Yesterday, Bitcoin started the month of May in the worst possible way by brutally breaking the USD 60,000 price support, thus changing the outlook of the forecasts.
In the morning, the sales were so consistent that they pushed the cryptocurrency to below 57,000 USD, before recovering slightly during the evening.
Let’s now see what the future price predictions are for this month: is the bull market over or is there also room for some bullish movement?
Let’s see everything in detail below.
Bitcoin opens the month of May by breaking the USD 60,000 support: price forecast
Workers’ Day on May 1st was painted red within the crypto market after Bitcoin marked a major leg down taking its price below the significant support of USD 60,000 and leading traders away from optimistic forecasts.
The largest portion of the sell-off was concentrated in the period from 8:00 to 10:00 in the morningwhere the currency reached a minimum of 56,550 USD, then recovered slightly in the afternoon and hinted at a timid recovery in the evening.
In particular, at 8:00 pm there was a brief assault by the bulls on 59,000 USD, which was immediately retracted by the bears in the following hourly candle.
At the time of writing the article, the price of Bitcoin is trading at 57,700 USD, the market capitalization is 1.136 trillion dollars and the volume in the last 24 hours is around 46 billion dollars.
By broadening our horizons we can clearly see how this week’s dump has irrevocably established the formation of a very strong top (not necessarily the ATH of this cycle).
Even the RSI, where having been in overbought territory for several months, has been rejected downwards, a symptom that the bears are maintaining control of the market at the moment.
The entire month of May could tend to be boring for the price action of Bitcoin as well as for other asset classes such as shares: as the motto says “sell in may and go away”generally from May to October there are disappointing performances in the stock market.
The first thing to do now before making medium-term forecasts is go in search of the support that will be able to support the leg down in progress: if a price rebound starts from 57,000 USD, we could frame yesterday’s one as a false movement.
If the capitulation continues to USD 52,000 or worse to USD 48,000, it may then take longer for a recovery, discarding the option of an instant recovery.
Below 48,000 USD we could welcome a formally bearish summer, with the possibility of recovery starting from the last quarter of the year.
For now, NO PANIC: we are still within a valid macro-range, from which the Bitcoin graph could restart at any moment.
Analysts at cryptocurrency exchange Bitfinex agree that May will be a month of rest for Bitcoin lleaving room for potential attempts to break both sides of the chart without managing to take a decisive direction.
Here is what is reported in your weekly analysis:
“We believe we could see a 1-2 month consolidation in Bitcoin prices, trading in a range with $10,000 swings on either side. We expect the positive impact of the halving, which has led to a reduction in the supply of Bitcoin, will be seen in the coming months. At this point, the economy is also expected to perform better, having achieved a soft landing and avoided a recession, providing further momentum for cryptocurrencies.”
On-chain settlements and data
Yesterday the loss of 60,000 USD for Bitcoin and the subsequent sales blew up several bullish positions on the crypto derivatives markets, with settlements of $250 million.
It should be noted that the previous day another 330 million dollars were liquidated while the cryptographic currency violently lost the price of 63,000 USD.
Now, while the forecasts suggest the possibility of a prolonged laterality for a few weeks/base, the most important liquidation levels are consolidating.
In particular in the range from 56,800 USD to 56,000 USD we find around 500 million dollars of potential liquidations in the event of a downward breakout, while around 67,300 we find over 2 billion of hypothetical bear liquidations. Above 71,500 USD another billion-dollar load of short positions ready to jump.
As Bitcoin’s price decline shifts forecast bias more and more to the downside, open interest suggests that the situation is not as dramatic as it seems.
Despite the volatility, the indicator remained around $16 billion yesterday, behaving in a totally different way compared to April 13th where a similar downward movement in prices was recorded.
This makes us understand that the interest in speculation is still relatively medium/high and that the declines have not killed the market.
The funding rate of the derivative markets is still positive despite having been significantly reduced in recent days.
Furthermore, observing the indicator in its “weighted” version with the open test, we can observe a significant movement on April 24, where we saw the transition from negative to positive territory, a symptom that the bulls are paying a premium to keep open their own positions.
This means that the bullish spirit has not yet abandoned the market and there could be some unexpected surprises in the coming days.
To conclude the analysis we report the chart of “MVRV Z score” of Bitcoin, which serves to identify whether the crypto asset is overvalued or undervalued compared to its fair value.
Generally above a ratio of 3.5 the currency could be overvalued while with a ratio lower than 1.5 there would be the opposite condition.
At the current level, the chart shows that Bitcoin still has a lot of room to print green candles and could be undervalued by the market right now.
