Bitcoin and most of the major altcoins are not tracking stock recovery, which could indicate that a further downturn is possible.
Stock markets in the US rose strongly on May 25-26, but Bitcoin (BTC) and altcoins did not follow the same trajectory. This suggests that traders are not sure that the crypto markets have not bottomed out yet.
Analyst firm Glassnode said that the number of bitcoin whales has declined, and on May 27, the figure fell to its lowest level since July 2020.
On May 24, Bill Miller, founder and chief investment officer of Miller Value Partners, supported investing in bitcoin, calling it “a financial disaster insurance policy.”
Daily dynamics of the cryptocurrency market. Source: Coin360
In a note to its clients dated May 25, JPMorgan stated that the fall of Bitcoin looks like a capitulation and they expect Bitcoin and the cryptocurrency markets to recover. Bank analysts believe that the fair value of Bitcoin is $38,000, which is about 30% higher than current levels.
Can Bitcoin follow US stock markets higher or will it break away and continue to languish at lower levels? Let’s examine the charts of the top 10 cryptocurrencies to find out.
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Bitcoin fell below the strong support of $28,630 on May 26, but the bulls were unable to hold onto the lower levels. The long tail of the daily candle shows that the bulls have aggressively bought the fall.
BTC/USDT daily chart. Source: Trading View
The bulls are once again trying to defend the support at $28,630 which is an important level to keep an eye on. If the price rises from the current level and breaks the 20-day exponential moving average (EMA) of $30,868, this would indicate that the BTC/USDT pair may have bottomed out. The pair could then move up to the 50-day Simple Moving Average (SMA) of $35,721.
Conversely, if the price turns down from the current level or upper resistance, this will indicate a lack of demand at higher levels. This could increase the chance of a break below $28,630. If so, the pair could retest the crucial $26,700 level. A break and close below this level could encourage selling and the pair could drop to $20,000.
Ether (ETH) fell to close below the uptrend line on May 25th, suggesting the bears are trying to reassert their dominance. Selling intensified on May 26 and the price fell below the May 12 intraday low at $1,800.
Daily ETH/USDT chart. Source: Trading View
The bears are trying to defend key support at $1,700, but the recovery lacks momentum. This suggests that the bulls are not buying aggressively from support. This could spur bears who may try to drop and keep the price below $1,700. If they succeed, the ETH/USDT pair could drop to $1,300.
On the other hand, if the bulls successfully defend the support at $1,700, the pair could start moving higher towards $2,159. This could keep the pair in the $2,159 to $1,700 range for a few more days.
The long wick on the May 25 BNB candle shows bears selling on the rally, approaching the critical upper resistance at $350. Selling continued on May 26 and the price dropped below the 20-day EMA ($320).
BNB/USDT daily chart. Source: Trading View
There is minor support at $286 where the bulls will try to stop the decline. If they do well, this suggests that sentiment has shifted from selling on a rally to buying on dips. The bulls will then try to push the price down to $350 again.
Alternatively, if the price breaks below $286, this would mean that aggressive bulls, who may have been trapped after buying on the break above $320, could close their positions. This could take BNB/USDT down to $260.
Ripple (XRP) broke below immediate support at $0.38 on May 26, but a long daily candle tail suggests strong buying at lower levels. Buyers will try to push the price towards the downtrend line.
Daily XRP/USDT chart. Source: Trading View
When the price breaks the downtrend line