Insights > Technical analysis > Volatility return on the crypto market to be expected for the weekend

Volatility return on the crypto market to be expected for the weekend

2 June 2021

temps de lecture 5 minutes

avatar-auteurJulien Moretto

After the purge of May, the last few days are plunging the cryptocurrency market into a very indecisive situation. Bitcoin is down about 3% in a week to around €30,500 ($37,000) on June 2. What to remember: Bitcoin’s price has actually been hovering between €24,500 and €32,7000 ($30,000 and $40,000) since May 19. Technically, a consolidation pattern, called a symetric triangle, has formed. Volumes and volatility have been decreasing for the past few days, reinforcing the doubt and uncertainty of the less serene players.

This phase of the market should end by the end of this week at the latest, and we will see a return of volatility that will give a new direction to the market. In this context, we look with our detailed analysis below at the different possible scenarios, as well as the important price levels to allow you to properly adjust your portfolio, regardless of the direction the market is taking. The return of medium/long-term bullish sentiment will not occur until the price of Bitcoin rises above $45,000 to $50,000.

On the altcoin side, volatility is generally higher than on Bitcoin. In downturns, altcoins lose more than Bitcoin, and in upturns, they rebound more than Bitcoin. So the risk is currently higher for altcoins. On the other hand, Bitcoin’s dominance has not really managed to regain a significant share, proving that we are not yet back in a bullish phase in which Bitcoin would dominate the market again. A few altcoins are showing stronger price support, such as Cardano (ADA) and Chainlink (LINK). These assets will be worth watching as they could be among the best performers in a bullish recovery.

In terms of news and the macro economy, traditional markets have held up better than crypto assets. Investors are not, for the moment, really worried in the face of the first figures showing inflation in the real economy. The reassuring speech of central banks, with their very accommodating monetary policy, still seems to be having an effect. The crypto market is also suffering from a rather average news flow, against the backdrop of continuing restrictions on cryptocurrency-related activities in China, or the recent warnings of regulators, particularly in the UK, on the highly speculative aspect of this market. However, it should be noted that this news flow can very quickly reverse and take positive turns for the ecosystem.

  • According to CoinGecko, market capitalization is down slightly, to $1,700 billion from $1800 billion last week.
  • Bitcoin’s dominance also drops to 40.7% market share from 42% last week.
  • The best performance of the top 50 is attributed to Kusama (KSM) with +25% over one week.

We invite you to discover our video analysis (in french and dated June 1st):

Bitcoin (BTC)

The Coinhouse recommendation :
Wait

  • Bitcoin’s price fluctuations are slowing this week. The asset is down 3% on the week and is trading around €30,500 ($37,000) as of June 2. The chart shows a compression triangle in which the price will continue to move until June 5 or 6. After that, we should be prepared for volatility to return and for the market to take a new, sharp direction. This follows the sharp decline in mid-May, so a further decline is possible.
  • For this week, we recommend waiting for further price indications before resuming decisions. We are holding on to purchases made around the $30,000 mark for Bitcoin. But if you feel that you are too exposed to the market, you may want to consider selling a little at current price levels to protect yourself in case of further declines.
  • If the price breaks out of the triangle from below and breaks through the €28,800 ($35,000) level, the bearish scenario is set in motion and it will become very likely that the price will fall back below €24,600 ($30,000). The €22,000/€22,800 ($27,000/$28,000) price zone will then be an interesting area to buy in, only if we see an upward reaction of the price to its contact. In the case of such a scenario, it is therefore important that you always have some capital to invest.
  • If the price breaks out of the triangle at the top and goes well above €32,000 ($39,000), then a more significant technical rebound will take place. The price area to watch will then be between €36,000 and €40,800 ($44,000 and $50,000), where sellers will certainly try to regain control. We will take partial profits if the price returns to this area.

Ethereum (ETH)

The Coinhouse recommendation :
Wait

  • Ethereum (ETH) still shows more volatility than Bitcoin but follows similar price movements: corrections and rebounds are more pronounced. The asset is almost stable over a week, at -0.4% to quote around €2,200 ($2,700) on June 2nd. As with Bitcoin, we can draw a compression triangle that shows the tightening of price fluctuations in recent days.
  • We also recommend waiting for the technical situation to clarify and making sure you are not overexposed to Ethereum. It is very likely that Ethereum’s price will take the same direction as Bitcoin’s. If volatility returns with a rise in price, the next interesting price zone will be between €2,460 and €2,750 ($3,000 and $3,350), where we will take partial profits. On the other hand, in case of a bearish exit, it is not impossible that the price will go down to the €980/€1,140 ($1,200/$1,400) area, which we will consider as a buyback zone if we see a positive price reaction to it.

Chainlink (LINK)

The Coinhouse recommendation :
Buy on support

  • Chainlink (LINK) has performed well this week, gaining 15% to trade around €25.40 ($31) on June 2. A performance that shows a good resistance of this asset in this uncertain situation. In mid-May, Chainlink, like all altcoins, experienced a violent decline. The $20 area, which was an important market peak dating back to the summer of 2020, acted as support, causing an impressive temporary rebound of around 140%. Since then, Chainlink’s price has been congested like the rest of the market. If you have been buying chainlinks around the $20-$25 mark, then you should now wait. This $20-$25 support is still a great buying area. However, the $35-$40 resistance will be difficult to break through directly, and partial profits will have to be taken there. If the overall market resumes its uptrend, Chainlink’s price will return to $44-$49, close to its all-time highs. This will be another area where the more cautious will secure some gains.

Tops & flops of the week (top 50 marketcap)


Tops

1- Kusama (KSM) : +25%
2- Leo Token (LEO): +18%
3- Cardano (ADA): +15%


Flops

1- Internet Computer (ICP) : -20%
2- Ethereum Classic (ETC) : -12%
3- Klaytn (KLAY): -10%

All information in this article is provided for informational purposes only, although it has been compiled from reputable and reliable sources. It does not constitute an offer to buy or sell digital assets, nor does it constitute an offer to provide services in respect of digital assets, nor does it constitute advice, inducement or recommendation to deal in such digital assets. It constitutes simple information that is under the user’s absolute control. We inform you that if you choose to invest in digital assets, you must be aware of our general terms and conditions of sale (https://bit.ly/2FGW2ek) and accept the various risks listed and defined on our legal warning page (https://bit.ly/3c4sQKc)

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