Bitcoin (BTC) hit intraday highs of $30,505 on May 19, extending its weeklong trading range higher. Most cryptocurrencies, like stocks, appear to be stabilizing, indicating a halt in the sour mood among traders. Although the charts show limited upside, some technical indicators applied to BTC and the S&P 500 remain in oversold territory.
Alternative cryptocurrencies, otherwise referred to as altcoins, rebounded, albeit within a six-month decline. Litecoin is up 5% amid optimism around the long-awaited Mimblewimble (MWEB). Charlie Lee, Litecoin founder, gave the estimated day and time of the MimbleWimble (MWEB) activation as May 19, 8:30 p.m. PT or May 20, 3:30 a.m. UTC. Kyber Network Crystal V2 (KNC) rose by more than 15%.
The majority of altcoins are posting gains between 3% and 10% while recouping losses weekly. Crypto analyst, Michale van de Poppe, predicts that the crypto market might be gearing up for a relief rally. “The total market capitalization of crypto swept the lows at $1.1T and looks ready for a relief upwards.” Because of the heavy crash, there seems to be a chance of 20-25% relief over the entire market here. Probably putting Bitcoin around $34-36K. “
He gives the levels expected for Bitcoin to hold to proceed further, ‘’Bitcoin is ready to continue moving towards $32.8K and possibly $34K after this break. I’d like to see a $29.4-29.7K hold for continuation.”
However, a majority of market participants are now expecting a recession ahead, according to a closely watched business survey released on Wednesday.
According to cryptoanalyst and economist Alex Kruger, ‘’Think markets are now trading US recession as the primary driver vs tightening (still matters but now secondary). Bonds signaling that (not falling any longer). Commodities need to fall to strengthen this view. A falling dollar with falling commodities would be ideal for “risk assets”.
He continues, “How can a recession be “ideal for risk assets”? Recession => demand down => inflation down => Fed backs off.The recession would be positive. Stagflation would be hell (as the Fed would not back off)’’.
Risk asset generally refers to assets that have a significant degree of price volatility, such as equities, commodities, high-yield bonds, real estate, and currencies. This might be positive for cryptocurrency in a way, as Bitcoin and Ethereum are showing an extremely high correlation with the traditional market. Intotheblock analytics gives the 30-day correlation between lead cryptocurrencies at 90%.
Fed Chair, Jerome Powell said on Tuesday that he is still committed to keeping inflation under control, but that conditions must shift “clearly and convincingly” before the Fed stops raising rates and tightening monetary policy.
According to the Blockchain Center, only 15% of the top 50 altcoins have outperformed bitcoin in the last 90 days. This demonstrates a fear of taking risks. A protracted surge in alternative cryptocurrencies or altcoins, on the other hand, could imply buying pressure or risk-on over time, similar to what happened between January and August of last year.
The bitcoin dominance ratio, or BTC’s market cap compared to the overall crypto market cap, broke above a short-term downtrend last week and continues to tick higher. A sustained reading above 50% would signal a risk-off or selling pressure similar to what occurred in 2018. Bitcoin dominance was at 45% at the time of publication.
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