Relevance up to 08:00 2022-06-07 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
In May 2022, Bitcoin set a historic milestone and formed a record nine red candles in a row. This "streak" is the clearest indicator of a bearish trend in the cryptocurrency market. However, everything has an end, and the nine-week bear run is over. Bitcoin managed to form the first green candle in two months.
However, Bitcoin and the crypto market are still within the downward trend, and the first bullish candle is a clear confirmation of this. Initially, large volumes of purchases were observed, thanks to which sellers managed to push the price to the level of $32.3k. However, the cryptocurrency failed to storm an important resistance zone for the second time. There is a large volume of pending sales concentrated in the area of $31.5k–$32.2k, which indicates bearish market sentiment. Technical indicators on the weekly timeframe demonstrate the prerequisites for a long period of consolidation without significant jumps in both directions.
In part, this may indicate stabilization and reaching a local bottom at $25k. On the daily chart, the buyers' attempt to break out of the $29k–$31.5k range is clearly visible, which ended with a false break of the $32k level. This suggests that the asset continues the period of consolidation in the specified zone without prerequisites for growth.
Despite this, in the daily context, Bitcoin is losing relevance as a stable asset. We see an active increase in longs, as well as positive signals on technical metrics. RSI and stochastic oscillator indicate an increase in sales volumes. The MACD also maintains its upward momentum, which may mean another, and this time, a successful retest of the $31.5k–$32k area.
However, should we regard the positive dynamics as a trend reversal? Definitely not. Bitcoin is still in a powerful bear market and sellers are dictating their terms. The cryptocurrency has passed the local bottom at $25k. It is unlikely that the price will drop lower, as the market has clearly established the boundaries of the protection of their positions. However, it is important to understand the context. Bitcoin set a new local low during the collapse of Terra, which added to the panic in the market. As a result, even long-term owners began to sell the asset. This is an important factor that continues to put serious pressure on BTC coin quotes.
But more importantly, the whole market has seen this sell-off, and it will take some time to restore investment confidence in Bitcoin. The fear and greed index is still at the 13 mark, which indicates the absence of fundamental demand for BTC.
Another important signal indicating the preference for fiat over cryptocurrencies is the USDT Dominance Index. In the classical sense, during the consolidation of this indicator, the market accumulates volumes for further sale. In May, we saw a similar situation, but as a result, the level of USDT dominance fell, which means that investors are willing to fix funds in fiat. The drop in the metric could be attributed to the outflow of capital to USDC. However, this stablecoin is also losing its position in the market.
All of these factors indicate that investors continue to view cryptocurrencies as a bad investment. It is important to note that a general positive trend can be traced, the activation of longs and active accumulation indicates a gradual stabilization of the situation.
But at a fundamental level, there is too much fear among investors about the prospects for cryptocurrencies. Most likely, the situation will clear up in July, when the first results of the withdrawal of liquidity from the market become clear. But until then, we should expect a consolidation movement from BTC/USD and other digital assets.