Bitcoin futures are off to a rocky start, with price volatility and spiking volume causing more than one high-profile Bitcoin trader to retire. However, the rest of the cryptocurrency market is seeing an uptick in trading as investors look for alternatives after Bitcoin’s latest crash.
With Bitcoin seeing a dip in the market, altcoins have seen a relief rally. However, traders are still deciding whether or not to buy the dip. Read more in detail here: should i buy this crypto dip.
On May 10, traders witnessed a relief rally across asset classes after the May 9 panic, which saw Bitcoin (BTC) briefly fall below $29,730.
Due to a multitude of reasons, including sparsely traded assets and limited liquidity, market downturns often correlate to higher losses in cryptocurrencies, but this also translates to larger bounces once the market recovers.
Market performance on a daily basis. Coin360 (source)
On May 10, many projects gained double digits, including Maker (MKR), the protocol responsible for generating the DAI (DAI) stablecoin, which profited from the fallout from Terra (LUNA) and its TerraUSD (UST) stablecoin.
Persistence (XPRT) and its liquid staking token, pSTAKE (PSTAKE), saw increases of 16.4 percent and 39.8 percent, respectively, after Binance Labs announced a strategic investment in the liquid staking platform. Polygon (MATIC) recovered as well, gaining 14.59 percent.
Traditional market correlations are still present.
Despite popular notion that the crypto market will function as a buffer against TradFi volatility in 2022, the link between Bitcoin and the stock market remained significant.
The volatility that characterizes the cryptocurrency market has started to show up in conventional markets, as indicated by the Dow Jones Industrial Average’s price movement on May 10, which soared more than 500 points before reversing at the time of writing.
The Nasdaq and S&P 500 have fared a little better, notching gains of 0.9% and 1.92%, respectively.
Bitcoin expert Willy Woo added to the evidence of a link between crypto and conventional markets by posting the chart below, saying that “fundamentals [are] taking a second seat to fear driven trading.”
1-week chart of BTC/USD vs. 1-week chart of SPX Twitter (source)
According to Willy Woo,
“What I believe is that we are trading macro and stocks, not Bitcoin. The SPX support in the right pane determines BTC directionality, whereas the comparable BTC support is in the left pane.”
Michael Saylor reassures investors amid market turbulence $BTC, $MSTR
The S&P 500 could drop much further
While May 10’s relief rally sent crypto and stock prices higher, market analyst Caleb Franzen posted the following chart warning about a bearish head and shoulders formation on the S&P 500 chart that could result in the loss of another 500 points.
1-day SPX/USD chart. Twitter (source)
According to Franzen,
“After my $4,000 prediction was reached, it’s difficult to choose downside targets, but I believe the MOST LIKELY support zone is down around $3,530–$3,590. From September until October 2020, this is the white resistance range.”
The total cryptocurrency market capitalization is currently $1.444 trillion, with Bitcoin commanding 41.5 percent of the market.
The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.
The “crypto to buy during dip” is a question that has been brought up by many traders. The altcoins have seen a relief rally, and Bitcoin traders are deciding whether or not to buy the dip.
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