Crypto.Think Weekly Update (31 May 2021): The past week has been a stressful but eventful trading week in the cryptocurrency markets.  There was ongoing debate throughout the cryptocurrency community whether the bear market had arrived and the bull market ended with the massive market correction that took place on the 19th.  Since that initial drop, many altcoins have rallied hard off the lows.  Coins like Ethereum, Cardano, Chainlink, Forth, and more have made significant progress upward and are building momentum as May finally comes to a close.  It is safe to say at this point that the bear market is not here - and this coming summer bull run could add hundreds of billions to the overall crypto market cap.

From Extreme Fear to New All Time Highs

Currently, as of the 31st of May, the market is still in an extreme fear sentiment when it comes to market conditions despite the fact that many coins have rallied as much as 99% since the major correction.  All week, coins have been slowly generating upward momentum, breaking through key resistance levels and converting them into support.

Generally, when considering the fear & greed index for the market analysis, it is wise to take profit during periods of greed and to accumulate to your positions or find entry points in periods of extreme fear.  Since the initial drop, the market has been experiencing very fearful sentiment although none of the major market cap coins have made lower lows since the May 19th correction.  Twitter has been in an uproar debating the course of the possible bear market and where Bitcoin and others could be heading.  While Bitcoin has been trading mostly flat in a range, some coins have been extremely mobile and profitable.

The Return of the Bull

At this point in time, many coins, including Bitcoin and Ethereum, have appeared to make visible bottoms with increasing upward momentum.  As a matter of fact, many altcoins have been slowly building a very bullish set up as we approach the summer months.  Bitcoin has been mostly trading sideways since the major correction, testing certain resistance levels but all the while consolidating within a range.

Bitcoin

Since the initial bottom at $30,000 USD, Bitcoin has been trading sideways awaiting a retest of the 1 hr 200 daily moving average (200MA).  Visible in the graphic above, Bitcoin has been trading right along the 1hr 200MA trend line as selling pressure slowly flattened out.  It is currently trying to break above this resistance level once again as Bitcoin rose above $37,000 USD.

In the graphic below is a possible scenario that I see as plausible for Bitcoin should it continue to hold its momentum upward.  At this point in time, I believe that the official bottom for the May correction was at $30,000 USD.  Based on the price channels drawn below, Bitcoin fell out of the top channel after the Elon Musk tweet, retested the top of that channel, then continued down into the correction we all experienced.  Since then, Bitcoin bottomed and bounced back upward off the lows.  Based on the current set up, should Bitcoin be able to take back the 200MA, that will give Bitcoin the momentum to make a summer rally with a possible retest of all time highs sometime in late June to mid July.  From there, Bitcoin could continue upward towards the coveted $100,000 USD mark by the end of summer.

This scenario is strengthened by the possible coming crossover of the daily MACD as seen in the bottom red circle of the graphic above.  A crossover at that level would signal the coming of a major move upward.  This move up could be the rally that takes Bitcoin back up to retest the highs.

Many altcoins have already successfully turned their 1 hr 200MA trend lines into new support the past week.  Currently, Ethereum, Cardano, Chainlink, and Forth have all broken through or are testing the 2 hr 200MA.  As long term signals continue to point towards a coming rally, weakening selling pressure is being met with new, rising demand from buyers.

Ethereum & Cardano

The setups for Ethereum and Cardano are nearly identical.  They are both currently attacking the 2 hour resistance level and are showing strength.  This is the first retest of this trend line for Ethereum since the correction off the all time highs.  Cardano tested this level previously but failed to breakthrough.  This time however, as seen in the bottom graphic, Cardano appears to be breaking through right now.  Time will tell whether or not Cardano will sustain that breakout or not.

Chainlink

Chainlink is already flexing a strong bullish development after last week.  Chainlink first off had a massive rally off the lows and was up 99% at one point.  This occurred through a rapid rally off the lows of $15 all the way up to $35 USD before a correction back to $25.  Since that correction, Chainlink has rallied again and managed to break through the 2hr 200MA resistance level.  This is the first time Chainlink has been above this level since the correction from the all time highs.

The "Bear Market" was Actually a Bear Trap

If you still have doubts about this being the next leg up of the bull market, take a look at the following charts:

All three of these coins are showing tremendous strength off the lows from the drop.  If anything, I would argue that this correction was not only necessary, but obvious prior to it happening.  To start, Ethereum and Cardano never even made it down to the daily 200MA trend line.  Ethereum came close as the wick of one candle did almost touch it, but Cardano never even got close.  Chainlink did dip significantly below this level, but that dip was met with tremendous buying power that rallied Chainlink back up above this level.  Since then, Chainlink retested it and has continued to move up as the it crossed over the daily MACD.

Ethereum and Cardano look to be close to a crossover on their respective daily MACD charts.  A crossover at these levels would signal a major buying opportunity for both of these coins.  Another way to look at current price levels as well is Ethereum is actually sitting above where it was a month ago and Cardano is well above prices back in April.  This correction actually brought both coins back closer to the developing trendline on the daily 200MA which is why I believe this correction was healthy despite it being so steep.

Closing  

While obviously I could be wrong and the market could drop out tomorrow and dump another 80%, I believe that fundamentally the crypto market just went through a significant, but healthy, correction and is still in a bull market.  The setups on Bitcoin, Ethereum, Cardano, Chainlink, and others point towards coming summer rallies as the market continues to recover.  I believe many altcoins, especially Chainlink (I love LINK), are really showing some true upward strength even after such a correction.  The long term picture seems pretty evident that crypto will look to at least retest the all time highs printed last month.  Things should be quite interesting as we say goodbye to tax season and hello to the summer months of 2021.

This isn't financial advice.  While I aim to provide my insight as accurately and bias-free as possible, please do your own due diligence before choosing to invest in anything, including the coins discussed above.

Quick final note:  Obviously I cannot predict the future, especially on that Bitcoin call, I am just letting you guys know what I see.  Right or wrong I am having fun lol.