Bitpanda Pro • 5 min read
By Bitpanda Pro
The fight between buyers and sellers resulted in a ranging market, where upcoming important events such as El Salvador accepting Bitcoin as legal tender or the expiration of over $1b in Ethereum options will decide the sentiment for the near future.
- Bulls vs. bears and a ranging market
- Good news pushing the market higher
- El Salvador recognises Bitcoin as legal tender
- ETH futures expiry marked as an important date
- Altcoins lag behind BTC
One of the most difficult and intimidating tasks for any trader, or investor, is to try and determine when the price of an asset has bottomed or reached a point where it no longer decreases significantly. Everyone wants to buy low and sell high, but this is not as easy as it sounds. In crypto, market corrections can happen in a very short period, totally unexpectedly. The terms "bull market" and "bear market" describe upward and downward market trends respectively. However, the market also moves sideways, typically after corrections like the ones the crypto market experienced in May. A ranging market is a market where the price is moving back and forth between a higher price and a lower price. The top of a trading range often provides price resistance, while the bottom of the trading range typically offers price support. It is commonly referred to as a range-bound, choppy, sideways or a flat market. Trading in a ranging market can be tough. Without a clear trend to jump on, it can be hard to pinpoint when to enter and exit positions. This is especially true for traders that learned to trade in bull markets where the price is constantly on the up and up. Trading in June can, so far, be described as a ranging market where the price not only found support, but also where sellers were still active and pushing the price lower in attempts to break higher.
The price charts for Bitcoin and other altcoins might be turning bullish after a month of market stagnation, followed by some positive news and overall market optimism. BTC printed three weekly green candles which was very positive after the May slump. The BTC price found support and buyers pushed the price back above the €30,000 level. Another aspect of cryptocurrency optimism is also the Crypto Fear & Greed Index, which is a sentiment gauge. After hitting its lowest point in more than a year in recent weeks, Fear & Greed sentiment has rebounded to the 30’s - approaching neutral territory. The Index uses a basket of sentiment measures to determine whether traders are overly bullish or bearish at a certain price and therefore, whether tokens are oversold or conversely due for a sell-off.
Crypto exchanges registered a net outflow of 22,550 BTC on Monday, the biggest single-day net drain in seven months. Outflows typically mean the traders might be moving their coins to wallets, custody or cold storage and are not intending to trade them in a short period of time, but are instead planning to hold them longer. This kind of news is a bullish event and has triggered higher prices, not only for BTC and ETH, but also for other altcoins, which followed this positive momentum.
Following the massive BTC purchase announcement, MicroStrategy announced it may sell up to €1B in stock to buy Bitcoin. MicroStrategy is one of the biggest institutional holders of Bitcoin and currently owns 92,079 BTC, thereby forming an important market indicator.
El Salvador officially recognised Bitcoin as legal tender, meaning that all businesses can accept Bitcoin for goods or services and the government will act as a backstop for entities that aren’t willing to take on the risk of a volatile cryptocurrency. Rumours on the market suggest some other countries might follow, in addition to Paraguay potentially following suit.
Ethereum regained its €2,000 level over the weekend as altcoins bounced back from a weekly low. The price is showing patterns of higher lows, indicating the market should begin moving higher from these levels and filling the gap in upcoming corrections.
On the 25th of June, ETH will face its largest options expiry in 2021 as more than €1.2 billion worth of options will be settled. This figure is 30% larger than the expiry in March, which took place as the price of Ethereum plunged 17% in 5 days. However, ETH rallied 56% after the above event and reached new all-time-highs. Option expiration events usually create a volatile market and should be taken into consideration.
Bitcoin is still the king in determining the market trend. Currently, Bitcoin’s dominance stands at 45%, up from 39% reached in mid-May, its lowest for 2021. As dominance increases, altcoins start to lag behind BTC and vice versa. The altcoin index currently stands at 82%, which indicates that altcoin season is still on, but the last 30 days were volatile and investors were shifting their money from smaller caps to big caps, which translated into a greater price decrease for some altcoins and a lower recovery price.
ADA, DOT and LINK were all among the best-performing assets last week as confidence returned to market. The LINK price tested the support zone and made a quick rebound back above €20. LINK is now up by about 30% over the last 4 days.
The DOT price is forming a higher low and trading at around the €20 level. Higher highs and higher lows indicate that an uptrend is occurring with an overall increase in value.
ADA is solid at €1.3, as investors seem bullish on updates about Cardano’s upcoming smart contracts rollout plan called Alonzo. The update will likely be concluded around September 2021, according to Cardano development updates. You can read our recently-published Cardano (ADA) Deep Dive article, where we take a detailed look at the Ethereum competitor.
Chiliz was among the best-performing altcoins. Its price has been flying in recent days, and is up more than 20% in the last 24 hours. The price is now trying to reach levels before the correction. Want to know more about Chiliz and the fan tokens? Head over to our article about why they might be the future of the sports industry.
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