crypto market analysis

Hi Crypto Network,

Bitcoin completed its halving without any fireworks. This suggests that the much talked about event was already priced in. However, history suggests that post-halving rallies have averaged 446 days. This means that historically the event has been bullish but it takes a few days to play out and start the next leg of the up move.

History suggests that the short-term has mixed results. After a month of the first halving in 2012, Bitcoin had risen a modest 7%, whereas, a month after the second halving in 2016, the price had slipped 10%. This suggests that the short-term might remain range-bound and volatile.

Hedge fund manager Paul Tudor Jones told CNBC that he has “just over 1% of my assets in bitcoin. Maybe it’s almost 2. That seems like the right number right now.” This is a major sentiment booster as this is likely to attract other hedge fund managers to place a bet on Bitcoin. Larger participation can be expected if Bitcoin can start the next leg of the up move.

The crypto hedge funds assets under management surged from $1 billion in 2018 to over $2 billion by the end of 2019, according to the “2020 Crypto Hedge Fund Report,” published on May 11 by PwC and Elwood Asset Management Services Ltd. With the crypto hedge funds posting stellar returns, they are likely to attract further investment going forward.

Institutional players have made their entry into the crypto space. This is likely to be a huge positive in the long-term. Therefore, long-term investors who can ride the near-term volatility can build positions on weakness. For the others, who are more short-term oriented, let’s see what the charts project.

BTC/USD

Bitcoin broke out of the pennant formation and surged to a high of $10,079 on May 7, which was just above the pattern target of $10,071.66, as suggested in our previous analysis. The failure of the bulls to sustain the price above $10,000 attracted profit booking.

On May 10, the largest cryptocurrency plunged sharply to hit an intraday low of $8,106.70. However, the positive sign was that the bulls purchased the dip to $8,100 levels, which helped the price recover and close (UTC time) at $8729.86.

The bulls attempted to push the price above $9,214.67 on May 11 but failed. The 20-day EMA has flattened out and the RSI is just above the midpoint, which suggests a balance between bulls and bears.

For the next few days, the BTC to USD pair might remain range-bound between $8,100-$9,214.67. A break above the range could result in a move to $10,000 and above it to $10,500.

On the other hand, if the bears sink the price below $8,100, a drop to $7,466 is possible. The traders can buy the next bounce off the $8,100 levels or buy the breakout above $9,214. We do not find any reliable buy setup at the current levels.

 

ETH/USD

Though the bulls pushed the price above the downtrend line on May 7, they could not break out of the $220 levels. This attracted profit booking and on May 10, Ether plunged below the support line of the channel but managed to recover and close (UTC time) inside the channel.

However, the bulls could not scale the price above the 20-day EMA on May 11, which attracted further selling and the ETH to USD pair slipped below the channel once again. Repeated breakdown of a level weakens it.

Currently, the bulls are attempting to push the price back into the ascending channel. If the bulls can sustain the pair inside the channel, it will indicate that the current breakdown below the channel was a bear trap.

On the other hand, if the pair turns down from the current levels or the 20-day EMA, it will signal a lack of demand at higher levels. In such a case, a drop to the 50-day SMA is possible.

A move above the 20-day EMA can offer a buying opportunity with a target objective of $220 and then $240. Long positions should be avoided if the bears sink the price below the 50-day SMA because then, the trend will turn negative.

 

XRP/USD

The bulls carried XRP above the downtrend line on May 7 but struggled to sustain the higher levels. This suggests that the bears are aggressively defending the $0.21629-$0.23571 zone.

On May 10, the XRP to USD pair plummeted below both the moving averages to hit an intraday low of $0.17501. However, the bulls aggressively purchased close to this level, which helped the price to recover and close (UTC time) at $0.19721.

Currently, the bulls are attempting to drive the price above the 20-day EMA. If successful, it would indicate strength and increase the possibility of a move to $0.23571. Conversely, if the pair turns down from the 20-day EMA, the bears will again attempt to sink it to $0.17426. If this level also cracks, a drop to $0.16 and then to $0.14 is possible.

The pair could remain range-bound between $0.17426-$020524 for a few days before starting a trending move. As the range is small, the traders can wait for a trending move to start before initiating long positions.

 

BCH/USD

As suggested in our previous analysis, Bitcoin Cash rallied to the overhead resistance of $280 but could not break out of it on May 9. From there, the price turned down the next day and broke below both moving averages and hit a low of $223.52.

The moving averages have flattened out and the RSI is just below the 50 level, which suggests that the BCH to USD pair is likely to extend its stay inside the range for a few more days.

Trading inside a range can be volatile. Currently, the pair is at the midpoint of the range, hence, we do not find any reliable trading setups.

The traders can wait for the pair to bounce off the $200 levels before initiating long positions. Another possible trade setup is to buy the breakout above $280. Long positions can be avoided if the bears sink the pair below $200 because below this level a drop to $150 is possible.

 

BSV/USD

Bitcoin SV continues to trade inside the large $170-$227 range. On May 10 and 11, the bulls purchased the dips to the support of the range, which is a positive sign. This shows that the buyers are keen to get in at lower levels.

If the bulls can push the price above the 20-day EMA, a rally to the resistance of the range at $227 is possible. The bears are likely to defend this level aggressively. Therefore, traders who had bought the dip on May 11 can close their positions near $227.

Long positions can again be initiated if the BSV to USD pair breaks out and sustains above $227. If that happens, the next leg of the up move is likely to begin.

Conversely, if the pair turns down from the 20-day EMA and plummets below the range, a drop to $146 is possible. Therefore, traders should avoid bottom fishing after the price slips and sustains below $170.

 

Hopefully, you have enjoyed today’s article. Thanks for reading!

Have a fantastic day!

Live from the Platinum Crypto Trading Floor.

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