the downside direction. The trend looks to be in an interesting space and the currency looks ‘Bearish’ given the current price of USD 7.478 (as on May 30, 2024, at 08:30 AM, (GMT+1) Time in London, UK. However, volatility in the price should be borne in mind when looking at further evaluation for investment scenarios. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while making investment decisions.

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 report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the cryptocurrency has not been considered in the decision-making process. Other factors which could impact the cryptocurrency prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.

Markets are trading in a highly volatile zone currently due to certain macro-economic and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Trend Indications

Bullish Trend is generally used in information services and financial reporting as a trend typified with an upward momentum in prices based on the market sentiments, overall price action, and technical analysis. Typically, Resistance Levels or Indicative Stop loss levels need to be evaluated for exit triggers. 

Bearish Trend is generally used in information services and financial reporting as a trend typified with a downward movement in prices based on the market sentiments, overall price action, and technical analysis. Typically, Support Levels or Indicative Stop loss levels need to be evaluated for exit triggers.

When we identify trends as ‘Bullish’ or ‘Bearish’ it is based on a technical analysis of the available data as we understand it and is not, and should not be considered as, either advice or a recommendation to buy, sell or hold the relevant cryptoassets.

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 at which the Cryptocurrency prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the Cryptocurrency and if the price breaches the level, then Support 2 may act as the crucial support level for the Cryptocurrency.

Resistance: A level at which the Cryptocurrency prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the Cryptocurrency and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the Cryptocurrency.

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

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. individuals, 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, currency, technical indicators, support, and resistance levels is May 30, 2024 at 08:30 AM, (GMT+1) Time in London, UK.  S&P Cryptocurrency BDM Index in this report has been sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar

Note: This publication is for informational purposes only based on technical analysis and does not reflect the fundamental validity of the cryptoasset. It in no way constitutes investment advice or a recommendation to buy, sell or hold financial instruments. Trading decisions require a thorough analysis by investors taking account of a range of factors, including in relation to cryptoassets in themselves, general market trends and an investor’s own ability and appetite to take risks and bear losses. Past performance is neither an indicator nor a guarantee of future performance.

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