At the time of writing, the cryptocurrency market is booming again, despite volumes dropping across major exchanges.
During the weekend, Bitcoin and other altcoins gained some investor confidence after the market progressed about 5% upwards. However, volumes are getting thinner, which means there is no new money coming into the market at the moment. There are also claims of price manipulation that could be linked to the current boom-bust cycles – for example, the influence Bitfinex and Tether have on Bitcoin is still quite large.
Let’s take a look at what’s going on in the cryptosphere.
Bitcoin is yet again reaching yearly highs, having touched $5,900 during the weekend. However, as we can see from the volume bars on the graph above, Bitcoin’s volume seems to suggest that people are still betting on a lower price. We see minor volume spikes and then a huge one at the beginning of May that pumped BTC’s price upwards, despite the broader market moving to the downside.
Last week, I mentioned as long as the price continues to stay above the 200-day EMA, we can be confident the bulls are back and buyers are in charge. I also mentioned that if I was wrong, then two things could happen: either Bitcoin follows the path of Litecoin and other altcoins and starts to consolidate above the 200-day EMA (a really bullish scenario) or it drops below the 200-day EMA. In the latter scenario, I argue Bitcoin would first dance around $4,700 for a few days before dropping to the $4,200-$4,400 levels.
However, because the 50-day EMA crossed the 200-day EMA in late April, we might see BTC making higher highs. That usually means buyers want to take back control. Nevertheless, my medium-term bet is that Bitcoin will slowly drop closer to its $4,000 support level.
At the moment, traders should be on the lookout for a price move upwards, as that is what the data suggests is most likely to happen.
Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is currently trading at $291 and is struggling to remain close to its 200-day EMA, which currently stands at around $300.
Bitcoin Cash suffered a 30% drop from late April to early May, when it started to recover its lost gains.
As we can see from the chart above, the 20-day EMA is still above the 50-day EMA, which is a really bullish long-term signal. At the time of writing, the 20-day EMA is sitting above $250, while the 50-day EMA is sitting around $230.
If this trend continues and the 20 and 50-day EMAs cross the 200-day EMA, we could definitely see price dancing between $350 and $400. However, by looking at BCH’s price action between September and November last year, there are some indications of price resistance around these levels.
Volume-wise, it seems most traders are still betting heavily on a downtrend and sellers are still in control.
Ethereum is currently showing great signs of recovery. ETH is now trading above its 200-day EMA following two major price pushes upwards that took place during the weekend, taking ETH to over $170.
In the early days of April, Ethereum’s price went through the roof before a swift correction. As volumes show, traders were betting heavily on a price drop, way below the 50 and 20-day EMAs. However, ETH recovered and is now trading around $176.
If we see positive volume coming into Ethereum, the 200-day EMA may become a new support level. If not, we can expect ETH to bounce off the 50-day EMA before touching the 200-day EMA again.
Litecoin has been the main beneficiary of the current bullish season. At the time of writing, it is sitting near $75 after a recent 10% move upwards.
Still, at the time of writing, LTC has dropped about 23% from its 2019 high. Last week, LTC dropped 16% from about $78 to $67 after a major correction, recovering early this week back above its 50-day EMA to around $76.
The only worrying fact is that volumes keep getting thinner, and at the moment, we see traders betting heavily on a price drop to $36-$44. If that happens, it means the bear market is far from over and traders/investors should be ready to make new entries at these levels.