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Crypto Technical Analysis Report | 06-May-2022

Market sentiment remains bearish

Markets appear to have fallen as we haven’t seen much movement this week and all assets appear to be range-bound early on and are now in red. This suggests that the overall sentiment remains bearish as most assets appear trying to break out of  their support levels.

Most digital assets are down 60% from March lows, some assets have been marginalised and are acting like they missed the rally. Bitcoin and most altcoins could remain volatile in the short-term due to the Fed’s decision, giving traders caution.

Investors around the world are awaiting the outcome of the May 4th Federal Open Market Committee meeting. Although markets are anticipating a 50 basis point rate hike and an announcement by the Fed that it will start reducing its balance sheet in June, it is difficult to predict how  markets will react to this trigger.

Global financial markets were thrown into chaos on May 5 as the Dow Jones fell 1,063 points and Bitcoin (BTC) price plummeted to $35,571 on leading exchanges. The broad-based weakness comes as traders have had more time to digest the Federal Reserve’s recent half-point rate hike, the largest hike since 2000 in an attempt to stem inflation. The midday drop in BTC price  coincided with a sell-off in the tech sector that intensified until traditional markets closed.

Institutional investors offloaded $133 million worth of Bitcoin (BTC) investment products last week, marking the biggest week of outflows since June of last year. Total digital asset fund outflows for the week ended Friday totaled $120.1 million, according to the latest report. Large Bitcoin outflows were marginally offset by a surprise $38 million in FTX token (FTT) product inflows. The $132.7 million BTC fund outflows over the past week bring month-to-date outflows for April to $310.8 million. 

The last time BTC funds saw such a level of outflows in a single week was during a strong downtrend in June 2021, driven by large FUDs in the news including Tesla taking BTC payments for its cars suspended over environmental concerns, and China, which introduced its ban on crypto mining. This suggests that institutional investors have been trying to take risk off the table with crypto investing across the board.

Billionaire investor Paul Tudor Jones said in an interview with CNBC that the US was entering “uncharted territory” as interest rates rose as the Financial Conditions Index rose. Tudor Jones warned investors that “there’s going to be a very, very negative situation” for both stocks and bonds. He added that the current environment for financial investments is the worst. Bitcoin and altcoins can enter into a period of capitulation or the investors may buy after the initial chaos of the rate hike is beaten down.  

Technical Outlook:

BITCOIN:

BITCOIN, last week, after taking support around $37,500 started moving up and rallied up to $40,023. However, the asset struggled to sustain above the psychological level of $40k and witnessed a sharp fall. The prices corrected almost by 11% yesterday breaking the support of $37,500 and made a low of $35,571. Technically, on a weekly time frame, BTC is forming a ‘Lower Top Lower Bottom’ pattern and has tested the key support level of $36,185 (78.6% Fibonacci Retracement level). If the price holds and gives a weekly closing above the support then we can expect a pullback or a relief rally whereas a close below $36,185 will lead to further downfall and the asset can slide to $34k to $32k.

ETH:



ETH after making a ‘Bearish Engulfing’ candle at the previous top of $3,520 has been trading in a downtrend by forming a ‘Lower High Lower Low’ pattern and is resisting at its 20 Day Moving Average. The asset has plunged almost by 23% over the past five weeks making the low of $2,688. ETH is trying to take support at an important level of $2,702 (61.8% Fibonacci Retracement Level).  If it holds and gives a weekly closing above the support then we can expect a pull back or a relief rally whereas a close below $2,700 will lead to further downfall and the asset can test $2,500 levels.

Matic:

Matic was trading in a broad range from $1.30 to $1.7. The asset finally gave a breakout on a downside from the range and fell almost by 22.5% making the low of $1.01. Matic is taking multiple support around $1 and is currently consolidating between $1.01 to $1.15. Once the breakout occurs above $1.15 with good volumes then we can expect a rally or an up move whereas a close below $1 will lead to further downfall.


Weekly Snapshot:

USD ($)28 Apr 2205 May 22 Previous WeekCurrent Week
 CloseClose% ChangeHighLowHighLow
BTC$39,774$36,575-8.04%$40,714$37,885$39,902$36,269
ETH$3,020$2,749-8.96%$3,026$2,786$2,957$2,705
MATIC$1.37$1.06-22.63%$1.50$1.22$1.19$1.02
Cryptocurrency1w – % Vol. Change (Global)
BitCoin (BTC)12.63%
Ethereum (ETH)20.57%
Polygon (MATIC)4.07%
Resistance 2$44,550$3,300$1.35$0.90
Resistance 1$40,500$3,000$1.15$0.65
USDBTCETHMATICBAT
Support 1$36,185$2,700$1.00$0.50
Support 2$32,910$2,500$0.84$0.45

Market Updates:

  • Republican Senator Tommy Tuberville from Alabama has unveiled a new bill he calls the ‘Financial Freedom Act’, allowing Americans to add cryptocurrency to their 401(k) retirement savings plan unencumbered by regulatory guidance.
  • The central bank of Argentina (BCRA) has put the kibosh on financial institutions offering crypto trading only days after two of the country’s largest banks signalled they were opening up to digital assets.
  • The U.S.’s  The District Court for the Southern District of New York has ordered a total of $30 million civil monetary penalties from the three co-founders of BitMEX crypto derivatives exchange, including former CEO Arthur Hayes.

*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. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness, or reliability of the information, opinions, or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum, etc are very speculative and are subject to market risks. The analysis by the Author is for informational purposes only and should not be treated as investment advice.

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