This week witnessed a significant decline in the value of the cryptocurrency market. Bitcoin and several altcoins recorded daily losses as new lows in price levels were tested. Bitcoin, for example, fell below the $30,000 threshold when it entered the $29,000 region.
XRP also recorded a massive sell-off with a 7.44% decline in price on 12 May. However, fortune smiled on this token as it made a complete recovery on 13 May. The token rallied up by 10% following the filing of Ripple’s reply to the Securities and Exchange Commission’s Attorney-Client Privilege claims concerning William Hinman’s speech and notes.
These documents were suggestive of a possible conflict of interest from the former SEC official which might destroy the Commission’s case against Ripple.
In what other ways in the last 24 hours did the filing of this reply help the XRP token recover from the week-long losses?
Hold on, it is only ephemeral
While the XRP token quickly recorded gains following the news of the filing, the bears immediately came in to push for a reversal. This left resulted in the token shedding 5% of the gains earlier made. At press time, the coin stood at $0.4296.
Standing at 3.2 billion at the time of writing, the transaction volume for the XRP token was up by 8% in the last 24 hours. However, with no corresponding growth in price, the spike in transaction volume could only mean that following the temporary pump in price, investors exited their positions to take profits.
Furthermore, indicators on the XRP price chart suggested significant distribution of the token in the last 24 hours. Although the price was marked by a green candle, the RSI and the MFI maintained positions dangerously close to the oversold positions yesterday following the news and remained there at the time of press.
The RSI for the token stood at 29, while the MFI maintained a position at 22 at the time of writing. With a position above price, the 50- EMA trend line hinted at a bearish bias and increased selling pressure on the token at the time of writing.
No Significant Traction
Despite the temporary uptrend in price, data from the chain showed no that the news of filing left no significant impact on the performance of the XRP token.
At 37.4k active addresses on the network at the time of writing, the token recorded an 11% decline from the 42,132 active addresses recorded on 13 May.
Furthermore, the last 24 hours were marked with a decline in Whale Transaction Count for the token. For transactions over $100k, despite the news of filing, transaction count dropped by 81%. For transactions over $1m, transaction count dropped by 85%. This decline suggested that despite the news of filing, the price of the token might have gone up. However, the “big boys” were not impressed.
Bitcoin [BTC]: Here are a few signals that point to a strong possibility of a recovery
Bitcoin price seems to have found its stable footing at $29,100 after a recent flash crash below it. This quick recovery and retest will be a testament to the bulls’ power and determine the next course of action for BTC.
Bitcoin price to provide temporary gains
Bitcoin price created a bearish continuation pattern known as a bear flag between November 2021 and April 2022. After a brief consolidation in late April, BTC triggered a breakout from the setup, triggering a massive sell-off.
The pattern contains a massive downswing known as “flagpole” followed by a consolidation phase known as “flag.” A breakout from this coiling-up often results in the price continuing its descent, which is why the setup is referred to as the continuation pattern.
This technical formation forecasts a 46% downswing, determined by adding the flagpole’s height to the breakout point. On April 22, BTC breached the flag’s lower trend line at $40,032, forecasting a target of $21,584.
So far, the post-FOMC volatility combined with the LUNA-UST debacle has stirred the market and caused it to crash violently. As a result, BTC dropped to $25,333, taking altcoins with it. However, the recovery of Bitcoin price seems to be going well as it is back above the $29,100 support level.
If bulls can manage a successful retest, it will reveal that a further uptrend is likely. In such a case, investors can expect a move to $35,100. This uptrend would constitute a total of 17% gain and is likely where the upside is capped.
Further removing the uncertainty for the retail investors’ minds is the recent tweet from the Luna Foundation Guard (LFG). The announcement stated that LFG has sold 80,081BTC from its reserve that held 80,394 BTC.
1/ As of Saturday, May 7, 2022, the Luna Foundation Guard held a reserve consisting of the following assets:
· 80,394 $BTC
· 39,914 $BNB
· 26,281,671 $USDT
· 23,555,590 $USDC
· 1,973,554 $AVAX
· 697,344 $UST
· 1,691,261 $LUNA
— LFG | Luna Foundation Guard (@LFG_org) May 16, 2022
This news suggests that a further sell-off seems unlikely, which could push buyers to start bidding.
The tweet further stated,
“The Foundation is looking to use its remaining assets to compensate remaining users of $UST, smallest holders first. We are still debating through various distribution methods, updates to follow soon.”
Supporting this outlook for Bitcoin price is the supply on the exchanges chart. This index tracks the number of BTC held on exchanges, which could be interpreted as a potential sell-side pressure. In case of a sell-off, investors would not think twice and could panic sell, causing a cascade of sell orders that could steepen the downswing.
However, for Bitcoin, the number of tokens held on centralized entities has fallen by 50,000 BTC, denoting an effective decline in the potential sell pressure. This development falls in line with the bullish outlook from a technical perspective
Therefore, investors can expect BTC to rally in the near future.
Cyptopunks: Despite 560% spike in sales volumes, why’s there fear in the air
In March, Yuga Labs, the creators of the Bored Ape Yacht Club announced the acquisition of CryptoPunks. CryptoPunks have captured plenty of attention- thanks to endorsements from celebrities and athletes. However, despite the fame, the project has witnessed significant backlash from the community.
Analyzing this ‘punk’
At press time, the NFT marketplace yielded an overall sales volume of around $20 billion as per CoinMarketCap. Although, given the ongoing bearish sentiment in the crypto market, many projects have suffered a fall. However, CryptoPunks recorded a new milestone that placed the project just below Axie Infinity when it comes to the all-time ranking of NFTs by volume.
The 24-hour trading volume of CryptoPunks increased by 371% to $3.98 million, ranking second in the 24-hour trading volume of the NFT market. In fact, at press time, the platform witnessed a 560% rise as the trading volume crossed the $5.1 million mark.
Looking at insights on OpenSea, CryptoPunks, indeed enjoyed a much needed uptick in the sales domain as seen in the graph below over 90 days.
Likewise, given the demand, holders’ count increased by more 3% within the same period. Likewise, given the need, the current floor price rose to 53.8 ETH, with a market value of $1.67 billion.
Since January 2022, the NFT project grew substantially in total transaction counts, including a surge in unique monthly users, reaching 501 transactions and an approximate sales volume of $6.1 million.
All smiles here?
Well, this certainly isn’t the case here for this project. The investor who bought CryptoPunk #273 for more than $1 million less than seven months ago sold the NFT for $139,530 — at a massive almost 80% loss. Out of the last 10 CryptoPunks that have been sold, eight were sold at a loss.
Such headwinds did create a lot of speculations and FUDs for this project.
Chainlink: Key levels where investors can considering creating a position
Since striking its ATH a year ago, Chainlink (LINK) bears have made a visible effort to find fresher lows. The lower peaks coupled with even lower troughs helped the sellers pierce through the 15-month trendline support (now resistance).
An extended selling vigor can now drag LINK to retest its $6.5-support before the bears give a leeway to the buyers. At press time, LINK traded at $7.37.
LINK Daily Chart
Despite upholding the $12-mark for over 16 months, the bulls failed to defend this level after the bears made the most of the fear sentiment and provoked liquidations. Without a surprise, it became viable for them to pull off a nearly 60% drop from the $12.6-level. In this bloodbath, LINK took a plunge toward its 22-month low on 12 May.
The current price was slightly overstretched from the alt’s 20 SMA (red) and 50 SMA (cyan). Also, the gap between the 20 EMA and 50 EMA has significantly risen to display a one-sided bear dominance. Historically, the buyers have bridged the overextended gap between the 20/50 EMA by propelling short-term rallies.
The Relative Strength Index failed to show a strong revival after undertaking a bearish divergence with price. An undesired fall below the 30-mark could lead to a much-needed recovery from the oversold region.
After peaking at its record high, the -DI line showed some slowing signs. Keeping in mind its past tendencies, it could head south and thus lead to an ease in the selling pressure.
Taking cognizance of the one-sided bearish dominance revealed by the indicators, a continued fall could see testing grounds at the $6.5-level. With the overstretched readings on its Moving averages, RSI and DMI, the buyers would be keen to show up in the $6.5-$7 zone. In which case, they would mount on buying volumes to snap the $8-level in the coming sessions.
Even so, an overall market sentiment analysis becomes vital to complement the technical factors to make a profitable move.
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