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Cryptocurrency markets update, A relief rally or a sign of revival

02-Jun-2022 Collins Jackson
Cryptocurrency markets update, A relief rally or a sign of revival

Cryptocurrency markets update, A relief rally or a sign of revival

The cryptocurrency market has been full of hope this week, with Bitcoin bouncing off an important support level of 29k. Other top-tier coins like Ethereum, Cardano, and the Binance Coin, have also seen a sharp increase in critical support levels. While these coins have seen a 5-7% gain, coins like Waves(WAVES), Axie Infinity (AXS), and Bella(BEL) Protocol stole the show by increasing by at least 50% in a choppy market. These top gainers are due to breakouts from major resistance and are news-based.

The crypto market cap is naturally up by $82 Billion after losing a trillion dollars because of several factors, including the US markets, fear of inflation, increasing price of crude oil, and the Chinese slowdown. This recent surge in price can hence be a temporary relief rally to an already tumbling market. However, there is currently a lot of uncertainty in the market, and to understand it further, let's break it down. 

Bitcoin(BTC) trend analysis

Bitcoin has been forming a double bottom on the daily time frame, from which it closed and broke out with a resistance level of $31,200. While these sideways movements were beneficial for many altcoins, it was a great accumulation period for Bitcoin for at least the short term. Moreover, this breakout can signify trend reversal on a local level. 

Bitcoin is making a falling wedge that is predominately a bullish pattern if broken in a relatively more extensive time frame. Bouncing perfectly from the lower trend line support may indicate that it may test 44-45K resistance levels. China's easing covid curbs and the reversal in SPX after a similar pattern to BTC were major factors behind this reversal. 

Bitcoin major news this week:

  • JP Morgan's client focus note this week said Bitcoin has a significant upside potential marking its 'fair value' to $38,000.

  • Bitcoin's three months and vs. Gold's six-month volatility of Gold behaving a lot like each other re-sparks discussions about crypto being digital Gold. 

  • Andreessen Horowitz or a16Z launches a $4.5 billion fund amid market turmoil. 

Ethereum (ETH) trend analysis:

On a daily time frame, Ethereum is facing resistance on $2,040 levels; once broken, we might see a major trend reversal. The Ethereum upgrade news and the recent bounce from the major support of $1698 can be another indicator of reversal in this bearish trend. Furthermore, Ethereum has the power to uplift altcoins even when it is going sideways since its dominance is expected to increase from 17%. 

On a weekly time frame, just like BTC, Ethereum is making a bullish pattern- a falling wedge. While it looks bullish, micro indicators are just as crucial as a macro when the market is this chaotic and volatile. So breaking and closing the $2,040 support is the most vital thing for Ethereum.

Ethereum major news this week:

  • Ethereum's oldest PoW test net is one step closer to PoS. A new beacon chain was launched on May 31st, and The Merge is expected around June 8th on the network. 

  • Optimism, an Ethereum scaling solution, airdropped 249k wallets for its governance token.

  • Boston-based firm Fidelity Investments is planning to offer custody and trading services for Ethereum.

Solana(SOL) trend analysis:

Unlike Bitcoin and Ethereum, the 'Ethereum killer is yet to recover; it has been in a constant downtrend since it got rejected from $145 resistance; the selling volume of Solana has just increased after it broke the $75 support, which it held for months.

Some sideways movement is to be expected from Solana; after the Terra debacle, new but huge ecosystem coins have been a matter of concern. Solana needs to break and close above the daily Exponential Moving Average - 20 (EMA20) to indicate a reversal.  

Solana news

  • Solana sees a surge in passive income platforms in its ecosystem.

  • The Solana blockchain's clock drifted significantly due to slower slot times; hence the on-chain time has fallen half an hour behind real-world time.

Cryptocurrencies that stole the show this week?

  • Cardano(ADA)

Cardano broke out and rose more than 40% this week because of the widely anticipated Vasil hard fork that may significantly increase the efficiency of the network. In addition, many Cardano-based DApps are also supporting the hard fork; hence Vasil will boost the ecosystem. To remain bullish, ADA will have to stay above and close above $0.61 levels.

  • Waves(WAVES)

Waves essentially doubled in price in the last five days, ever since the developer published the WAVES-Defi revival plan on May 27th. It still looks highly bullish since it successfully broke the $8.5 major resistance. WAVES even broke and closed about the falling wedge so that we can expect a retest before another massive pump.

  • Axie Infinity(AXS)

Amid the Play 2 Earn downturn and the chaotic market, Axie saw a retail surge in prices as Sky Mavis turned to user-generated content. But, it still made a hanging man candlestick pattern that indicates a (possibly brief)bearish overturn. AXS should remain above $22.5 support to stay bullish, which is also EMA20. 

In conclusion, the market is currently news-driven, and traders should pick news-based coins since high volumes guarantee high optimal situations for trades. Bitcoin, Ethereum, and most of the other currencies seem to be bullish for at least a few weeks. Still, due to the current volatility, Dollar Cost Averaging(DCA) is always a go-to strategy for long to mid-term investors. 

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