Markets

Here are 3 altcoins that could surge once Bitcoin flips $35K to support

ADA, MATIC and XLM appear well positioned for a bullish breakout once BTC flips the $32,000 to $35,000 zone to support.

Bitcoin (BTC) and the wider cryptocurrency market are taking a breather after the rally on May 31. Meanwhile, most altcoins remain severely oversold, with most between 70% and 90% below their all-time highs.

What is clear is that fear is everywhere and blood is in the water. Risk-on markets are suffering worldwide, but it is exactly these kinds of conditions that create opportunities where professional money accumulates and adds to positions.

Let’s take a look at three altcoins that could be positioned for a rebound if the broader market enters a new uptrend.

ADA could be setting up for an 80% surge

Cardano (ADA) has a significantly bullish update coming very soon. The much anticipated Vasil hard fork, which increases performance and adds more Plutus enhancements, is planned for June.

From a price action perspective, ADA is positioned in a strong price range that will likely support any further upside that the broader market experienced. Within the Ichimoku Kinko Hyo system, ADA has maintained a significant gap between the bodies of the past three weekly candlesticks and the Tenkan-Sen.

When the bodies of the candlesticks and the Tenkan-Sen have noticeable gaps, a correction often occurs within three to four days. This is because the equilibrium is out of sync, the Tenkan-Sen and price action like to stick together as much as possible. A mean reversion back to the Tenkan-sen is extremely likely when one strays too far from the other.

ADA/USD weekly Ichimoku Kinko Hyo chart Source: TradingView

However, if the broader cryptocurrency market experiences a big bounce, ADA price may shoot past the Tenkan-Sen to test the Kijun-Sen. ADA has not tested the weekly Kijun-Sen since the week of November 8, 2021.

The weekly Kijun-Sen is at $1.02 and contains the 2021 volume point of control and the 50% Fibonacci retracement of the all-time high to the low of January 25, 2021.

ADA/USD weekly chart (Binance) Source: TradingView

MATIC aims for $1

Looking at the weekly chart of Polygon (MATIC), one can’t help but notice that it looks strikingly similar to ADA. MATIC and ADA both have sold off from $3 and both are stuck in the mid $0.50 to mid $0.60 price range, but that is where the similarities mostly end.

Fundamentally, MATIC remains strong. Governments worldwide have attempted to restrict or ban mining due to excessive energy costs for proof-of-work blockchains and MATIC is likely to avoid government scrutiny and attract supporters as a positive example of environmental stewardship.

Like ADA, MATIC has significant gaps between the bodies of its weekly candlesticks and the Tenkan-Sen. Although, MATIC’s gaps are more significant. Likewise, the gap between price and the Kijun-Sen is much more meaningful.

Within the Ichimoku Kinko Hyo system, there is a max-mean that price will travel away from the Kijun-Sen before experiencing a violent mean reversion. For MATIC, that threshold is 63%.

MATIC/USD weekly chart (Binance) Source: TradingView

Any renewed bullish momentum ifor Bitcoin will likely see MATIC lead the altcoins higher until it reaches the $1.00 to $1.15 value area near the weekly Tenkan-Sen.

XLM lags the altcoin market, but it’s known for surprises

Sometimes it is hard to forget that during the last major bull run from the COVID crash to November 2021, there were a few major altcoins that did not hit new all-time highs. Stellar (XLM) is one. In fact, the last time XLM made a new all-time high was the week of January 8, 2018, almost four and a half years ago!

One thing that XLM has going for it that not many other weekly charts have is a very clear falling wedge pattern. Out of the standard rectangle and triangle patterns in technical analysis, wedge patterns are the most powerful. What makes its wedge so powerful is the probable fakeout breakout lower.

XLM/USD weekly chart (Binance) Source: TradingView

The most probable direction for a falling wedge is higher — but breakouts below a falling wedge can yield powerful short opportunities. The typical behavior that analysts and traders expect to see with a failed falling wedge is an immediate and swift sell-off, but so far, bears have been unable or unwilling to do so.

Instead, the weekly chart for XLM shows a very strong probability of a fakeout. If bullish momentum returns to the cryptocurrency market, XLM is likely to hit the second peak of the falling wedge near the $0.38 value area.

Classic technical analysts believe that technicals lead fundamentals. If that is true, then altcoins like XLM, MATIC, and ADA could be positioned in very desirable conditions in the event of any new bull run.

However, downside risks remain a concern, but they are likely extremely limited. If a new uptrend fails to materialize before the end of June, the cryptocurrency market will probably move sideways until a major breakout higher or lower occurs in the Fall.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

DeFi protocols launch stablecoins to lure new users and liquidity, but does it work?

In the wake of UST’s collapse, several DeFi platforms launched their own stablecoins to lasso new users and liquidity but are investors willing to take on the risk in return for 20% APY?

Stablecoin projects have been thrust into the limelight over the past month as the popularity of algorithmic stablecoins and the collapse of the Terra project put a spotlight on the important role dollar-pegged assets play in the crypto market.

In response to the void left by UST, multiple protocols have released new stablecoin projects in an effort to attract new users and capture liquidity. Generally speaking, the DeFi sector is full of gimmicks that are designed to entice user participation and it’s possible that the recent stablecoin launch programs are simply the next trending tactic being used to boost TVL on DeFi platforms.

Let’s take a look at some of the newest stablecoins to hit the market and what impact they may or may not be having within DeFi.

USDD

One of the biggest stablecoin projects to launch recently is USDD, a decentralized algorithmic stablecoin on the Tron (TRX) blockchain. Since launching on May 5, USDD has experienced rapid growth in terms of its circulating supply, which currently sits near 601.86 million and its integration within the Tron ecosystem is relatively widespread.

USDD is also available on the Ethereum (ETH) network and the BNB Smart Chain (BSC), which has helped to increase the tokens distribution along with providing additional yield opportunities.

There are multiple liquidity provider pools available to USDD holders that offer 20% APY or more across various protocols, including JustLend, SunSwap, Ellipsis and Curve. In the time since USDD launched, the price of TRX has increased 17% from $0.07 to its current price of $0.0818 after briefly hitting a high of $0.092 on May 31.

fUSD

Fantom recently released fUSD, its first native stablecoin, which is an over-collateralized and can be minted using Fantom (FTM), USD Coin (USDC), Dai (DAI), SpiritSwap (SPIRIT) and wrapped Tether (fUSDT) as collateral.

The new @FantomFDN's native stablecoin, $fUSD…

Brings all the goodness of decentralization while delivering stability:

✅Governed by the community.
✅Full transparency.
✅Overcollateralized stability.

Plus, new collateral assets you’ll be happy to see!

pic.twitter.com/JMaD4D5oWZ

— Stader.Fantom (@stader_ftm) May 25, 2022

In an effort to attract more liquidity, the Fantom Foundation set the fUSD staking reward at 11.3% and created a fUSD to USDC swap interface that allows users to purchase fUSD and repay their positions to avoid liquidations.

At the time of writing, the circulating supply of fUSD stands at 60,993,403 and it is trading at a price of $0.7112, which is significantly below its $1 peg.

aUSD

Following the official launch of the first parachains within the Polkadot ecosystem, the Acala decentralized finance platform released aUSD as the first native stablecoin for Polkadot projects.

aUSD is an over-collateralized stablecoin that can be minted by pledging Polkadot (DOT), staked Polkadot (LDOT), Kusama (KSM), staked KSM (LKSM), Acala (ACA) or Karura (KAR) as collateral.

Pledging LDOT and LKSM as collateral allows DOT and KSM holders to continue earning staking rewards while simultaneously being able to borrow collateral against their holdings.

On March 23, Acala joined with nine other parachain teams to launch a $250 million “aUSD Ecosystem Fund” that is designed to support early-stage startups planning to build strong stablecoin use cases on any Polkadot or Kusama parachain.

Acala, nine parachain teams, and a group of venture funds have launched the $250 million 'aUSD Ecosystem Fund' ️

The fund is seeking early-stage projects from any @Polkadot or @KusamaNetwork parachain with strong $aUSD stablecoin use cases https://t.co/OJ2V47ZUry pic.twitter.com/NDgLg2bG8N

— Acala (@AcalaNetwork) March 23, 2022

As of May 31, 6.31 million aUSD have been minted and the amount of pledged capital locked on Acala stands at $91.53 million.

OUSD

Origin protocol’s OUSD is a stablecoin that is fully backed by more recognizable stablecoins like USDC, USDT and DAI.

Users can mint OUSD by pledging their stablecoin collateral on the Origin Dollar protocol and earn a yield of 12.79% by holding OUSD in a wallet. Yields that are paid to OUSD holders come from automated strategies managed by smart contracts that put the deposited funds to work in DeFi.

After briefly dropping to a low of $0.967 on May 12 during the height of the UST fallout, OUSD has, for the most part, maintained a price above $0.996 and has a current circulating supply of 63,605,444.

Price analysis 6/1: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, AVAX, SHIB

BTC and altcoins met resistance at a key moving average, leading traders to wonder whether the current pullback is a lower support test, or proof that bears are still in control.

Bitcoin (BTC) has made a tentative start to the month of June, suggesting that bears have not gone into hibernation just yet. Although Bitcoin is trading nearly 55% off its all-time high of $69,000, whales and institutions remain cautious and have not jumped into the market with gusto, according to BlockTrends analyst Caue Oliveira.

According to CryptoQuant contributor Venturefounder, if Bitcoin repeats the historical patterns seen after the previous halving cycles, then a bottom may be formed between $14,000 and $21,000 in the next six months. Thereafter, Bitcoin may chop around the $28,000 to $40,000 range for a large part of the next year and be around $40,000 during the halving.

*Daily cryptocurrency market performance. Source:* *Coin360*

Crypto’s bear market has not stopped Goldman Sachs from exploring the possibility of integrating its derivatives products into FTX.US derivatives offerings. This suggests that the investment bank expects derivatives demand to pick up in the future.

Has Bitcoin started a bottoming formation? Is the short-term downtrend in altcoins over? Let’s study the charts of the top-10 cryptocurrencies to find out.

BTC/USDT

Bitcoin reached the overhead resistance at $32,659 on May 31 but the bulls could not clear this hurdle. The Doji candlestick pattern on May 31 indicates uncertainty among the buyers and sellers.

This uncertainty resolved in favor of the bears on June 1 and they pulled the price below the 20-day exponential moving average (EMA) ($30,741). If the price sustains below the 20-day EMA, the next stop could be $28,630. The buyers are expected to defend this level with all their might.

If the price rebounds off $28,600, the BTC/USDT pair could again attempt a rally to $32,659. If that happens, the pair may consolidate between these two levels for a few days.

The next trending move could begin if the price breaks above or below the range. If the price soars above $32,659, the rally could reach the 50-day simple moving average (SMA) ($34,629). The downtrend could resume on a break below the $28,630 to $26,700 support zone.

ETH/USDT

The bears stalled Ether’s (ETH) relief rally at the 20-day EMA ($2,009) on May 31, indicating that they are not allowing the bulls to get a foothold.

The bears will try to pull the price to the vital support at $1,700. This is an important level for the bulls to defend because if it cracks, the ETH/USDT pair could witness panic selling. The pair could then resume its downtrend and plummet to $1,300.

Alternatively, if the price rebounds off $1,700, it will suggest that the bulls are buying proactively at these levels. The bulls will then again try to push the price above the 20-day EMA and challenge the stiff resistance at $2,159.

BNB/USDT

BNB rose above the immediate resistance of $320 on May 30 but the bulls have not been able to build upon this move. This indicates that bears are posing a strong challenge at $325.

The sellers have pulled the price to the uptrend line. This is an important level to keep an eye on in the near term. If the price rebounds off this level, it will suggest that bulls are accumulating on dips. That could enhance the prospects of a break above $325.

Contrary to this assumption, if bears sink the price below the uptrend line, the BNB/USDT pair could drop to the strong support zone between $286 and $265. A break below $265 could send the pair tumbling to the vital support at $211.

XRP/USDT

Ripple (XRP) rose above the downtrend line on May 30 but the bulls could not clear the overhead hurdle at the 20-day EMA ($0.43). This suggests that bears are not willing to surrender their advantage.

The bears will try to sink the price below the downtrend line. If that happens, the XRP/USDT pair could decline to $0.38. The buyers are likely to defend this level and a bounce off it will point to a possible consolidation in the near term.

On the contrary, if the price rebounds off the downtrend line, it will suggest that bulls are attempting to flip this level to support. If that happens, the possibility of a break above the 20-day EMA increases. The pair could then rally to the psychological resistance at $0.50.

ADA/USDT

Cardano (ADA) broke above the 20-day EMA ($0.56) on May 30 and followed it up with another sharp up-move on May 31. This pushed the price to the 50-day SMA ($0.70) but the long wick on the day’s candlestick suggests that bears are selling near this level.

The bears will try to pull the price back below the 20-day EMA and trap the aggressive bulls. If that happens, the ADA/USDT pair could drop to $0.44 where buying may emerge.

That could suggest a consolidation inside the large range between $0.44 and $0.74. The flattening 20-day EMA and the relative strength index (RSI) just below the midpoint also indicate a range-bound action in the near term.

The bulls may gain the upper hand if the price rebounds off the 20-day EMA and breaks above $0.74. Such a move will suggest that the downtrend may be over.

SOL/USDT

Solana’s (SOL) relief rally is facing stiff resistance from the bears near the psychological level at $50. This suggests that bears have not yet given up and they continue to sell on rallies.

The bears will try to pull the price to the strong support at $40. The bulls are expected to buy the dips to this level. If the price rebounds off this support, the buyers will again try to push the SOL/USDT pair above the 20-day EMA ($51). If they succeed, the pair could rally to $60 and thereafter attempt an up-move to the breakdown level of $75.

On the other hand, if bears sink the price below $40, the pair could drop to the May 12 intraday low of $37. The pair could resume its downtrend if bears pull the price below this crucial support.

DOGE/USDT

Dogecoin’s (DOGE) price has been trading near the 20-day EMA ($0.09) for the past two days but the bulls have failed to achieve a breakout. This suggests that bears are defending the 20-day EMA with vigor.

The bears will try to sink the price to the strong support at $0.07. This level has held on two previous occasions; hence, the bulls will again try to defend it. If the price rebounds off this support, the DOGE/USDT pair may remain stuck inside a range between $0.10 and $0.07 for some time.

If bulls drive the price above $0.10, it will suggest that the downtrend could be weakening. The pair could then rally to $0.12. Conversely, the downtrend could resume on a break below $0.07.

DOT/USDT

Polkadot (DOT) is facing resistance at the 20-day EMA ($10.55) but the bulls have not allowed the price to sustain below $10. This suggests strong demand at lower levels.

If bulls push and sustain the price above the 20-day EMA, the DOT/USDT pair could rally to $12. This level may act as a minor hurdle but if crossed, the recovery could reach the strong overhead resistance at $14.

Contrary to this assumption, if the price turns down and sustains below $10, the decline could extend to the strong support at $8. A strong bounce off this support will suggest that the pair may remain range-bound between $8 and $12 for some time.

AVAX/USDT

Avalanche (AVAX) turned down from the downtrend line on May 31, suggesting that bears continue to defend the level with vigor. The bears will now try to pull the price below the strong support zone of $23.51 to $21.35.

If they succeed, the AVAX/USDT pair will complete a descending triangle pattern, indicating the start of the next leg of the downtrend. The pair could then decline to $20.

Although the downsloping 20-day EMA ($31.33) favors the bears, the positive divergence on the RSI suggests that the bearish momentum may be weakening. If the price turns up from the current level and breaks above the 20-day EMA, buying could resume. The bulls will then try to propel the pair to $38.

SHIB/USDT

Shiba Inu’s (SHIB) recovery is facing stiff resistance at the 20-day EMA ($0.000012), suggesting that the sentiment remains negative and bears are selling on rallies.

The bears will try to pull the price to the strong support at $0.000010. This level is likely to attract aggressive buying by the bulls. If the price rebounds off $0.000010, the SHIB/USDT pair could rally toward the 20-day EMA.

If buyers push the price above the 20-day EMA, the pair could rise to $0.000014 and later to the breakdown level of $0.000017. On the downside, the bears will have to sink the price below $0.000009 to signal the resumption of the downtrend.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Market data is provided by HitBTC exchange.

Bitcoin price broke to the upside, but where are all the leveraged long traders?

BTC price looks to break out of its downtrend, yet pro traders are still unwilling to add leveraged positions.

This week’s Bitcoin (BTC) chart leaves little doubt that the symmetrical triangle pattern is breaking to the upside after constricting the price for nearly 20 days. However, derivatives metrics tell a completely different story because professional traders are unwilling to add leveraged positions and are overcharging for downside protection.

*BTC-USD 12-hour price at Kraken. Source: TradingView*

Will BTC reverse course even as macroeconomic conditions crumble?

Whether BTC turns the $30,000 to $31,000 level into support depends to some degree on how global markets perform.

The last time U.S. stock markets faced a seven-week consecutive downtrend was over a decade ago. New home sales in the U.S. declined for the fourth straight month, which is also the longest streak since October 2010.

China saw a whopping 20% year-on-year decline for its on-demand services, the worst change on record. According to government data released on May 30, consumer spending for internet services from January to April stood at $17.7 billion.

The value of stock offerings in Europe also hit the worst level in 19 years after rising interest rates, inflation and macroeconomic uncertainties caused investors to seek shelter in cash positions. According to Bloomberg, initial public offerings and follow-on transactions raised a mere $30 billion throughout 2022.

All of the above make it easier to understand the discrepancy between the recent Bitcoin price recovery to $32,300 and weak derivatives data because investors are pricing higher odds of a downturn, primarily driven by worsening global macroeconomic conditions.

Derivatives metrics are neutral-to-bearish

Retail traders usually avoid quarterly futures due to their price difference from spot markets, but they are professional traders’ preferred instrument because they avoid the perpetual contracts fluctuating funding rate.

These fixed-month contracts usually trade at a slight premium to spot markets because investors demand more money to withhold the settlement. This situation is not exclusive to crypto markets. Consequently, futures should trade at a 5% to 12% annualized premium in healthy markets.

*Bitcoin 3-month futures’ annualized premium. Source: Laevitas*

According to data from Laevitas, Bitcoin’s futures premium has been below 4% since April 12. This reading is typical of bearish markets and it’s worrisome that the metric failed to break above the 5% neutral threshold even as the price moved toward $32,000.

To exclude externalities specific to the futures instrument, traders must also analyze the Bitcoin options markets. The 25% delta skew is optimal as it shows when Bitcoin market makers and arbitrage desks are overcharging for upside or downside protection.

During bearish markets, options investors give higher odds for a price crash, causing the skew indicator to move above 12%. On the other hand, a bull markets’ generalized excitement induces a negative 12% or lower skew.

*Bitcoin 30-day options 25% delta skew: Source: Laevitas*

The 30-day delta skew peaked at 25.4% on May 14, the highest-ever record and typical of extremely bearish markets. However, the situation improved on May 30 and 31 as the indicator stabilized at 14%, but it prices in higher odds of a price crash. Still, it shows a moderate sentiment improvement from derivatives traders.

The risks of a global economic slowdown are probably the main reason why Bitcoin options markets are stressed and why the futures premium is still low. The 30-day correlation of BTC versus the S&P 500 index is at 89%, meaning traders have fewer incentives to place bullish bets on cryptocurrencies.

Some metrics suggest that the stock market may have bottomed last week, especially since it’s trading 8.5% above the May 20 intraday low, but weak economic numbers are weighing on investor sentiment. This drives the risk-averse momentum and has a negative impact on cryptocurrency markets.

Until there’s a better definition for traditional finance and the world’s biggest economies, Bitcoin traders should continue to avoid building leveraged long positions and maintain a bearish stance, a feature that is currently reflected in options markets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.