Luno’s market analysis – Week 19

Welcome to this week’s retrospective of the latest goings-on in the crypto markets, featuring an overview of price movements, a look at the fundamentals, and the impact of other major events over the last week. The content of this article is for information purposes only and is not investment advice or any form of recommendation or invitation. Luno always advises you to obtain your own independent financial advice before investing or trading in cryptocurrency.

Happy halving week, Bitcoin fans ? On Monday, the big moment finally arrived! For the third time in Bitcoin’s illustrious history, mining rewards fell by 50% – this time to 6.25 BTC. Here’s what the halving means and why it matters.

It was a big week all round for Bitcoin. The leading cryptocurrency’s recent streak of gains culminated in a run to $10,000, before a sharp pullback to just under $9,000. All eyes are now on whether this was a healthy correction or the start of another downtrend in the crypto market.

One man who is certainly bullish is Paul Tudor Jones, widely considered to be one of the best macroeconomic traders ever. Jones told investors last week that he sees Bitcoin as a global hedge. Could this be an indication that the real institutional money is about to hit the crypto market?

Price analysis

Short-term view

The 7th of May saw the price of Bitcoin increase $1,000 before hitting resistance at the $10,000 zone. This led to a healthy retrace to – and hold at – the previously mentioned $8,000 mark. Here, BTC was met with healthy support in the form of increased trading volumes, which helped to drive the price back into the $8,500 and $9,000 range.

Generally considered a healthy indicator for an upward-trending market, retraces like these can often help maintain momentum by providing new entry points for late arrivals. However, time will tell whether the BTC market will take advantage of this. For this to happen, we’ll need to see Bitcoin overcome the psychological barrier of $10,000 and pass its February high of $10,500. If this doesn’t happen, though, the $7,500 to $8,100 zone is still very much in play when looking towards short-term support levels.

Long Term:

Volatility is seemingly here to stay with the 7-day volatility last week reaching levels not seen since March. Bitcoin ended its streak of 7 green weekly candles, closing the week $100 below where it started – in spite of a strong rally up towards the $10,000 mark – with price trading in a range nearly as wide as $2,000 over the course of the week. Following the halving, it will be interesting to see how the volatility evolves this week.

Bitcoin volume stays high

The 7-day average real trading volume* spiked above $2 billion last week, as the volume holds strong. It will be interesting to see if the volume could continue to hold at these levels, or if we will see the same kind of drop downwards as we did in March. Yesterday’s daily volume crossed $3 billion for the sixth time in 2020.

Reasons to be cheerful

There has been a lot of chatter in recent weeks about the high correlation between Bitcoin and the stock market. This has been a source of concern with the global economic landscape still fragile. However, with the stock market relatively flat in May, Bitcoin has surged, suggesting that this could very well be the moment of decoupling.

The crypto market got greedy last week, but fell back

The Fear & Greed Index continued to climb last week, as the momentum looked strong. After pushing above 50 and entering a “greedy” state, the index fell back after the pullback this weekend. We’re currently back in “Fear”, and the index is at 40 again.

The trailer for Banking on Africa: The Bitcoin Revolution has landed!

Follow Bitcoin pioneers from across Africa as they fight to bring this revolutionary new technology to the masses and transform the continent’s financial systems. Supported by Luno and produced by award-winning production studio, Documinute, Banking on Africa: The Bitcoin Revolution arrives on Amazon Prime on 22 May. In the meantime, check out the trailer below.

Keep reading…

Luno’s market analysis – Week 18

Luno’s market analysis – Week 17

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