FTX US to launch stock trading against stablecoins

May 19, 2022 Coin Telegraph

FTX Stocks will allow retail investors to fund their accounts with fiat-backed stablecoins like USD Coin via the FTX US crypto exchange.

Major cryptocurrency exchange FTX is moving into equity trading, with its United States-based subsidiary FTX US launching a stock trading platform.

West Realm Shires Services, the owner and operator of FTX US, announced on May 19 the upcoming launch of FTX Stocks, a stock trading service offered directly through the FTX US trading app.

The new stock trading platform will feature trading and investing in hundreds of U.S. exchange-listed shares, including common stocks and exchange-traded funds.

According to the announcement, FTX Stocks will be the first platform to ever allow retail investors to fund their accounts with fiat-backed stablecoins like USD Coin (USDC). The option is enabled via a partnership with the FTX US crypto exchange, providing an alternative option to default deposit methods in the U.S. dollar, including wire transfers, credit card deposits and others.

The FTX Stocks platform will be initially available in a private beta phase for select U.S. customers chosen from a waitlist. The service will also initially route all orders through Nasdaq in order to ensure transparent trade execution and fair pricing, the announcement notes.

“With the launch of FTX Stocks, we have created a single integrated platform for retail investors to easily trade crypto, NFTs, and traditional stock offerings through a transparent and intuitive user interface,” FTX US President Brett Harrison said. He added that there is “clear market demand” for a new retail investment experience supporting “full order routing transparency” while not relying on payment for order flow.

The news comes shortly after FTX founder and CEO Sam Bankman-Fried criticized the efficiency of Bitcoin (BTC) as a payment network on May 16. He specifically expressed concerns over the Bitcoin network’s mining consensus, arguing that it’s not scalable enough to process millions of transactions.

The CEO has also been actively buying shares of major players in the industry, holding about $650 million in the stock of the crypto-friendly stock trading app Robinhood as of May 2022.

Aave price risks a 25% plunge as a classic bearish reversal pattern emerges

May 18, 2022 Coin Telegraph

Aave

A handful of concerning factors, plus AAVE’s correlation with the Nasdaq, increases the possibility of the altcoin undergoing another massive sell-off.

Technical analysis suggests that a recent uptrend in the price of Aave (AAVE) is showing signs of exhaustion based on early development of a classic bearish reversal pattern.

Is AAVE headed to $70?

Dubbed a "rising wedge," the pattern surfaces when the price rises inside a range defined by two ascending, converging trendlines. As it happens, the trading volume declines, pointing to a lack of conviction among traders when additional buying is needed for continued upside momentum.

Therefore, falling wedges typically result in a bearish breakout where the price breaks below the pattern's lower trendline and falls by as much as the maximum distance between the wedge's upper and lower trendline.

AAVE has been painting a similar pattern amid its sharp upside move from nearly $61.50 on May 12 to over $93.50 on May 17. If a sustained breakdown pans out, AAVE will fall by at least $27, which is the wedge's maximum height, as shown in the chart below.

*AAVE/USD four-hour price chart featuring 'rising wedge' setup. Source: TradingView*

This puts AAVE en route to around $70, down about 25% from the current price at $89.20.

Bearish headwinds persist

The bearish setup for AAVE appears in the wake of the crypto market's ongoing strong correlation with U.S. equity markets.

The daily correlation coefficient between AAVE and the tech-heavy Nasdaq 100 stood at 0.91 as of May 17, underscoring that the two markets have been moving in a near-perfect tandem.

At the core of their synchronous trends is the Federal Reserve's ultra-hawkish monetary policies, including the recent 0.5% hike in benchmark interest rates, against rising inflation.

*AAVE/USD daily correlation coefficient with Nasdaq 100. Source: TradingView*

Fear of continued sell-off remains as Wall Street veterans warn about a looming recession.

According to Lloyd Blankfein, the former CEO of Goldman Sachs, higher interest rates, coupled with supply chain issues, fresh lockdowns in China and the conflict in Ukraine could keep inflation high. The persistent combination of these factors is likely to make the Federal Reserve keep its hawkish policies and the knock-on-effect is a reduction in U.S. economic growth.

Similarly, Michael J. Wilson, Morgan Stanley’s chief U.S. equity strategist and CIO reiterated the same catalysts while predicting a 15% decline in the benchmark S&P 500 index. As a result of its correlation with cryptocurrency, AAVE also risks similar downside moves heading further into 2022.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Analysts note parallels with March 2020: Will this time be different?

May 18, 2022 Coin Telegraph

Coin Telegraph

Analysts across crypto and traditional stocks have taken notice of the similarities between what happened in March 2020 and market moves so far this month.

Analysts in both crypto and traditional markets have noted some startling similarities between the recent downturn and the one caused by a pandemic panic in March, 2020.

The real question is whether it’s the start of a larger downturn or if there will be a significant bounce-back as in 2020 that led to an extended bull run in both crypto and stocks markets.

Podcaster and author of The Pomp Letter, Anthony “Pomp” Pompliano is on the permabull side of the ledger, tweeting on May 18 that since March 1, 2020 when one Bitcoin cost about $8,545, “Bitcoin is up 340%.”

Bitcoin is up 340% since March 1, 2020.

As central banks around the world devalued their currencies at a historic rate, there is only one asset that stood out from the pack.#bitcoin is the savings technology that shields billions of people from undisciplined monetary policy.
— Pomp (@APompliano) May 17, 2022

Among those hopeful of a turnaround is investment firm Real Vision’s CEO Raoul Pal who believes Bitcoin markets have been painting a pattern that shares traits with the March 2020 crash.

In his May 13 episode of Raoul Pal Adventures in Crypto, Pal explained that with the downward price action last week, Bitcoin (BTC) may have “shot straight down” to the bottom of the current wedge formation and is now in a range that will eventually lead to another rise in price. He said,

“That was exactly the kind of pattern we had in March 2020.”

On March 12, 2020, investors panic-sold many assets, including Bitcoin, as fear about how the market would be impacted by the COVID-19 pandemic and global lockdowns. On that day, Bitcoin fell 45% from $7,935 to $5,142 according to CoinGecko.

The current decline in traditional markets has led to a loss of $7.6 trillion in market cap from the tech heavy Nasdaq, in non-inflation adjusted terms, more than the dot-com bubble and the March 2020 sell-offs.

The numbers are obviously not adjusted for inflation but still mind-blowing to see in this context. pic.twitter.com/aHem93mhpo
— Mati Greenspan (@MatiGreenspan) May 17, 2022

The Crypto Fear and Greed Index plunged to 8 on May 17 which is the lowest since March 2020.

#Crypto fear & greed index is at 8 out of 100.

The lowest number since the COVID-19 crash in March 2020. pic.twitter.com/jKVTcjrXV1
— Michaël van de Poppe (@CryptoMichNL) May 17, 2022

The 50 day moving average (MA) of financials, real estate, and technology investments is close to the overwhelmingly oversold levels seen just over two years ago. Respectively, in March 2020 those levels were 0, 0, and 1 compared to 2, 3, and 4 so far in May based on data from Fidelity Investments. In a May 18 tweet, Fidelity’s own Director of Global Macro Jurrien Timmer called March 2020 “one of the most oversold setups in the history of the market.”

Managing partner at The Future Fund Gary Black pointed out on May 17 that Tesla (TSLA) is trading at a 20% discount, the widest from analyst target price since March 2020. He added that “Over the next 12 months, $TSLA rose 660%.”

The last time $TSLA traded at this wide a discount (25%) vs the avg Street PT ($984) was in March 2020, at the height of the Covid crisis. Over the next 12 months, $TSLA rose 660%. Source: https://t.co/5fcVwWX78i pic.twitter.com/z2AHe5zkVi
— Gary Black (@garyblack00) May 16, 2022

The S&P 500 Index also displays similarities as it recorded a 52-week low of 3,930 on May 12 only to bounce back to 4,088 by market close on May 17. Chief Market Strategist for financial research firm LPL Research observed in a May 18 tweet that the last time the index had done that was in March 2020.

The S&P 500 just made a 2% gain in two of the past three days coming off of a 52-week low.

The last times that happened?

March 2009 and March 2020.
— Ryan Detrick, CMT (@RyanDetrick) May 17, 2022

Before traders get too excited, market conditions are very different now, with rising inflation and interest rates. Back then, governments reacted with unprecedented support packages to prop up prices. Reuters reported on May 14 that the strong bounce in the market in 2020 was fueled by what it called an “unprecedented Fed stimulus.”

Analyst and author of the Rekt Capital Newsletter, Rekt Capital tweeted on May 17 that BTC “is entering a period of outsized opportunity” based on analysis of the Log Channel which he says resembles what happened in March 2020. However he’s not clear if we’ve bottomed out yet.

Last time #BTC lost the Log Channel was in March 2020

This is when $BTC also dipped below the blue 200-SMA

Log Channel clearly shows BTC is entering a period of outsized opportunity

But does price need to drop as low as to the 200-SMA to completely bottom?#Crypto #Bitcoin pic.twitter.com/hTxwfWYdkH
— Rekt Capital (@rektcapital) May 16, 2022

As of the time of writing, Bitcoin is up 1.1% over the past 24 hours trading at $30,545.

$1.9T wipeout in crypto risks spilling over to stocks, bonds — stablecoin Tether in focus

May 15, 2022 Coin Telegraph

Bitcoin

The dangers posed by stablecoins to the traditional market cannot be dismissed due to Tether's exposure to the U.S. credit system.

The cryptocurrency market has lost $1.9 trillion six months after it soared to a record high. Interestingly, these losses are bigger than those witnessed during the 2007's subprime mortgage market crisis — around $1.3 trillion, which has prompted fears that creaking crypto market risk will spill over across traditional markets, hurting stocks and bonds alike.

*Crypto market capitalization weekly chart. Source: TradingView*

Stablecoins not very stable

A massive move lower from $69,000 in November 2021 to around $24,300 in May 2022 in Bitcoin's (BTC) price has caused a selloff frenzy across the crypto market.

Unfortunately, the bearish sentiment has not even spared stablecoins, so-called crypto equivalents of the U.S. dollar, which have been unable to stay as "stable" as they claim.

For instance, TerraUSD (UST), once the third-largest stablecoin in the industry, lost its dollar peg earlier this week, falling to as low as $0.05 on May 13.

*UST/USD daily price chart. Source: TradingView*

Meanwhile, Tether (USDT), the largest stablecoin by market cap, briefly fell to $0.95 on May 12. But unlike TerraUSD, Tether managed to recover back to near $1, primarily because it claims to back its dollar peg using good old-fashioned reserves, including the real dollars and government bonds.

Crypto spillover risks

But that is where the trouble begins, according to a warning issued by rating agency Fitch last year. The agency feared that Tether's rapid growth could have implications for the short-term credit market, where it holds a lot of funds, according to the company's reserves breakdown disclosed here.

If traders decide to dump their Tether, the most-popular dollar-pegged stablecoin in the crypto sector, for cash, it would risk destabilizing the short-term credit market, Fitch noted.

Crypto losses now equal $1.7 trillion. The 2007 subprime mortgage market was $1.3 trillion.

It's highly likely that Crypto will be the catalyst for accelerated global collapse.

Weekend risk is HIGH. pic.twitter.com/4Ewo73uTeg
— Mac10 (@SuburbanDrone) May 12, 2022

The credit market is already struggling under the weight of higher interest rates. Tether could further pressure it lower as it holds $24 billion worth of commercial paper, $35 billion worth of Treasury notes, and $4 billion worth of corporate bonds.

The signs are already visible. For example, Tether has been reducing its commercial paper reserves during the crypto correction in the last six months, its chief technology officer, Paolo Ardoino, confirmed on May 12.

So, based on Fitch's warning last year, many analysts fear that the "financial run" might soon spill over to the traditional market.

That includes Joseph Abate, managing director of fixed income research at Barclays, who believes Tether's decision to sell its commercial papers and certificate deposit holdings before maturity could mean paying several months of interest in penalty.

As a result, they could be forced to sell their liquid Treasury bills, which make up 44% of their net holdings.

"We do not know what is going to happen, but the danger cannot be dismissed out of hand," opines Robert Armstrong, the author of Financial Times' Unhedged newsletter, adding:

"Stablecoins have a total market capitalization of more than $150 billion. If the pegs all break — and they could — there will be ripples well beyond crypto."

Bitcoin macro bottom ‘not in yet’ warns analyst as BTC price holds $30K

May 13, 2022 Coin Telegraph

Bitcoin

The worst is yet to come for Bitcoin price performance, multiple sources warn, despite the turmoil at Terra slowly passing.

Bitcoin (BTC) failed to clinch $31,000 by the Wall Street open on May 13 as new warnings forecast a continuation of the downside.

*BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView*

Dollar declines, stocks bounce at week's end

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD consolidating after reaching just short of $31,000 earlier on the day.

United States stock markets saw some relief, the S&P 500 up 2.2% and the Nasdaq gaining 3.3% on the open.

The conspicuous exception was Twitter stock, which at the time of writing traded down 7.7% on the day, thanks to Elon Musk delaying his takeover bid.

*U.S. dollar index (DXY) 1-hour candle chart. Source: TradingView*

In parallel to the renewed equities strength came a declining U.S. dollar, with the U.S. dollar index (DXY) coming off fresh twenty-year highs to decline 0.2% — traditionally a boon for Bitcoin and risk assets more broadly.

$DXY - Finally showing some sort of chance for a pullback. This would help #Bitcoin and #Stocks. Still early to tell but it's better than seeing another green candle. pic.twitter.com/WZ3vSUwZsd
— IncomeSharks (@IncomeSharks) May 13, 2022

As optimism around Bitcoin slowly returned in the midst of the Terra LUNA blowout, some sources still argued that it was far from guaranteed that a deeper BTC price crash would be avoided.

Among them was on-chain analytics platform Material Indicators.

"This BTC rally could continue, but before you FOMO in, ask yourself what has changed fundamentally?" part of its latest Twitter update stated.

"IMO, the macro bottom is not in yet."

An accompanying order book chart from major exchange Binance showed moderate support in place below the spot price, this nonetheless being little in comparison to the main wall at this week's $24,000 lows.

*BTC/USD order book data (Binance). Source: Material Indicators/ Twitter*

Equally wary was popular trading account HornHairs, which demanded a reclaim of up to $50,000 on the weekly chart to avoid a capitulation event.

"Until then, there is a real chance we could chop around & dead cat bounce here for a few weeks into another flush down to $20k for accumulation bottom," a recent tweet read.

As Cointelegraph reported, a further theory suggested that to preserve its tradition of 80% drawdowns from all-time highs, BTC/USD would need to dive to just $14,000.

Hayes: I would buy Bitcoin at $20,000, Ethereum at $1,300

As the dust settled on markets this week, another voice reiterated his existing concerns over a fresh meltdown to come.

In his latest blog post concerned primarily with the LUNA phenomenon, Arthur Hayes, former CEO of crypto derivatives platform BitMEX, called for $20,000.

"The crypto capital markets must be allowed time to heal after the bloodletting concludes. Therefore, it is asinine to attempt to fathom legitimate price targets. But I shall say this — given my macro view about the inevitability of more money being printed, I will close my eyes and trust the Lord," he wrote.

"Therefore, I am a buyer at Bitcoin $20,000 and Ether $1,300. These levels roughly correspond to the all-time highs of each asset during the 2017/18 bull market."

Hayes had previously called for $30,000 to hit in June, before this week's shake-up unfolded. Longer-term, however, he had likewise told readers to prepare for an extended period of pain across crypto-assets and stocks alike.

By 2030, he said, Bitcoin should cost "in the millions " of dollars.

Bitcoin gains superior to stocks in the long term, economist says

May 13, 2022 Coin Telegraph

Coin Telegraph

Crypto is more volatile than stocks and thus is associated with higher risks, but it also offers better return opportunities, industry executives agree.

The recent crashes in stock and cryptocurrency markets have provided yet another chance to observe better return opportunities of crypto versus stocks, according to several industry executives.

This week, the crypto market saw one of its biggest sell-offs ever, with the total market capitalization plummeting more than 30% from $1.8 trillion on May 4 to as low as $1.2 trillion on May 12. Bitcoin (BTC), the biggest digital asset by market capitalization, tumbled below $27,000 for the first time since late 2020, losing 30% of value over the same period.

But the market instability has not been exclusive to crypto. The stock market has also seen one of its worst moments since 2020, with the tech-focused Nasdaq Composite dropping more than 12% over the period, dipping below 12,000 points.

Tech giants like Apple and Microsoft both saw their market cap decline by about 13%, while Tesla’s market cap tanked 23% from $986 billion to $754 billion.

Cryptocurrency markets are more volatile than stocks and thus are associated with higher risks, but they also offer bigger opportunities, ANB Investments CEO Jaime Baeza told Cointelegraph.

“Over the long term and without getting too much into detail, I believe crypto as a whole provides better risk-return opportunities,” Baeza said.

Huobi Group chief financial officer Lily Zhang expressed similar remarks, stating that the volatility of crypto means that there are “more opportunities to make substantial gains with cryptocurrency.”

“It is important to note that we are in the midst of a new Fed rate hike cycle and both cryptocurrencies and tech stocks may be subject to sudden capital outflows, leaving them susceptible to deep corrections,” Zhang noted.

According to Ryan Shea, a crypto economist at fintech startup Trakx.io, crypto has a higher beta to market sentiment than stock markets. When investors become more reluctant to take risks, the market experiences relatively larger price declines, but it also means relatively larger price gains when risk appetite improves, Shea said, adding:

“Our long-term view is that certain crypto-assets — fixed or limited supply cryptocurrencies like Bitcoin — will experience superior price gains as they offer a better store of value relative to fiat money.”

According to Huobi’s CFO, the correlation between the crypto market and the U.S. stock market has been strong since the end of 2020. Bitcoin’s correlation with the S&P 500 was as high as 0.7 in January, and has remained high since then, she added.

“Given this correlation, it is difficult to hedge against overall portfolio price volatility when assets are allocated amongst both equities and crypto assets. However, investors can still smooth out volatility by controlling their risky asset positions, and adjusting both their asset allocation strategies and the variety of assets they invest in within these two asset classes,” Zhang stated.

At the time of writing, crypto markets are seeing a significant recovery, with Bitcoin edging up about 9% over the past 24 hours, trading at $30,610, according to data from CoinGecko. The cryptocurrency is down 23% over the past 30 days.

Robinhood shares spike 30% after Sam Bankman-Fried buys $650M stake

May 13, 2022 Coin Telegraph

Robinhood shares spike 30% after Sam Bankman-Fried buys 0M stake

Coin Telegraph

Shares in the popular online brokerage Robinhood have spiked over 30% in after hours trading following billionaire Sam Bankman-Fried acquiring a 7.6% stake in the company.

Sam Bankman-Fried, the billionaire founder and CEO of cryptocurrency exchange FTX has acquired a substantial 7.6% stake in the popular online brokerage, Robinhood.

The news was well received by the market, with Robinhood’s (HOOD) stock price initially soaring over 30% in after hours trading. At the time of writing the price has settled to a 24% overall gain.

According to a securities filing made with the Securities and Exchange Commission on Thursday, Bankman-Fried purchased a total of $648 million in Robinhood shares at an average price of $11.52. The purchases disclosed by Bankman-Fried reportedly began in mid-March and continued through until Wednesday.

In the securities filing, Bankman-Fried made it clear that he had, “no intention of taking any action toward changing or influencing the control of [Robinhood],” and that the move was simply because he saw Robinhood as an “attractive investment.”

Robinhood’s communications team took to Twitter to emulate what Bankman-Fried said in his securities filing — tweeting to their 82,000 followers, “Of course we think it is an attractive investment too.”

Of course we think it is an attractive investment too. We have the best customer base, are introducing great new products, and we have the team to deliver.
— Robinhood Comms (@RobinhoodComms) May 12, 2022

The transaction was executed by an Antiguan firm called Emergent Fidelity Technologies Ltd, of which Bankman-fried is the sole director and majority owner.

The announcement seems to have provided Robinhood investors with some short-term relief, after its stock price reached a new all time low of $7.73 on March 12, just one day after the brokerage firm revealed that its crypto transaction revenue fell 39% year-over-year (YOY).

Robinhood has been taking significant strides into the cryptocurrency market, as revenue from stock-related trading has fallen drastically. Robinhood currently provides users with crypto trading capabilities, bringing it into immediate competition with other US-based cryptocurrency exchanges such as Coinbase and Gemini.

According to Robinhood’s Q1 2022 report, roughly 18% of its Q1 net revenue came from crypto-related transactions, however transaction-based revenue from cryptocurrencies decreased 39% YOY to $54 million, compared to $88 million in the Q1 2021.

In April last year, Robinhood announced plans to expand into cryptocurrency brokerage by purchasing UK-based crypto company Ziglu.

Earlier this month, Robinhood also rolled out its highly anticipated crypto wallet to 2 million waitlisted users, outlined plans to integrate the Lightning Network, and listed Shiba Inu (SHIB) after months of campaigning from its supporters.

3 reasons why bears aim to pin Bitcoin below $30K for this week’s BTC options expiry

May 12, 2022 Coin Telegraph

3 reasons why bears aim to pin Bitcoin below K for this week’s BTC options expiry

Coin Telegraph

BTC price is in a freefall and data suggests bears plan to keep the price below $30,000 until the May 13 options expiry.

Investors were surprised by Bitcoin (BTC) price falling to $25,500 on May 12, and this shock extended to options traders. The strong correction was not restricted to cryptocurrencies and some large-cap stocks faced 25% or heavier weekly losses in the same period.

Growing economic uncertainty impacted S&P 500 index members like Illumina (ILMN), which declined by 27% over the past seven days and Caesars Entertainment (CZR) faced a 25% drop. Shopify (SHOP), one of the largest Canadian e-commerce companies also saw its stock plunge by 28%.

Traders are scratching their heads and asking whether it’s the U.S. Federal Reserve tightening to blame for the volatility. The monetary authority has been increasing the interest rates and has also reaffirmed their plans to sell bonds and debt-related instruments.

While this may be the case, traders should remember that the stock market rallied 113% between 2017 and 2021, as measured by the S&P 500 index. Keeping that in mind, the recent downturn is also a reflection of excessive valuations and overconfidence from investors.

Fortunately, not everything has been negative for Bitcoin. On May 10, Townsquare Media, a New York-based digital marketing and radio station company, disclosed a $5 million Bitcoin investment. Nubank, the largest digital bank in Brazil and Latin America, also announced that it would allocate roughly 1% of its net assets to Bitcoin.

Bulls were taken by surprise

Bitcoin's drop to $25,500 on May 12 took bulls by surprise because less than 1% of the call (buy) option bets for May 13 have been placed below this price level.

Bulls might have been fooled by the recent attempt to overtake $40,000 on May 4, because their bets for May 12's $610 million options are largely concentrated above $34,000.

*Bitcoin options aggregate open interest for May 13. Source: Coinglass*

A broader view using the 0.90 call-to-put ratio shows a slight advantage for the $320 million put (sell) options versus the $290 million call (buy) instruments. But now that Bitcoin is below $30,000, most of the bullish bets will become worthless.

If Bitcoin's price remains below $30,000 at 8:00 am UTC on May 13, only $1 million worth of those call (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin at $30,000 if it trades below this level at expiry.

Bears are aiming for a $260 million profit

The three most likely scenarios based on the current price action are listed below. The number of options contracts available on May 13 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side makes up the theoretical profit:

Between $27,000 and $30,000: 0 calls vs. 9,350 puts. The net result favors the put (bear) instruments by $260 million.
Between $30,000 and $32,000: 150 calls vs. 7,500 puts. The net result favors bears by $220 million.
Between $32,000 and $33,000: 1,100 calls vs. 5,900 puts. The net result benefits put (bear) options by $150 million.

This crude estimate considers the put options used in bearish bets and the call options exclusively in neutral-to-bullish trades. Even so, this oversimplification disregards more complex investment strategies.

For instance, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price but unfortunately, there is not an easy way to estimate this effect.

Bears have incentives to suppress Bitcoin price

Bitcoin bears need to hold the price below $30,000 on May 13 to secure a $260 million profit. On the other hand, the bulls' best case scenario requires a 10.7% gain from the current $28,900 to the $32,100 zone to limit their losses to $150 million.

Bitcoin bulls had $1.73 billion in leveraged long positions liquidated over the past three days, so they probably have fewer resources to push the price higher in the short term. With this said, bears have greater odds of suppressing BTC below $30,000 before the May 13 options expiry.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

ApeCoin rebounds after APE price crashes 80% in two weeks: dead cat bounce or bottom?

May 12, 2022 Coin Telegraph

Altcoin

APE risks crashing into unchartered price territory as it follows Bitcoin and the rest of the crypto market.

ApeCoin (APE) has undergone a sharp recovery after falling to its lowest level in two months. But its strong correlation with Bitcoin (BTC) and U.S. equities amid macro risks suggests more losses could be in store.

APE rebounds after 80% losses in two weeks

APE rebounded by nearly 45% to $7.30 on May 12. The upside retracement move came after APE dropped circa 81% to $5 on May 11, from its record high near $27.50, established on April 28.

The seesaw price action mirrored similar volatile moves elsewhere in the crypto market, led by the chaos around TerraUSD (UST) — an "algorithmic stablecoin" whose value plunged to 23 cents earlier this week, and the Federal Reserve's hawkish response to rising inflation.

*APE/USD versus USTUSD. Source: TradingView*

Meanwhile, the correlation coefficient between ApeCoin and Bitcoin is now around 0.90, suggesting that it's trading nearly in tandem with BTC, which is testing multi-year lows.

*ApeCoin and Bitcoin daily correlation. Source: TradingView*

Dead cat bounce?

ApeCoin's rebound occurred near what appears to be a strong technical support level.

Notably, APE is holding above $5.82, which coincides with the 0.786 Fib line of the Fibonacci retracement graph sketched from the $0.97-swing low to the $23.65-swing high. Meanwhile, the token's daily relative strength index's reading is just above its 'oversold' threshold level of 30 — a buy signal.

*APE/USD daily price chart. Source: TradingView*

Therefore, a rebound move from the $5.82-support could have APE test $9.63 (the 0.618 Fib line) as its near-term upside target.

Conversely, an extended breakdown below the support would risk crashing the APE/USD pair into unchartered price territory, confirming that its retracement move was a mere dead cat bounce.

Altcoins stage a relief rally while Bitcoin traders decide whether to buy the dip

May 10, 2022 Coin Telegraph

Bitcoin Price

Stocks and altcoin prices bounced as the sell-off in BTC took a pause, but analysts continue to warn that further downside could occur shortly.

The similarity in price action between the crypto and traditional financial markets remains quite strong on May 10 as traders enjoyed a relief bounce across asset classes following the May 9 rout, which saw Bitcoin (BTC) briefly dip to $29,730.

Market downturns typically translate to heavier losses in altcoins due to a variety of factors, including thinly traded assets and low liquidity, but this also translates into larger bounces once a recovery ensues.

*Daily cryptocurrency market performance. Source:* *Coin360*

Several projects notched double-digit gains on May 10, including a 15.75% gain for Maker (MKR), the protocol responsible for issuing the DAI (DAI) stablecoin, which likely benefited from the fallout from Terra (LUNA) and its TerraUSD (UST) stablecoin.

Other notable gainers include Persistence (XPRT) and its liquid staking token pSTAKE (PSTAKE), which experienced gains of 16.4% and 39.8% after Binance Labs revealed a strategic investment in the liquid staking platform. Polygon (MATIC) also bounced back with a 14.59% gain .

Correlation with traditional markets remains

Despite the widely held belief that the crypto market would act as a hedge to TradFi volatility, the correlation between Bitcoin and the stock market has remained high in 2022.

If anything, the volatility usually associated with the cryptocurrency market has begun to rear its ugly head in traditional markets, as evidenced by the price action for the Dow Jones Industrial Average on May 10, which rose more than 500 points only to give back at the time of writing.

The Nasdaq and S&P 500 have fared a little better, notching gains of 0.9% and 1.92%, respectively.

Further evidence to support a correlation between crypto and traditional markets was provided by Bitcoin analyst Willy Woo, who posted the following chart noting that “Fundamentals [are] taking a back seat to fear driven trading.”

*BTC/USD 1-week chart vs. SPX 1-week chart. Source: Twitter*

Willy Woo said,

“What I do think is we are not trading BTC, we are trading macro and equities. Right pane is SPX support, which will determine BTC directionality, left pane is the equivalent BTC support.”

The S&P 500 could drop much further

While May 10's relief rally sent crypto and stock prices higher, market analyst Caleb Franzen posted the following chart warning about a bearish head and shoulders formation on the S&P 500 chart that could result in the loss of another 500 points.

Franzen said,

“Hard to pick downside targets after my $4,000 call got hit, but I think the MOST LIKELY support zone is down around $3,530–$3,590. This is the white resistance range from September–October 2020.”

The overall cryptocurrency market cap now stands at $1.444 trillion and Bitcoin’s dominance rate is 41.5%.

Stocks

Is AAVE headed to $70?

Bearish headwinds persist

Stablecoins not very stable

Crypto spillover risks

Dollar declines, stocks bounce at week's end

Hayes: I would buy Bitcoin at $20,000, Ethereum at $1,300

Bulls were taken by surprise

Bears are aiming for a $260 million profit

Bears have incentives to suppress Bitcoin price

APE rebounds after 80% losses in two weeks

Dead cat bounce?

Correlation with traditional markets remains

The S&P 500 could drop much further

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