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May Month-End Report

28 May 2021 | ZebPay Trade-Desk

Bitcoin has surprised us all this month, and it plummeted by almost ~50% to $30,000 levels, for the first time this year. However, since that fall, a slight recovery has started, as the asset is supported by strong fundamental metrics on the network, and impressive institutional flows, which have been holding up volumes. The asset witnessed the much-anticipated correction this month, and it fell from its all-time high of $64,863, in the previous month, and currently trades at $38,000 levels. Due to this, the market capitalization of Bitcoin also fell significantly this month, at approximately $700 billion, but is still the most prominent asset in this space. On the positive side, the crypto community, as well as FI’s, and banks continue to keep a bullish stance on the asset. This is the result of banks, MNC’s and in some cases even governments recognising the potential of the asset. The sentiment remains positive, hence fueling the recovery even more, as accumulating at these levels seems like an attractive strategy. Furthermore, as companies allocate BTC to their balance sheets, this is positive reinforcement, proving that the asset class is going mainstream rather quickly. 

While Q1 2021 was very fruitful for BTC and ETH, this month reversed those trends. The upward trend had been an ongoing affair since October 2020, with minor corrections setting in from time to time, but also new highs being attained almost every month. However, the month of May saw a big correction across assets, altcoins included, which has in some way reset the marketplace. The second-largest asset by market capitalization, Ethereum, also witnessed a major correction, falling from $4,300 levels to lows of $1,700. Since then though, an upward trend set in, and ETH has gradually come up to $2,900 levels, at $2,600 as of now. During the month, major corrections and profit booking were seen, but the asset has always responded with a recovery, almost immediately. ETH saw an average decrease of ~40% this month, compared to April. The sentiment is bullish, as ETH crossed a market cap of $310bn last month, reflecting its true potential. As the Ethereum blockchain fully supports DeFi Apps, Ethereum has gained significant traction among major industries, spiking investors’ interest in Ether. In addition to that, the blockchain is soon undergoing an upgrade, which will result in token burns, limiting the ETH supply in the long run, and this is likely to result in an upward price pressure of the asset, and hence a reason to watch out, and maintain a bullish stance. 

In terms of market capitalization, Bitcoin is gradually regaining its momentum and continues to have a strong outlook. As of now, Bitcoin accounts for ~70% of the total crypto space.  If we combine Bitcoin, LiteCoin, Monero, Ethereum, and other significant cryptocurrencies, the total value comes to ~$1.4 trillion, which accounts for ~80% of the total global crypto marketplace.

On the Macro front, Bitcoin looks like an increasingly attractive asset to add to portfolios as it is among the few assets (including traditional) whose supply is limited, and demand has seen spikes, as the asset goes mainstream and is adopted by a larger set of people. Ethereum is also an attractive asset, as fundamentally it has a lot going for itself, especially in light of the upgrades it is likely to see, hence upon any correction, another quick rally is anticipated. As FI’s interest continues to grow, and blockchain technology gives rise to new applications being formulated and implemented, the overall sentiment fundamentally is positive and likely to remain so for some time to come. While this month has seen the market witness a bearish stance, we anticipate markets to recover rather quickly and maintain a bullish view on BTC, ETH, and other major AltCoins.

May Fundamental Snapshot at ZebPay

The ZebPay trade desk also conducted research on broader, fundamental investment topics and our weekly technical reports this month. We looked at the relationship between BTC and AltCoins, the UniSwap V3 upgrade, covered the launch of MANA at ZebPay, and provided some price analysis on BTC, ETH, and BNB. 

Relationship between BTC and AltCoins

The market has endured several cycles of booms and busts, and new institutional players are now entering the space as the market has started to mature. These investors are betting largely on Bitcoin and less on altcoins. This is driving the momentum in Bitcoin’s favour, and it is likely to be a while before the trend discontinues, and BTC alone can up-lift altcoins to the same extent.  Ethereum on the other hand is seen as the second pillar in the crypto community and leads the altcoin market. The bull run for Ethereum could be the push altcoins need to see a historical rally this year. As Ethereum is the king of all decentralized systems and is due for an upgrade in the near future, altcoins face the mammoth task of catching up and stealing Bitcoin’s market share.

To read our in-depth report on these dynamics, please click here.

UniSwap V3 Upgrade 

Earlier this month, UniSwap saw the launch of its largest upgrade, now called UniSwap V3. Uniswap V3 features the following attributes, which make it a rather significant upgrade. Namely, it will provide concentrated liquidity, better capital efficiency, active liquidity, range order capabilities, non-fungible liquidity, flexible fees, and a license to operate its open-source code. UNI will remain the native token of the Uniswap protocol, and holders will continue to have governance rights and can vote on the development of the protocol. 

 Along with these features, UniSwap V3 will also see the advent of advanced oracles and the license to operate its open-source code. Uniswap V3’s code, while still open source for anyone to view,  will require a license to use in a commercial or production setting. The introduction of advanced oracles, which further strengthens the technical architecture of the protocol, is likely to reduce the gas cost to Uniswap traders for keeping oracles updated by ~50% compared to v2.

To read our in-depth report on DeFi Lending and Borrowing, please click here.

Launch of MANA at ZebPay

Decentraland (MANA) is essentially a virtual reality platform built on the Ethereum blockchain. It allows users to create and experience content and applications, and then monetize them. The virtual world in which it operates, allows users to purchase land which they can later harness and build upon, and eventually monetize. Decentraland was launched with a $24 million initial coin offering (ICO) back in mid-2017. Since then, users have created a wide range of experiences on their parcels of LAND, including interactive games, sprawling 3D scenes, and a variety of other interactive experiences

To read our in-depth report on Tokenomics, please click here.

Price Analysis – BTC, ETH, and BNB

The overall sentiment in the crypto space has been largely bearish for the past two weeks or so. The third week of May, saw several altcoins plummeting, and some depreciating even more than 50% in value, This suggests that traders are continuing to sell at every opportunity, even upon the slightest recovery. However, Bitcoin (BTC) and Ethereum (ETH), have seen good volume growth, at low levels, and have behaved differently from altcoins, suggesting at when markets did dip, accumulation at lower prices what the most preferred strategy among investors, who then continued to hold on to the assets. This is probably the reason why BTC and ETH have seen some degree of traction, and have started to ride the upward trend.  

To further understand what this might mean for some assets, namely BTC, ETH, and BNB, please click here.

May Technical Analysis Snapshot – Results: 

For the first week of May,  we published a technical analysis on 5 crypto assets, namely BTC, ETH, BAT, and USDT/INR. Based on our analysis we were bearish on 3 coins except for BTC and USDT/INR. Consistent with our analysis BTC, BNB and BAT remained to trade sideways, while ETH and USDT/INR continued to rally.

For the second week, we covered 5 crypto assets; BTC, ETH, BAT, BNB, and USDT/INR; technical analysis led to a bearish view on BNB and ETH. In the second-week report, we were spot on with our analysis, with ETH and BNB as the assets started moving downwards. BTC and USDT/INR were in line with our calls as well.

For the third week, we covered BTC, ETH, BAT, BNB, and USDT/INR. Our technical analysis suggested that assets have taken support at crucial levels and we expected some recovery or relief rally. The prices did recover up to our mentioned resistance levels. Except for USDT, we anticipated the coin to take support at $78.5 levels but it failed to hold the support level.

Out of 15 asset-specific analyses over the month, 11 analyses were strongly consistent with actual moves, market moves were opposite of 4  analyses.

Assets Covered Outcome AlignedOutcome OppositeAligned with Miniscule Deviation
Week 15320
Week 25410
Week 35410
Week 40000
Total151140

Weekly Technical Analysis: 

Over the two past weeks, BitCoin has witnessed a major correction. The asset witnessed the much-anticipated correction this month, and it fell from its all-time high of $64,863, in the previous month, and currently trades at $38,000 levels. It hit a low of $30,681, on May 19, reflecting a fall of more than ~50 compared to its all-time high, a month ago.  Ethereum too has trended in a similar fashion. The second-largest asset by market capitalization, Ethereum, also witnessed a major correction, falling from $4,300 levels to lows of $1,700. Since then though, an upward trend set in, and ETH has gradually come up to $2,900 levels During the month, major corrections and profit booking were seen. BAT too has been upwards of a 50% correction this month, and volumes too have taken a significant beating. However, since then, the asset has started to witness an uptrend. 

Bitcoin (BTC) Technical Analysis and Chart:

At the time of writing, Bitcoin is trading around $37,200 reflecting a loss of about 4% approximately over the period of 24-hours.

Bitcoin has witnessed a major correction this month, and lows of $31,000, but since the start of this week has been recovering well, and currently trades at $38,000 levels.  The week saw good momentum, as well as volumes and the asset battles to fight off bearish sentiments and recover its market cap. On a positive note, the largest asset by market capitalization continues to see strong inflows, and volumes have held up fairly well, showing that the asset has good promise and investor confidence is at its peak.

BITCOIN has been on a downtrend over the past two weeks, however this week, the asset has shown signs of recovery and surged almost 36% to make the weekly high of $40,900. On the technical front, the asset is consolidating and trading in a range from $36,400 to $40,500. Breakouts on either side with good volumes will further decide the trend. BTC can face some stiff resistance at $42,500.

Ethereum (ETH) Technical Analysis and Chart:

At the time of writing, Ethereum is trading around $2,590 reflecting a loss of about 5% approximately over the period of 24-hours.

ETH has witnessed an upward trend towards the latter part of this week after it saw a correction and fall of ~50% last week. The asset currently trades at $2,600 levels. While some of this rally can be attributed to the fact that at these levels the asset looks attractive, hence investors’ buy-in, another crucial factor is the Ethereum blockchain upgrade which is likely to occur soon. This upgrade will cramp the supply availability of ETH, which is likely to create upward pressure on prices, the start of which can be seen in small proportion now itself, and another rally can be soon anticipated.

ETH, post making the low of $1,755 has witnessed a sharp recovery and the prices have surged almost 66% making the weekly high of $2,915. The bulls, however, have failed to manage a grip on the asset and were not able to break the resistance of $2,981, and hence the prices have retraced from these levels. $2,495 should act as a crucial support level and if the prices fail to hold these levels we may see more downside movement. ETH, to further rally, needs to break and sustain above the $3,000 mark.

Basic Attention Token (BAT) Technical Analysis and Chart:

At the time of writing, BAT is trading around $0.78 reflecting a loss of about 6% approximately over the period of 24-hours.

BAT, like BTC and ETH, has also seen a major correction, last week. However, after falling by over 50%, the asset has begun recovering, slowly and steadily, and currently trades at $0.78 levels. On the volume front, the asset has taken a hit, and volumes have dipped by about 50% month on month. This is not surprising, given that markets crashed, and much of the interest was peaking on BTC and ETH pairs, leaving altcoins a little out of focus. As we mentioned earlier, BAT derives its core attributes and purpose from the well-established Brave Browser, which tries to solve some of the fundamental problems that exist today in digital advertising,  and attempts to make browsing a safer practice.

BAT has also witnessed a major correction and the price plunged almost 72% from its peak. However, the asset tested the support level of $0.45 (78.6% Fibonacci retracement level) and bounced back sharply to make a weekly high of $0.932. On the technical front, the asset has made a ‘Spinning Top’ indicating indecision. Hence, for the prices to go further up it needs to close and sustain above $0.924 whereas $0.66 acts as a strong support level.

Monthly Trade Summary Sheet:

Monthly Price Analysis:

AprilMayPrevious MonthCurrent Month
CloseClose% ChangeHighLowHighLow
BTC$53,555$38,436-28.23%$64,863$47,741$51,519$30,681
ETH$2,756$2,736-0.73%$2,797$1,945$4,362$1,737
BAT$1.190$0.840-29.41%$1.650$0.972$1.59$0.460

Monthly Volume Analysis:

Cryptocurrency1m – % Vol. Change (Global)
BitCoin (BTC)-4.65%
Ethereum (ETH)1.62%
Basic Attention Token (BAT)-52.12%

Support and Resistance Levels:

Resistance 2$46,000$3,600$1.100
Resistance 1$42,500$2,981$0.920
USDBTCETHBAT
Support 1$33,600$2,495$0.660
Support 2$30,000$2,114$0.510

Market Updates: 

  1. Uniswap is now planning layer-two deployments on both Arbitrum and Optimism.
  2. Altcoins moved higher while a lack of buy volume prevented Bitcoin and Ethereum price from breaking out after the completion of a bullish inverse head and shoulders pattern.
  3. The American billionaire entrepreneur, Mark Cuban, has invested in over 10 blockchain startups, one of them in India based start-up exchange, Polygon.
  4. The news of China’s crackdown had sent cryptocurrency prices tumbling, from $63,000 in mid-April to $39,000 on May 19.

June Outlook: 

The overall sentiment has been a little bearish this month, as markets did witness a major correction. But given that, we maintain a bullish stance on both BTC and ETH, as well as the major altcoins. In the month of June, we expect our favorite asset BTC to continue to see attractive volumes and growth, as, at these levels, accumulation is likely.  Volumes have sustained throughout the year thus far, and the month of May seemed to be no exception. Along with BTC and ETH,  the majority of other altcoins also witnessed a fall, as BNB and BAT both fell by more than 50%, defeating our expectations post the fall. We anticipate $1.3 levels for BAT again soon, and $500 for BNB, over the next couple of weeks.

As Banks, FIs, Governments, and MNCs continue to adopt digital assets, coupled with the ever so increasing coverage this asset class has been witnessing among institutions and research papers, the macroeconomic outlook is strong.  As mainstream, more credible fund managers and economists start investing and holding BTC as well as ETH, we expect others to follow suit, further instilling belief in the asset class, and pumping up volumes. The month’s highlights have undoubtedly been the correction in the market, but also the fact that RBI has been publicly speaking about the need to explore the need for a digital fiat currency, and the acceptance of the need for further investigation in this space,  has further enhanced confidence in the community and is likely to result in positive sentiment among investors. 

Lastly, we expect June to be a positive and anticipate a good recovery to set in. Though volatility seems to be a given, fundamentally BTC and ETH, the largest assets by market cap, continue to hold a strong footing in the marketplace. Given that, we remain bullish on both BTC as well as ETH and feel positively towards altcoins, especially those operating in the DeFi ecosystem, and also BNB the native token of Binance Exchange.

Conclusion: 

This concludes our ZebPay May Monthly Analysis report. The report aims to provide its readers with some insight into what the month has been like for us at ZebPay, and dive into some outcomes as a future approach on what we expect to happen next. The trade-desk has put together a snapshot for our investors to understand both the fundamental and technical analysis for better trading and investment decisions, coupled with some market updates and key events that readers can refer to to get a glimpse of the key developments taking place in the crypto world and how this is shaping markets. 

Happy Trading with ZebPay!

References:

https://news.Bitcoin.com/

https://coinmarketcap.com/

https://www.investopedia.com/

https://www.coindesk.com/

https://www.livemint.com/

https://cointelegraph.com/

https://news.Bitcoin.com/

*Sources of charts: https://cryptowat.ch

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 Author is for informational purposes only and should not be treated as investment advice.

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