Late May relief rally

30 May 2022

Late May relief rally

Bitcoin spent most of last week oscillating around $29,000 but has seen promising price action over the weekend, pushing above $31,500 for the first time since the May 12th crash, seeing a 9% gain over the last seven days.

While BTC rested around $29,000 last week, both ETH and BNB saw a slight sell-off into the midweek. Both coins have recovered their midweek losses on the backdrop of the strength in BTC over the last few days but sit in the same price range as last week.We’re possibly seeing some early signs of decoupling in the market. The ETHBTC correlation has started to trend downwards, and last week’s recovery in U.S. equities was not reflected in the crypto market, leading the 30-day correlation between BTC and U.S. equities to decline to late April levels.

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Source: Tradingview (Coinbase, Binance US)

Certain altcoins have seen a strong recovery over the last week, with Cardano being the winner among the top 50 coins, seeing 28.7% gains. Nevertheless, we note that all top performers have seen yearly losses of 50% or more, while Avalanche, one of last year’s strongest coins, is down 76% for the year.

May ends with a surge in the bitcoin dominance

Although the bitcoin price has finished May down 18%, it has still outperformed most of the crypto market, as traders view it as the blue-chip cryptocurrency. The Large Caps Index is down 24%, the Mid Caps Index has decreased by 28%, and the Small Cap Index is the worst performer after declining 33%.

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Source: Bletchley Indexes

The rest of the market’s performance relative to bitcoin has led the bitcoin dominance to grow from 42.5% at the start of May to 45.9%. Bitcoin hasn’t been this dominant since October last year.

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Source: CoinMarketCap

May started terribly with the Luna collapse coupled with general turmoil in the financial markets, leading most cryptocurrencies to fall by double-digit percentage points in a matter of days.The steep decline only lasted a few days, and the market has been very stable for the second half of the month, and we even saw a welcomed rebound during the last couple of days. Is the crypto market’s strong finish in May a sign of what awaits us in June, or will we go through yet another depressing month? Only time will tell.

Fakeout or breakout?

The bitcoin price just broke above a critical resistance level after ranging below it for three weeks. Is this a breakout, or just a fakeout?After falling sharply at the beginning of May, the bitcoin price stabilized around $30k and has been rangebound between $29k and $30,500.The bitcoin price just broke through the $30,500 resistance in its biggest daily upwards price movement since March.If the price continues upwards, the next resistance to break is around $34,500, which served as support for the bitcoin price at the beginning of 2022.Further towards the upside, the next resistance level to keep an eye on is at $38k, which also has served as support on multiple occasions this year.Looking downwards, $29k has proven to be a strong support level that bitcoin has rested upon during the second half of May.

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Source: Tradingview (Coinbase)

Almost one month of extreme fear

The Fear and Greed Index currently sits at 16, slightly increasing from last week's 12. It has now indicated extreme fear for almost the entirety of May, corresponding to a 26-day stay in the extremely fearful territory, the longest since April 2020. Such prolonged periods of poor market sentiment are not unusual, but typically, these periods are interrupted by short spikes of hope. It's safe to say that market participants have had no such hope in May.

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Source: Alternative.me

The bitcoin spot volume stabilizes

After reaching its highest level since May 2021 two weeks ago, the 7-day average real* bitcoin spot volume has now stabilized at the normal levels seen in 2022, around $4 -$5 billion. FTX continues to grow its market share, as its bitcoin spot volume surpassed Coinbase's for the first time ever in May.

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Source: Skew, Tradingview (Binance, Binance US, Bitfinex)

Biggest daily price increase since March

Bitcoin continues to trade with low volatility as the market has calmed down following the market crash earlier in May. The spot volume has retracted to its usual level, and the bitcoin price has stabilized around $30k. Still, yesterday we witnessed bitcoin's biggest daily return since March, with the price increasing by 7.8%. Such a daily return should be highly welcomed by anxious market participants.

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Source: Tradingview (Coinbase)