Only a week has passed since our last article, and so much has happened on the market that it is impossible to stay still.
The last month of spring for the crypto industry and the market as a whole was not easy, and many would say it was terrible, and they will be partially right. In the beginning, the mighty Elon Musk walked through bitcoin, calling it environmentally unfriendly, and then China issued a joint notice prohibiting companies from supporting cryptocurrency-related businesses, adding that the Chinese authorities plan to take measures against cryptocurrency mining.
The overheated cryptocurrency market met such a negative information noise as a call for a collapse, which, in principle, happened: Bitcoin -53% from the maximum; Ethereum -60% from the maximum.
For altcoins, we will omit the information, since there is a pure "Panic sell": -70%; -80%; -90%; -95%.
With all the scale of the negative, the collapse has a local shape, and all this is because 2021 has cardinal differences from 2018. I mean a layer of qualified market participants who, unlike TikTok speculators, enter the market not on emotions, but with a well-developed strategy, which often considers a medium-long-term approach to an investment portfolio.
A correction of 50% or more enables funds, as well as institutional investors, to build up their portfolio by selecting an asset with a large discount.
Statistics
During the panic collapse, the owners of bitcoin wallets with a balance of 10,000 to 100,000 BTC increased their positions by 122,588 BTC.
In simple words, whales bought cryptocurrency from weak hands, increasing their portfolio.
Raymond Dalio, an American financier, billionaire, and founder of the investment company Bridgewater Associates, invested in Bitcoin just during the market crash, saying that the US dollar was depreciating, and against the backdrop of rising inflation, investments in digital gold look very attractive. Assuming that similar revelations about investing in cryptocurrencies will continue to delight the market, where large investors just at the time of the market crash have increased their portfolio.
In turn, MicroStrategy CFO Phong Le calls on technology companies to add the first cryptocurrency as a reserve asset, considering it their direct responsibility. These words can be taken very skeptically, but do not forget that as of May 25, 2021, MicroStrategy owns 92,079 BTC worth more than $3.4 billion, and this is a fairly strong player who does not plan to please its bitcoin reserves.
What happens on the trading charts?
During the collapse, bitcoin hit the price level of $30,000, after which there was a sharp jump in the volume of long positions, which led to a fairly rapid recovery of the BTC rate.
Those who read my previous analysis may recall that we had expectations about the market spill in the event of a breakdown of the $40,000/$43,000 price region. The forecast coincided by 100%, since the pivot point was found in the forecasted $29,000/$31,000 mark.
At this point, a thorough analysis of the external information background should be continued regarding the prospects or negative factors related to the crypto industry.
As for price levels, in order to increase the volume of long positions, the BTC quotes need to overcome the $43,000/$44,000 region. This step will lead to greater confidence and new growth towards $50,000- $59,000.
In turn, panic may arise in case of a breakdown of the $28,000/$30,000 mark, which will open the second wave of "Panic sell" in the direction of $20,000.
Ethereum recovered from the crash of about 40%, which is good enough, but this is not the limit of the possible.
The co-founder of Guggenheim Partners, an investment company that manages $270 billion in assets, believes that ethereum is more useful than bitcoin due to the presence of smart contracts. Blockchain technology is spreading rapidly around the world, and the number of ethereum developers is growing for the sixth year in a row, which is why Ethereum has a very bright future.
Ethereum's growth expectations, as before, have a large current drawdown, this is an excellent opportunity to reboot.
General background of the crypto market
Analyzing the total market capitalization of the crypto industry, you will be shocked by the scale of the collapse. From May 12 to May 23, the Total Market immediately decreased by $1.301 trillion. For comparison, the current Total Market is $1.732 trillion.
Now you understand why all the headlines of critical articles were full of the words "halved".
The dominant position in the market is kept by bitcoin (42.9%), which is equivalent to $742,839,955,169.22 in terms of numbers. It is worth considering that after the collapse, the dominant share of BTC in the market increased from 39.8% to 42.9%.
The index of emotions (aka fear and greed) of the crypto market has a low indicator, 22 points, but it is worth noting that the index is growing. For example, on May 24, the index is 10 points, which indicates high fear and panic in the market.
Indicator Analysis - BTC
Analyzing different sectors of time frames (TF), it can be seen that the indicators of technical instruments on the hourly period are actively tuned in to buy due to the active process of price recovery. The daily and weekly periods are focused on the "Panic sell" stage. The monthly period is still in an upward trend, signaling a buy.