"We got a buy signal for Bitcoin, but there is zero need to rush things"
By Noemi Jansana / Alejandra Zamora
Date: Friday 13 May 2022
(Sharecast News) - After the storm... This expression is a perfect fit for Bitcoin and the cryptocurrency market today, as it has embarked on a well-deserved rebound. The queen of digital currencies is trying to consolidate at the important level of $30,000 again, the first of its resistances to overcome to leave aside the marked bearish outlook of the 'crypto' par excellence. The charts are bleak after the May 12th 17-month lows below $26,500, according to CoinMarketCap data, but there is light at the end of the tunnel. "We got a buy signal for Bitcoin," cryptoasset expert Lark Davis, founder of 'The Wealth Mastery', pointed out.
The expert wrote the following in an email, "The daily RSI is showing an oversold reading, which is very rare. It maybe happens once a year." "Historically this has been a good time to buy," he added, although he also warned that this indicator "can become more oversold, as prices can go lower and the RSI can remain oversold for days to weeks."
"That said, there is zero need to rush things," Davis stressed, as "There has been an extreme amount of trauma and damage done to the markets this week, and it is still unraveling." Total market capitalization lost as much as $600 billion at one point, to fall below $1.2 trillion - recovering to $1.3 trillion - and Bitcoin's (BTC) correction has been about 45% from March's yearly high above $48,000. Ethereum has followed in these footsteps and has tried to rally to $2,200 after lows at $1,750, but retreats on its way to $2,000.
"If we look at the weekly price chart of Bitcoin, we can see how the double twist drawn in the vicinity of $64,000 could be shaping us to a double top," stated Bolsamania technical analyst, César Nuez. "This formation has terrifying consequences for the coming months and is that the target, for the fall of the figure could be quietly in the $8,000. "Be aware that this means a 70% drop from current prices. We must bear in mind that these downside targets are long term and we do not rule out that, after a 40% drop in the last month and a half, we could end up seeing the occasional rebound," he explained.
Davis indicated that he has deployed " some capital today to buy Bitcoin, but not a huge amount and that he is also "largely holding off on any altcoin purchases for the moment.'"
He also explained that the effects of the crash of the stale UST (Terra dollar) currency, which is already worth less than 10 cents on the dollar (it is supposed to maintain parity with the 'greenback') will be "will have broad reaching effects that may not become immediately apparent." This view sums up investor sentiment perfectly. On May 12th, the Bitcoin dominance index - an indicator that measures Bitcoin's market share against alternatives - rose to nearly 45%, its highest level since November 2021. This could also indicate that, amid the current market instability, traders see BTC as the safer option - digital gold.
"The market rotation is completely shot," warned Albert Salvany, strategic consultant at Belobaba CryptoFund. "To give us an idea, of the total capitalization of the 250 largest assets in the ecosystem (more than 95% of the total), we are seeing how it is rotating in the form of trading volume more than 56%. This implies that we are facing a very profound change in portfolio structures and portfolios, and therefore in market sentiment," he explained.
For Davis, we are in a bear market, a condition that implies a "game of survival." "Don't blow your capital too soon," he exclaimed. "Pretty soon you will be able to say you survived the bear market of 2022." "Look, we all knew that the crypto market is volatile. And today, it is really showing us that. Having rode these waves before, I can say that yes, it will get better. But that doesn't mean that it is not a brutal process," the analyst concluded.
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