The total market cap of the crypto market has dropped more than ten percent in the past week. Hive lost 12% in this period.
A brief search on the internet showed that there is no apparent reason for the sales in the crypto market. The rise in Bitcoin transaction prices and problems with US banks do not explain a sale of this scale. There is no significant development on the macroeconomic side either. Futures pricing shows that the FED will leave interest rates unchanged on June 14 with a 90% probability.
The crypto market has been correlated with the Nasdaq since the fall of 2021. This situation is due to the sensitivity of technology-based financial assets to interest rates. For the first time in a long time, the crypto market diverged from the Nasdaq on the downside. The chart below shows the course of Nasdaq and Bitcoin since the beginning of the year.
Although there has been no decline in the Nasdaq in the last week, prices in the crypto market have been falling. Why?
Bitcoin Support and Resistance Bands
There is a classic saying that prices that cannot rise fall. Bitcoin price has been trying to break the 29k-30k band upwards for two months. In fact, in mid-April, the price went above 30k, but it could not stay at this level. As an incurable optimist, I expected that the resistance formed at 27k would not be broken to the downside. However, Bitcoin's price broke the 27k resistance level. The price fell sharply yesterday and stabilized at 26k - for now. What's unique about 26k? 26k is the 100-day average Bitcoin price.
It seems unlikely that the price will stay at this level. As many analysts have stated for several months, the price will likely pull towards the 25k resistance, and this price will stabilize at this level.
Bitcoin needs a solid catalyst to break the 30k resistance. On June 14, if the FED does not raise interest rates, Bitcoin may rise towards 35k.
Ethereum Support and Resistance Bands
Ethereum's story is similar to Bitcoin's. Ethereum could not break the $ 2000 level that it tried last summer. Since the price was at a premium of over 50% compared to the beginning of the year, investors decided to sell. When 1850, a significant resistance, was broken, and the price quickly declined to $1750. The 1680-1720 band is an effective resistance zone for Ethereum. If this resistance is broken, Ethereum's price could drop as low as $1300.
What About Hive?
The 39-40 cent range was a significant resistance zone for the Hive. As the price dropped from this level, sales accelerated. Hive's next resistance zone is located at 30-31 cents. For the price to rise, it must cross the 38-cent level, the 200-day average. The price should rise above 42 cents so that we can talk about a new uptrend.
TL;DR
Recently, the demand in the market has weakened. When critical technical levels are broken to the downside, traders step in and cause the selling to deepen. Big fish do not like tiny fish to share their spoils. That's why significant price movements often happen at unexpected moments.
As a small fish, I took full advantage of the previous bull rally. I want to attend the next bull rally too. I don't sell my crypto assets because I don't want to be surprised by a possible rise.
Thank you for reading.