Market analysis as of May 31, 2022

The global economic crisis is already upon us, and some believe that the $25,500 mark is not yet the market bottom for Bitcoin and Ethereum. Analysis and forecasts prepared by KickEX analysts.

Bitcoin

The global economic crisis is already upon us, and some believe that the $25,500 mark is not yet the market bottom for Bitcoin. The main direction of the market at the moment is set by the US stock market, the correlation is >70-80% with the S&P. Although there are also positive factors - such as the growth of credit debt, which did not increase much during the month of May, which could be a breath of fresh air and the onset of a corrective movement.

As of 05/27/2022, Bitcoin is in the range of $30,600 - $28,600, which indicates a compression of volatility and an imminent breakdown of support or resistance levels.

We can note that the Put - Call ratio reached almost its maximum level for 2022, which may indicate the market’s desire to hedge further downside risk, which is not surprising. But if we look at the previous peak from February 2022, we can assume a corrective movement at least to the resistance levels of $30,600, $31,400.

After the incident with the liquidity crisis and the collapse of Terra, there is no noticeable increase in the issuance of stablecoins, which may indicate uncertainty among market participants. This may also indicate long-term accumulation in the narrow range in which the asset moves. In case of additional emission, we can consider testing resistance levels. 

The Fear and Greed Index tells us that we have reached a peak range where many users are leaving the market and can be a good indicator for the bulls. 

Summarizing the data above, we can conclude:

Scenario 1 (more likely) - movement to the levels of $30,600, $31,400

Scenario 2 (negative) - movement towards the level of $25,500.

Ethereum

The transition to PoS has a number of reasons - they can be both positive and carry a negative connotation for the correctional movement of ETH. 

Positive:

• new institutional money. Staking fee per year is ~4%, which looks like a good profit in bonds;
  
• it will take six months to withdraw funds from staking (13M);
  
• reduced commission for transfers on the network;
  
• ETH emission decreases.. The emission of new ETH will be reduced to ~91%;
  
• and, where without this, after the transition, ETH will reduce its carbon footprint. 

Negative:

• the mining business, which is fraught with risks, will lose its meaning. This will force the sale of video cards that have been depreciated by 50% and drain all the mined ETH;
  
• one must not forget about the critical bugs of the new network, as well as the centralization of staking with the help of the market leader LIDO;
  
• and, most importantly, the recession in the US stock market, which can greatly affect the opinion of investors and the risk on assets. 
  

Based on this, we can identify several scenarios for market movement for the summer of 2022:

Scenario 1 (positive) - corrective movement to the levels of $2,300, $3,500;

Scenario 2 (negative) - breakdown of the $1,700 level and movement to the $1,300 level with a long flat movement between them. 

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