Bitcoin fell close to the $27,000 level on May 8, indicating that some short-term traders may be booking profits. One of the reasons for the fall was the congestion in the Bitcoin network, which led Binance to halt Bitcoin withdrawals for about an hour on Sunday and roughly three hours on Monday. Binance later said in a tweet that it has taken actions to “prevent a similar recurrence.”
The Bitcoin network congestion was due to a massive surge in unconfirmed transactions. The backlog was caused largely due to heightened activity in minting and transferring of Ordinal inscriptions and BRC20 tokens.
Another negative sign for the crypto markets was the sudden surge of interest in meme coins. The trading volume in meme coins soared to $2.3 billion last week from $387 million in the preceding week, according to blockchain observer James Tolan’s Dune analytics-based tracker.
Pepecoin (PEPE), a frog-themed token, was the star performer whose market capitalization soared to $1.82 billion on May 5, according to CoinGecko data. The meme coin has lost some ground since then and its market cap has slipped below $800 million on May 9.
The sharp rally in PEPE boosted the price of other low-cap tokens such as DINO, WSB, and a few others. Usually, a surge in meme coins or obscure small-cap tokens is a sign of excessive speculation by newbie traders looking for an easy way to make money. That tends to form a short-term top as savvy investors turn cautious.
Apart from crypto-specific issues, market observers will also be keenly watching the macroeconomic developments. The consumer price index data to be released on May 10 is likely to boost volatility in US stocks and cryptocurrencies.
BlackRock said in a recent report that further tightening may be in store from central banks over the next few months, which may push the economy into recession. The asset manager believes that central banks will not cut rates rapidly to revive the economy and that may not be good news for risky assets.
What are the support levels that can start a recovery in Bitcoin and the major altcoins? Let’s study the charts to find out.
BTC/USD Market Analysis
We highlighted in the previous analysis that the indicators were pointing to a range-bound action between $27,000 and $30,000 and that is how it has been for the past few days.
The moving averages are on the verge of a bearish crossover and the relative strength index (RSI) is in the negative territory, indicating that the sellers are trying to gain the upper hand.
A break and close below the $27,000 support will tilt the advantage in favor of the bears. That will open the doors for a possible decline to the crucial support at $25,000. The bulls are expected to defend this level with all their might.
Another possibility is that the price rebounds off $27,000 with strength. If that happens, it will suggest that bulls continue to buy on dips. Buyers will then try to propel the price above the moving averages.
If the price turns down from the 20-day exponential moving average (EMA), it will suggest that bears are trying to gain control.
Contrarily, a break above the moving averages will indicate that the BTC/USD pair may remain stuck inside the $27,000 to $30,000 range for a few more days.
ETH/USD Market Analysis
We said in the previous analysis that if bulls push the price above the 20-day EMA, Ether could reach $2,000 and that is what happened on May 5.
Buyers tried to extend the up-move above $2,000 on May 6 but the bears sold aggressively. The ETH/USD pair turned down and slipped below the moving averages on May 8.
The 20-day EMA has started to turn down and the RSI is just below the midpoint, indicating that bears have a slight edge. The sellers will next try to sink the pair below the immediate support at $1,785.
If they succeed, the pair could slump to $1,700. This level may witness a tough battle between the bulls and the bears.
On the upside, the $2,000 level is the critical resistance to watch out for. If buyers clear this hurdle, the likelihood of a rally to $2,200 increases.
BNB/USD Market Analysis
We said in the previous analysis that the tight range trading between the resistance line and the 50-day simple moving average (SMA) was unlikely to continue for long and that is how it played out.
Binance Coin broke below the 50-day simple moving average (SMA) on May 2, indicating that the bears are trying to gain the upper hand. The bulls tried to stage a recovery by pushing the price above the 20-day EMA but the bears did not budge.
The BNB/USD pair slipped below the 50-day SMA on May 6 and started a downward move that could reach $300. This level is likely to attract strong buying by the bulls.
The negative view will invalidate in the near term if the price turns up and rallies above the moving averages. Such a move will suggest aggressive buying at lower levels. The pair may then reach the resistance line.
XRP/USD Market Analysis
We cautioned traders in the previous analysis that the indicators showed that bears have the upper hand. The sellers successfully thwarted attempts by the bulls to push XRP above the 20-day EMA on May 5 and 6.
That intensified the sell off which pulled the price to $0.41 on May 8, close to the first strong support at $0.40. A shallow bounce off the support suggests that demand dries up at higher levels.
If the price turns down and breaks below $0.40, the selling could further pick up momentum and the decline could stretch to $0.36. The downsloping 20-day EMA and the RSI near the oversold territory indicate that bears are in command.
The first sign of relief will be a break and close above the moving averages. That could attract further buying, pushing the pair toward the overhead resistance zone of $0.54 to $0.58.
ADA/USD Market Analysis
Cardano repeatedly failed to rise above the 20-day EMA, which attracted aggressive selling by the bears. The ADA/USD pair turned down sharply on May 6 and tumbled below the $0.37 support on May 8 as we had projected in the previous analysis.
The long tail on the May 8 candlestick shows that the bulls are trying to start a relief rally but the shallow rebound indicates that bears are selling on every minor rise.
If the price turns down and breaks below $0.35, the bearish momentum could pick up and the pair may plummet to the next major support at $0.33.
If bulls want to prevent the decline, they will have to quickly drive the price above the moving averages. The pair could then rise to the neckline of the inverse head and shoulders pattern.
Hopefully, you have enjoyed today’s article for further coverage please check out our crypto Blog Page. Thanks for reading! Have a fantastic day! Live from the Platinum Crypto Trading Floor.
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