False rise

This week we have experienced a new attempt to overcome the highs of the channel in which bitcoin is moving at the moment. The high of the end of May at 32,000 is still the reference to beat, and for now it has proved to be impregnable.

We have seen the emergence of news that has led to a market decline, such as that of a possible SEC investigation into Binance over the BNB ICO, something that happened 5 years ago. The appearance of this information put an end to the uptrend that was starting, and that from my point of view had a chance of success, as to break the channel and reach higher levels.

Since then we have seen a new failed attempt to break this ceiling zone, which is a clear sign that the market is still in a range for the time being.

In fact, at the time of writing this post, we have the price in the floor of this channel and visibly weakened compared to previous movements.

In a state of lethargy

The market is still in a state of lethargy, we could call it that. Although it is true that in the extreme zones of this channel (ceiling and floor) sales and purchases are appearing respectively, it is true that the movement and volatility of the market has been reduced significantly.

No alt text provided for this image

This is something we can perfectly appreciate with our crypto oscillator, which defines a narrow volatility channel in the last days. We must be careful with these situations, because their resolution usually leads to movements of an important dimension. In fact, another remarkable fact is that we are in a very low area of the histogram of this indicator’s data, which suggests a greater possibility of an upward movement.

No alt text provided for this image

Ethereum testing May lows

Although the dynamics are similar, Ethereum’s chart reflects some differences with respect to Bitcoin. Basically the most notable is the repeated movement of testing the floor zone generated in May 2022, which serves as an important support zone.

Movements in bitcoin are not as deep as in this case.

No alt text provided for this image

We can also add that this dynamic moves the price away from a possible test of the ceiling zone of the bearish channel that the price is developing, located right now above 2,030 USD.

Whales continue to extract cryptoassets from the market.

Even so, we can affirm that we are seeing how purchases do not cease (concentrated in the lower zones of these channels). This is attested by data such as those we use for our market strength indicator, in which we can see how strong hands are in a clear buying position.

No alt text provided for this image

A position that has been increasing steadily since the end of May and has already reached highs in the middle of the same month. This would give us a clear signal of accumulation by the whales.

Mixed behavior at DeFI

Regarding the decentralized finance ecosystem, we have seen mixed performance this week, with most of the major assets in the middle ground with slight gains or losses.

No alt text provided for this image

The most prominent is eGold [EGLD] which this week drops 22.15% due to an attack on its native Exchange on its elRond network, Maiar, which has been made public. The attacker reportedly stole USD 113 million by taking advantage of a security breach.

This forced the elRond team to block the Exchange funds and implement immediate corrective measures. According to the founders, the issue has been resolved and most of the funds have been recovered. It appears that the elRond foundation will take action and may cover the remaining losses.

The problem is not that a project suffers a hack, but how the team reacts and what mitigating measures are proposed. The market penalizes the lack of transparency and inaction in these situations, something that fortunately has not occurred in this case.

In fact, much of the decline in the price of the crypto-asset can be attributed to massive sales by the hackers themselves in an attempt to quickly realize the benefits of their theft.

We are still on hold

The market is still in a tense waiting period, in a situation that may continue for the next few days. Just in case, and to close our weekly post, we leave you with two milestones to keep in mind:

  • PoS consensus testing has been launched on the Ropsten network, Ethereum’s test network. It seems that the tests have been successful, but we should keep an eye out for any such news that could affect ETH. In fact, the roadmap indicates that the tests on test networks will take place this June, and the final implementation of PoS on the ETH mainnet will be in August.
  • Next July 6, the FED has to pronounce again on the ETF proposed by Grayscale on Bitcoin spot. Grayscale is continuing its crusade to adapt its products to market trends. That involves converting its Bitcoin trust fund into an ETF that would generate much more liquidity on the product. The FED has less and less arguments to deny the marketing of products like this, but we must wait until the first week of July to know this new verdict, and if this leads to any legal proceedings by Grayscale in case the answer is again negative.