Bearish sentiment in the market
As we have not seen much movement this week, markets appear to have dropped and all assets seem to be range bound. All assets are now in red. As most assets seem to be trying to break free of their support levels, this suggests that overall sentiment is still bearish.
Digital assets are down 60% since March lows. Some assets have been marginalised, and seem to have missed the rally. The Fed’s decision could make Bitcoin and other altcoins volatile, causing traders to be cautious.
Investors all over the globe are waiting for the outcome of May’s Federal Open Market Committee meeting. Markets are expecting a rate increase of 50 basis points and an announcement from the Fed that it will begin reducing its balance sheets in June. However, it is hard to predict how markets will react.
The global financial markets crashed on May 5, as the Dow Jones dropped 1,063 points, and Bitcoin (BTC), fell to $35,571 via major exchanges. This broad-based weakness is due to traders having more time to process the Federal Reserve’s recent rate hike of half-point, which was the largest since 2000 to try to curb inflation. BTC’s midday decline coincided with a selloff in tech, which accelerated until traditional markets closed.
Last week saw $133 million in Bitcoin (BTC), investment products, being sold by institutional investors. This was the largest outflow since June last year. According to the most recent report, total digital asset fund outflows in the week ending Friday were $120.1 million. Surprising inflows of $38 million in FTX token product (FTT), offset large Bitcoin outflows. Over the past week, $132.7 million in BTC fund outflows brought April’s month-to-date outflows to $310.8 millions.
BTC funds last saw outflows of this magnitude in one week in June 2021. This was due to a strong downtrend that began in June 2021. It was triggered by news stories like Tesla suspending payments for cars because of environmental concerns and China banning crypto mining. This indicates that institutional investors are trying to reduce risk with crypto investing.
Paul Tudor Jones, a billionaire investor, stated in an interview with CNBC the US was moving into “uncharted territory” due to rising interest rates and the Financial Conditions Index. Tudor Jones warned investors that stocks and bonds will be in a “very, very bad situation”. He said that the current investment environment is very bad. Altcoins and Bitcoin can be tempted to capitulate or investors might decide to buy once the rate hike has been stopped.
BITCOIN rallied to $40,023. Last week, after receiving support at $37,500, The asset was unable to maintain above the psychological level at $40k, and it experienced a sharp drop. Yesterday’s price correction was almost 11%. The support level of $37500 was broken and the prices fell to a low of 35,571. Technically, BTC has formed a “Lower Top Lower Bottom” pattern over the past week and has tested the support level at $36,185 (78.6% Fibonacci retracement level). If the price holds above the support, then we can expect a pullback or a relief rally. A close below $36,185 could lead to further decline and the asset could slide to $34k-$32k.
After forming a Bearish Engulfing’ candle at the previous high of $3,520, ETH has been trading in a downtrend and is resisting its 20-day moving average. Over the past five weeks, the asset plunged nearly by 23% to a low of $2688. ETH is seeking support at $2,702 (61.8% Fibonacci Level) If the weekly close is above the support, then we can expect a pullback or relief rally. A close below $2700 will cause further decline and the asset could test $2,500.
Matic traded in a wide range of prices, ranging from $1.30 up to $1.7. Matic finally broke out on the downside of the range, falling almost 22.5% to the low of $1.01. Matic is consolidating between $1.01 and $1.15, taking multiple support levels around $1. If the breakout happens above $1.15 and with high volumes, then we can expect a rally. A close below $1 will result in further decline. Weekly Snapshot
USD ($)28 Apr 2205 May 22Previous WeekCurrent WeekCloseClose% ChangeHighLowHighLowBTC$39,774$36,575-8.04%$40,714$37,885$39,902$36,269ETH$3,020$2,749-8.96%$3,026$2,786$2,957$2,705MATIC$1.37$1.06-22.63%$1.50$1.22$1.19$1.02Cryptocurrency1w – % Vol. Change (Global)BitCoin (BTC)12.63%Ethereum (ETH)20.57%Polygon (MATIC)4.07%Resistance 2$44,550$3,300$1.35$0.90Resistance 1$40,500$3,000$1.15$0.65USDBTCETHMATICBATSupport 1$36,185$2,700$1.00$0.50Support 2$32,910$2,500$0.84$0.45
Alabama Republican Senator Tommy Tuberville has introduced a new bill called the “Financial Freedom Act”, which allows Americans to add cryptocurrency into their 401(k), retirement savings plan. The law, which allows for the addition of crypto trading, was approved by the United States’ District Court for the Southern District of New York. The three founders of BitMEX, the crypto derivatives exchange, and former CEO Arthur Hayes, have been penalized with a total of $30,000,000 in civil monetary penalties.
*Sources of charts: https://cryptowat.ch, https://pro.zebpay.com/trade/USDT-INR Disclaimer: This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation, or needs of any investor. When deciding whether an investment is right for them, all investors should take into account these factors and consult with a professional advisor. This report was prepared by the Company using information that it has access to, as well as information from public sources that have not been independently verified. The Company makes no representations or warranties, either express or implied, regarding the accuracy, reliability, correctness or completeness of the information, opinions or conclusions contained herein. This report is preliminary. The Company does not assume any obligation to revise or update the reports in response to new events or circumstances after the date of the report was made. Trading and Investments in cryptocurrencies viz. Bitcoin Cash, Ethereum, and other cryptocurrencies are highly speculative investments that are subject to market risk. The Author’s analysis should be used only as information and should not be considered investment advice.
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