Bitcoin’s (BTC) massive drop in May 2021 is among its worst monthly performances, according to data from Bybt. The decline has divided the crypto community, with long-term investors considering the fall as a buying opportunity while short-term traders are dumping their positions out of fear.
Glassnode data suggests that long-term HODLers and miners are using the current weakness to accumulate Bitcoin. This transfer of Bitcoin from weaker hands to stronger hands is a positive sign because long-term investors are unlikely to panic and dump their holdings on every bear market correction.
In April, the U.S. personal consumption expenditures price index soared by 3.1% compared to a year ago, the biggest increase over 12 months since July 1992. This indicates that inflation is knocking on the doors. Several institutional investors may use the current correction to add Bitcoin to their portfolios as it is an uncorrelated asset and many consider it as a good hedge against inflation.
Therefore, a sharp plunge below $ 30,000 looks unlikely. However, that does not mean a new bull market will start in a hurry. The price is likely to remain volatile and range-bound before the start of a sustained uptrend.
Let’s analyze the charts of the top-10 cryptocurrencies to spot the critical support and resistance levels.
Bitcoin is in a downtrend. The downsloping moving averages and the relative strength index in negative territory suggest the bears have the upper hand. However, the bulls have other plans as they are trying to start a relief rally.
The BTC/USDT pair has formed a symmetrical triangle pattern. If the bulls push and sustain the price above the resistance line of the triangle, the pair could start a move to the 50% Fibonacci retracement level at $ 44,750 and then to the 50-day simple moving average ($ 50,161). Such a move will suggest that the downtrend could be over.
Contrary to this assumption, if the price turns down from the resistance line of the triangle, the pair could extend its stay inside the triangle for a few more days. A breakdown and close below the support line of the triangle will indicate the resumption of the downtrend.
The bears could then pull the price down to $ 30,000 and if this level cracks, the selling may intensify and the pair could drop to $ 28,000 and then $ 20,000.
Ether (ETH) has rebounded sharply off the support line of the symmetrical triangle as traders attempt to put a higher low. The price could now challenge the resistance line of the triangle where the bears are likely to mount a stiff resistance.
Author: Cointelegraph By Rakesh Upadhyay
This post originally appeared on Cointelegraph.com News