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Crypto at a crossroads: Will BTC, ETH and the rest stay bearish or go bullish?

By Daniela Ešnerová


Updated

Illustration of crossroads and signs with a bear and a bull.
Bitcoin (BTC) is trending in one of its most significant consolidation zones and the market is at crossroads,” Blockchain Investment’s analyst Noud Bouwhuis says.– Photo: ShutterStock

Cryptocurrency market players are anxious to see which way bitcoin and other digital coin prices will go this month as macro-economic factors impact the sector.

In other words: Will May mark a turning point for crypto?

Since the US Federal Reserve (Fed) started signalling the end of its quantitative easing program in November 2021, the cryptocurrency market has been on a downward trajectory, now sitting 40% below its all-time high that month. Macro-economic factors, which contributed to the 2022 downturn, prevail and have prompted some long-term crypto investors to sell. But some signs are pointing to bullish momentum around the corner, according to analysts.

"Bitcoin is trending in one of its most significant consolidation zones and the market is at crossroads,” writes Noud Bouwhuis, an analyst at Netherlands-based asset management firm Blockchain Investments, in a recent newsletter issued to subscribers.

He noted that bitcoin now ranges between $37,000 to $40,000, down 45% from its all-time high.

“After lingering around the support level of $38k, investors seem wary if it will hold support," he said.

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Bitcoin to USD

Potential bullish momentum?

Alluding to digital assets' recent correlation with equities and macro-economic factors like inflation and the Russia-Ukraine war, Bowhuis points out that cryptocurrencies could fall further if equities continue to slide.

But there are positive signs as well. 

BTC/USD

57,896.40 Price
+0.490% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

ETH/USD

3,134.11 Price
+0.480% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

XRP/USD

0.48 Price
+6.100% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BCH/USD

376.15 Price
+7.540% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

“Miners are at an increasing hash rate and not selling their tokens," Bouwhuis says. "These are also indicators of potential bullish momentum.”

Bitcoin monthly performance

Bitcoin (BTC) monthly performanceBTC saw battering in May 2021. – Photo: Capital.com

Traders ‘sitting on edge’

Similarly, Alexander Mamasidikov, co-founder of the mobile digital bank MinePlex, pointed to fear, uncertainty and despair (FUD) in the macro-economic picture: “The broader market event in April has set a wild tone of uncertainty in (May) as different sectors of the market gear up for another rising interest rate hike from the US Fed," he told Capital.com. 

“May will open with key data releases that will lend insight into inflation rates for the month of April. On this, investors in the crypto market are sitting on an edge and ready to take advantage of positive trends that can favor the growth of risky assets.

“Should the Fed hike the interest rate in May as broadly predicted, the crypto industry may shrink some more as traditional money managers may want to favor more safe assets. In all, we expect the crypto ecosystem to depend on its own core fundamentals to drive new demands that can impact the prices of digital currencies across the board.”

 

Ambitious expansion

In the wake of cryptocurrency losses,  says Mamasidikov, “there is enough room for growth that we can expect to see a more ambitious expansion in May and for the rest of the second quarter.”

The cryptocurrency community is showing optimism. User Generated Price Predictions at CoinMarketCap.com website predicted BTC's May average value at $46,850 – or 20% increase from the main cryptocurrency's current price.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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