3Sigma Markets – Crypto Report May 20th, 2021
There was heavy selling in Crypto markets yesterday led by Bitcoin which fell down to support at $30,000 before rebounding to $43,000. Speculation that the move was fuelled by tweets from Tesla founder Elon Musk was rife in the market but ultimately the move came from forced liquidation of 775,000 trading accounts in various crypto-currencies as leveraged traders were hit with falling prices. Up to $8.6 billion was liquidated from these accounts due to over-leveraged and margined positions. The move spread across other cryptocurrencies and even impacted the broader stock and bond markets, as ‘’risk off’’ sentiment hit all asset classes on the US stock market open. Thankfully this risk off move coincided with the finally push lower in Cryptos and as Bitcoin touched its intra-day lows and rebounded, the broader market stabilized in the subsequent hours of trading.
The selloff from $64,000 gathered pace yesterday and fell into the important $30,000 support zone. This is now a key area for buyers to hold and price is now trading back around $40,200 as it attempts to reverse the selloff. Support for today comes into focus at $35,000 and buyers should emerge to support price action in that region ahead of $30,000. A loss of the $30,000 level may result in a move down to $27,000 followed by $25,000. Alternatively if buyers can regain $43,000, the path to $45,000 opens up and may lead on to a test on $47,000 as the April low followed by the $50,000 level. A breakout higher may see price consolidate between $50,000 and $60,000 before attempting to break to new highs.
The selloff also hit Ethereum yesterday and pushed price under support at 3120.00 with buyers eventually stepping in at 2000.00. This crypto is now trading higher by 11% as it retraces the selloff and seeks to regain the 3000.00 level. A break above this area targets Monday’s low at 3120.00 followed by the 3550.00 area. A break above this zone may open the way to 4000.00 and the high at 4373.00. Alternatively, if sellers re-emerge, support may be seen around 2500.00 followed by 2200.00 and 2000.00. A loss of these levels opens the way to a test on the 1920.00 area followed by the higher low at 1550.00. From there the 1300.00 area may be supportive.
The chart is showing that Ripple was unable to escape the selloff yesterday as it was pushed down to 1.0600 with the low extending down to 0.9330 overnight. There has been a retracement of the selloff this morning with the market up 14% to 1.2122. The chart suggests that this market is in a consolidation pattern of higher lows and lower highs since mid-April. A break above the high from Tuesday at 1.7040 may suggest a test on the high from April at 1.9650 may be on the cards. The 2.0000 level may reinforce this as resistance but a push higher might target 2.2000. Alternatively, a loss of the 1.0000 puts pressure on the overnight low and may seek to test 0.8680 as the previous higher low. A loss of this level potentially opens the way to 0.7600 and 0.7000.