Volatility Soars as Some Cryptos Bounce Back From Bloody Wednesday Sell-Off
• Bitcoin (BTC, Tech/Adoption Grade “A-”) is trying to break through and close above the $40,000 barrier, a key test of this recovery.
• Chainlink (LINK) smashed through the $30 barrier today on an impressive 25% daily gain.
• Polygon (MATIC) has almost entirely erased any skid from the past week as it continues to flex its muscles.
Bitcoin has had a rough time since falling below its 21-day moving average on April 18. BTC has been trading below that level since May 12, right around the time Elon Musk decided to start tweeting again.
However, it appears that Bitcoin was able to find support around the $35,000 level during last week’s dip and is now attempting to make a close above $40,000. A close above that key level would be a strong sign that this recovery is moving in the right direction with good momentum.
Bitcoin’s full recovery could take months. In all likelihood, it will. But a slow and consistent upward path to those new highs would be the healthy way to recover as opposed to another fast, parabolic climb.
Regardless of speed, the key levels to watch on the way up are the 200-day moving average at $40,000, the 21-day moving average and the 50-day moving average, all of which are included in today’s chart.
Here’s BTC in U.S. dollar terms via Coinbase Global, Inc. (Nasdaq: COIN):
Chainlink has also made a nice bounce from its Sunday lows when it fell nearly 70% to about $15. It has already recovered about 100% of that loss.
Talk about a sharp price retracement!
If LINK manages to close above $30 today, we’ll have a new support level. The next level to watch for would be right around $37, which is where the 21-day and 50-day moving averages have converged.
That being said, unless some very bullish Chainlink news is released this week, expect this recovery to slow down. Rest assured, though — the fundamentals are still in check on this decentralized oracle network. Patience will be key moving forward in this next phase of the market.
Here’s LINK in U.S. dollar terms via Coinbase:
We’ve been talking a lot about Polygon lately and for very good reason. Despite a very brief dip in price, which served as an excellent buying opportunity, the MATIC token has been virtually immune from the bearish action that took place over the last two weeks.
The MATIC network has seen immense growth, and so the price of MATIC has continued its climb. It currently sits at just below 18% off its previous high of $2.80.
And Polygon’s fundamentals are improving. The MATIC network has released the first version of its software development kit (SDK), designed to help developers move assets from the Ethereum (ETH, Tech/Adoption Grade “A-”) chain to the MATIC chain and withdraw from MATIC to Ethereum using fraud proofs. This enables developers to deploy ETH-compatible chains using the Ethereum Virtual Machine (EVM).
This launch brings crypto one step closer to turning Ethereum into the internet of blockchains and is very bullish for both MATIC and ETH.
As you can see in the chart below, MATIC did briefly cross below its 21-day moving average before dropping to its 50-day moving average, where it saw a lot of buying volume and quickly bounced back.
Here’s MATIC in U.S. dollar terms via Coinbase:
Notable News, Notes and Tweets
• Erik Voorhees of ShapeShift explains how Bitcoin’s volatility is also the reason for its amazing returns.
• Apparently, GameStop Corp. (NYSE: GME) is cashing in on the non-fungible tokens (NFT) craze — a good fit, in my opinion.
What’s Next
This steep recovery has caught us by surprise, as we weren’t expecting things to turn around so quickly. But the broad market isn’t out of the woods just yet. We expect things to slow down a little bit moving forward — some sideways trading is to be expected following a drawdown like the one we witnessed over the last two weeks.
That said, there are still some assets performing very well right now and others that will likely prosper during sideways trading for Bitcoin and other blue chips.
More speculative altcoin assets tend to perform well during times like these. We’re already seeing a huge boom for MATIC, one that we don’t think will slow down anytime soon. In fact, we see the potential for MATIC to breach $5 in the near future.
Over the next few months — which we expect to be a period of consolidation for the broad market — we’ll be keeping our eyes trained on the decentralized finance (DeFi) sector. If DeFi can manage to decouple from the rest of the crypto landscape, it may confirm a theory that DeFi lives outside of the scope of the regular altcoin cycle.
That would mean, in addition to the potential for DeFi assets to rise as money shifts from Bitcoin into smaller altcoins, there’s also the chance for DeFi to boom as an asset class on its own.
To stay up to date on the developing market narratives and altcoin breakouts, follow along with us here and get your daily Weiss Crypto Alert fix.
Best,
Alex
