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Bitcoin (BTC) could still crash to $29,000 and lower, but price action is “healthier” than a week ago, the latest research concludes.
In a fresh market update on Friday, analysts at trading suite Decentrader said that BTC price action is finally showing “green shoots of optimism.”
After a difficult week in which BTC/USD dipped to just under $33,000, market analysis is now focusing on the likely outcomes of the rangebound behavior seen over the past few days.
For Decentrader, there is reason to be cautiously optimistic now where there was none a week ago.
“We believe that the current derivatives landscape shift and this extremely negative sentiment backdrop does increase the potential for at least a near-term relief bounce,” analysts summarized.
The reason lies in factors that had previously not fully “reset” as price action declined, notably the structure of derivatives markets. These include open interest declining toward less speculative levels, along with deepending negative funding rates.
As Cointelegraph explained, negative rates correspond to overall market sentiment calling for fresh losses — often perfect conditions for an upward price shift.
“We are now also beginning to see meaningful buyers step in, which is driving a potential change in the higher time frame trend from bearish to bullish,” the market update added about the additional positive pressure on the available BTC supply.
Selling overall, while uncharacteristic of bull markets, hints that those behind it are taking losses.
Going forward, the outlook for support is a bounce zone at $29,650, something tha would itself only come into play should several other areas above $30,000 fail to hold.
To the upside, meanwhile, resistance lies between $38,850 and $39,700, Decentrader said, followed by a significant “empty” patch to $47,900 and then $53,400.
“Support remains for now at $32,700 though there is some argument to suggest that price reached that level with Monday’s wick falling just $300 short of it,” the update reads.
“Beyond that level, the next support is just shy of $30k, at $29,650 leaving the door open for a potential sub-$30K liquidity grab.”
Sentiment, in line with funding, continues to stay in “extreme fear,” as per the Crypto Fear & Greed Index, this now rivaling the 2018 bear market trough and the March 2020 coronavirus crash in terms of record-breaking length.
The selling in Bitcoin (BTC) is showing no sign of abating and Bitcoin has fallen for seven straight weeks for the first time ever. This indicates that the momentum remains strongly in favor of the bears.
While the short-term sentiment remains bearish, institutional traders seem to be taking a longer-term approach on cryptocurrencies. Goldman Sachs and Barclays joined several other institutional investors in a $70 million Series A funding round by institutional trading platform Elwood Technologies.
After the mayhem and volatility of the last week, crypto prices may attempt a relief rally in the next few days. It is unlikely to be a V-shaped recovery because the macro conditions are not supportive. During periods of high volatility and uncertainty, it might be a wise decision to cut down on the trading position size to keep risk under check.
What are the critical support and resistance levels that may indicate a potential change in trend when breached? Let’s study the charts of the top-10 cryptocurrencies to find out.
Bitcoin turned down from $3,460, suggesting that bears are selling on minor rallies. The bears will now attempt to sink the price below the crucial support at $28,805 but the bulls are likely to have other plans.
If price rebounds off $28,805, the bulls will again try to push the BTC/USDT pair to the 20-day exponential moving average (EMA) ($33,646). This is an important level to keep an eye on because a break and close above it could indicate that bulls are attempting a comeback. The pair could then rise to the 50-day simple moving average (SMA) ($39,300).
Contrary to this assumption, if the price slips below $28,805, the pair could drop to $26,700. If this support cracks, the pair could resume its downtrend and the price may plummet to $25,000 and later to $21,800.
Ether (ETH) is facing stiff resistance at the breakdown level at $2,159, which suggests that bears continue to sell on rallies. The bears will now try to pull the price below the immediate support at $1,940.
If they succeed, the ETH/USDT pair could drop to the critical support at $1,700. This is an important level for the bulls to defend because if they fail to do that, the downtrend could resume and the pair may drop to $1,500.
Contrary to this assumption, if the price turns up from $1,700, the pair could rise to $2,159 and remain range-bound between these two levels.
The first sign of strength will be a break and close above $2,159. That could clear the path for a rally to the 20-day EMA ($2,421). The bulls will have to overcome this barrier to indicate that the downtrend may be over.
BNB‘s strong recovery reached near the breakdown level at $320 on May 13 and 15 but the bulls could not clear this overhead barrier. This suggests that bears are attempting to flip the level into resistance.
The BNB/USDT pair could now drop to $265, which is likely to act as support. If the price rebounds off this level, the buyers will again try to drive the pair above $320. If they succeed, the pair could rally to $350 and thereafter to the 50-day SMA ($391).
Alternatively, if the price slips below $265, the pair could drop toward the strong support at $211. The bulls are expected to defend this level with vigor. A strong bounce off this support could keep the pair range-bound between $211 and $320 for the next few days.
The long wick on Ripple’s (XRP) May 13 candlestick suggests that bears are trying to pose a strong challenge near the breakdown level at $0.50. The failure to rise above this overhead resistance could have tempted short-term traders to book profits.
If the price continues lower and breaks below $0.38, the XRP/USDT pair could drop to $0.33. The bulls are expected to defend this level aggressively but if the support cracks, the bearish momentum could pick up and the pair may plummet to $0.24.
Contrary to this assumption, if the price turns up from the current level or the support at $0.38, the bulls will try to push the pair above the $0.50 to $0.55 overhead zone. If they succeed, it will suggest that the markets have rejected the lower levels. That could clear the path for a potential rally to the 50-day SMA ($0.67).
Cardano’s (ADA) relief rally is facing selling near $0.61, suggesting that bears are not willing to let go of their advantage. The bears will try to pull the price below $0.46 and retest the May 12 intraday low at $0.40.
If the price breaks below $0.40, the selling could intensify further and the ADA/USDT pair may plunge to $0.33 and later to $0.28.
Conversely, if the price turns up from the current level or the support at $0.46, it will suggest that bulls are attempting to put in a bottom. The buyers will have to push and sustain the price above the 20-day EMA ($0.68) to signal that the correction may be over. The pair could then rise to $0.74 and later to the 50-day SMA ($0.89).
Solana’s (SOL) bounce from $37 is facing stiff resistance at the 38.2% Fibonacci retracement level at $59. This suggests that bears continue to sell on minor rallies.
The bears will now try to pull the price below the immediate support at $44. If they succeed, the SOL/USDT pair could retest the crucial level at $37. A break and close below this support could sink the pair to $32.
Conversely, if the price turns up from the current level or the support at $44, it will suggest that bulls are buying on dips. The bulls will then try to clear the overhead hurdle at $59 and push the pair to the 20-day EMA ($70). This level is likely to act as a stiff resistance.
Dogecoin’s (DOGE) recovery could not rise above the breakdown level at $0.10, suggesting that the bears are trying to flip the level into resistance. If sellers succeed in their endeavor, the likelihood of a retest of $0.06 increases.
This is an important level for the bulls to defend because a break and close below it could signal the resumption of the downtrend. The DOGE/USDT pair could then drop to $0.04 where the bulls may again try to arrest the decline.
Alternatively, if the price turns up from the current level, the bulls will attempt to clear the overhead hurdle at $0.10 and the 20-day EMA ($0.11). If they do that, the pair could rally to the 50-day SMA ($0.13).
Polkadot (DOT) climbed back above the breakdown level of $10.37 on May 13 but the recovery stalled near $12. This suggests that the sentiment remains negative and traders are selling on rallies.
If bears sink the price below $10.37, the DOT/USDT pair could drift lower toward the minor support at $8. If this level cracks, the possibility of a break below $7.30 increases. The pair could then resume its downtrend and plummet toward the next strong support at $5.
Alternatively, if the price rebounds off $10.37 or $8, the bulls will attempt to push the pair above the 20-day EMA ($13). If they manage to do that, it will suggest that the short-term trend may have turned in favor of the buyers. The pair could then attempt a rally to $16.
Avalanche’s (AVAX) recovery is facing stiff resistance at $38. The shallow rebound following a sharp decline suggests a lack of aggressive buying by the bulls. This could embolden the bears who may try to build upon their advantage.
If bears pull the price below $29, the selling could pick up momentum and the AVAX/USDT pair could drop to the critical level at $23. This is an important level for the bulls to defend because a break and close below it could result in a decline to $20 and thereafter to $18.
Contrary to this assumption, if the price turns up from the current level or $29, it will suggest that bulls are buying at lower levels. That could increase the possibility of a relief rally to the 20-day EMA ($48) where the bears may again mount a strong defense.
Shiba Inu’s (SHIB) rebound hit a wall at the 38.2% Fibonacci retracement level at $0.000014 on May 13 and 14, indicating that bears do not want to let go of their advantage.
The bears will once again try to sink the price below the psychological level at $0.000010 and challenge the intraday low of $0.000009 made on May 12. A break and close below this level could signal the resumption of the downtrend. The SHIB/USDT pair could then decline to $0.000007, which is likely to act as a strong support.
Contrary to this assumption, if the price rebounds off $0.000010, the bulls will attempt to push the pair to the breakdown level at $0.000017. The buyers will have to clear this hurdle to suggest that the bears may be losing their grip.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.
Crypto investment giant Grayscale is expanding operations by launching a new crypto-linked exchange-traded fund (ETF) in Europe.
Grayscale officially announced its first European ETF, called Grayscale Future of Finance UCITS ETF, on May 16.
The new investment product is getting listings on major European stock exchanges, including the London Stock Exchange, Borsa Italiana as well as Deutsche Börse’s electronic trading platform Xetra. Listed under the ticker symbol GFOF, the ETF will also be passported for sale across Europe.
An exciting milestone: Announcing our first European ETF, Grayscale Future of Finance UCITS ETF — listing on London Stock Exchange (LSE), Borsa Italiana, and Deutsche Börse Xetra.
— Grayscale (@Grayscale) May 16, 2022
Launched in partnership with Bloomberg, GFOF UCITS ET tracks the performance of the Bloomberg Grayscale Future of Finance Index. Bloomberg and Grayscale jointly introduced the index in January 2022, aiming to track the digital economy, focusing on three main directions like technology, finance and digital assets.
According to the announcement, the new ETF includes companies directly involved in cryptocurrency mining, energy management and other activities in the digital asset ecosystem.
“Through GFOF UCITS ETF, European investors now have the opportunity to receive exposure to the companies that are pivotal to the evolution of the global financial system,” Grayscale’s global head of ETFs David LaValle said.
Grayscale also collaborated with Europe’s white-label issuer HANetf to create the new investment product. The issuer is known for cooperating on blockchain ETFs with companies like ETC Group.
Grayscale is one of the world’s largest Bitcoin (BTC) investment companies, providing the Grayscale Bitcoin BTC Trust (GBTC) with $18.3 billion in assets under management. Amid massive market volatility, GBTC recorded a significant decline, trading at a nearly 31% discount on May 13.
The firm has been aggressively pushing its Bitcoin spot ETF, with CEO Michael Sonnenshein claiming that Grayscale was gearing up for a legal fight with the United States Securities and Exchange Commission if its ETF is denied. The firm reportedly tried to persuade the SEC that turning the biggest BTC fund into an ETF would unlock $8 billion for investors.
The news comes amid the increasing adoption of crypto and industry-related ETFs worldwide, with total assets invested in crypto ETFs hitting $16.3 billion in Q1 2022.
21Shares, a major crypto ETF issuer in Europe, recently expanded its investment offering with a Layer 1 and decentralized finance (DeFi) infrastructure exchange-traded products (ETPs).
Listed on SIX Swiss Exchange on May 12, the 21Shares Crypto Layer 1 ETP (LAY1) offers investors exposure to the five largest blockchains in the DeFi industry. The 21Shares DeFi 10 Infrastructure ETP (DEFI) will list on the same exchange on 18 May.
Investors familiar with the concept of equity investing will find equity tokens to be an extension of the same thought process as initial public offerings while those with a riskier appetite can venture into plonking their capital on the utility tokens in which they believe.
One glaring difference between utility and equity tokens is the fact that the former is not regulated as they provide access to a service rather than a specific investment in an asset or company as do equity tokens.
However, for those asking the question of whether utility tokens can be traded, the answer is that they are similar to equity tokens in this aspect and are available for trading on various exchanges.
To answer whether utility tokens are good investments though, any money put into a utility token needs to be weighed against the prospects of the service being offered by the issuing company and the potential rise in its demand to generate returns for token holders.
On the other hand, equity tokens are regulated and issued by existing firms that are already in business and provide token holders with voting rights that allow them to participate in the working of the company.
For novice crypto investors, it seems more prudent to invest in equity tokens as they are an extension of equity shares on the traditional stock market and are an easier concept around which to wrap oneself.
However, if you believe in the prospects of a blockchain project like XRP and want to gain an early mover advantage, it may be more beneficial to put your money on a utility token ICO and ride the demand wave to generate handsome returns in the process.
Do remember that utility tokens are not treated as a security and therefore, will have a higher risk involved when investing. Either way, it is important to read all the terms and conditions before investing money and understand the applicable fees that are levied on redemption or while trading these tokens on the various exchanges available in the crypto market.
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