Warning: Are You Prepared for the Crypto Market's Unexpected Turn?

Welcome to the latest edition of the onchain edge newsletter! In this issue, we'll examine the current state of the global cryptocurrency market capitalization and the altcoin market, highlighting the shift from bullish to neutral trends.

We'll also discuss the latest movements in Bitcoin and Ethereum prices and how they may impact the market. Additionally, we'll provide an in-depth on-chain analysis, assessing the risk levels and potential opportunities for investors.

As the market evolves, our insights and recommendations aim to help you make informed decisions.

Enjoy!

Onchain Edge

https://twitter.com/onchain_edge

Global market

The S&P 500 currently stands at $4,119, which is increasingly unlikely to break above the $4.1k range. I believe a significant catalyst is required for the market to surpass this level successfully - for example, Russia withdrawing from Ukraine and ceasing hostilities. Moreover, the wave of massive layoffs from numerous companies suggests that the recession is far from over.

The US dollar may have established a potential bottom at $110.79. If it breaks above the blue trendline, it could indicate further downside for all markets.

Technical Analysis

Global market cap with BTC

In last week's analysis, we discussed how the global cryptocurrency market capitalization stood at $1.02 trillion, with the next resistance level at $1.068 trillion (marked by the blue line) and significant support at $952 billion. We also highlighted the importance of this support level, as breaking it could disrupt the medium-term bullish trend. Finally, we mentioned the possibility of a scenario similar to March 10th, when the market briefly dipped into the Ichimoku cloud but recovered quickly.

Currently, the global market capitalization is at $1.013 trillion and is on the verge of entering the Ichimoku cloud in the daily timeframe. This would change the trend from bullish to neutral on the daily chart.

The question arises: Will the market break below last month's low at $989 billion?

The longer the market moves sideways, the closer it gets to an Ichimoku cross, which occurs when the blue line crosses the red line. This is a bearish signal and is often followed by a significant drop in price.

What should you do in this situation? First, we recommend preparing a list of cryptocurrencies you want to purchase at substantially lower prices. This way, you can seize potential opportunities in the volatile crypto market.

Global market cap without BTC (USDC + USDT caps removed)

Last week's update mentioned that the altcoin market capitalization was at $478 billion, slightly below the significant $500 billion resistance level. We also stated that as long as the global crypto market remained above the monthly low, the overall trend would stay bullish. However, a drop below the monthly low could trigger a more substantial correction, potentially lasting several months.

The latest information shows that the altcoin market capitalization has decreased to $468 billion and has recently entered the Ichimoku cloud. This development has shifted the altcoin trend from bullish to neutral. A break below the $434 billion support level would be unfavorable for the market. Moreover, unless the altcoin market receives a considerable boost that propels it to the $490 billion range, it will enter the Ichimoku cloud no later than May 13th.

BTC technical analysis

In last week's analysis, we noted no significant changes for Bitcoin, as it continued trading at $28,263 and remained within the distribution range. However, we also mentioned that the longer it stayed within this range without breaking to the upside, the higher the likelihood of it dropping to accumulation range 1.

As discussed last week, Bitcoin has lingered in the distribution range for too long and has now broken to the downside. BTC is losing momentum, falling to $27.6k this morning after breaking below the distribution range. While there is always the possibility of a wick-up to the $29k resistance level to flush out short traders, this has already started as the CPI data pushed BTC to $28.3k. Nevertheless, it seems likely that we will visit accumulation range 1 and the golden pocket.

I recommend placing buy orders at these two ranges and hoping they get executed. You can even place some stink bids (exceptionally low orders) around $20k on Kraken. Sometimes, when the market drops significantly, there are wild wicks that could potentially fill these orders.

If you want to hedge your positions, consider using options or low-leverage shorts. This approach can provide additional protection in the unpredictable cryptocurrency market.

Ethereum TA

In last week's analysis, we discussed that ETH was trading at $1,851 between the blue and red lines of the Ichimoku cloud. In addition, we mentioned that the trend would remain bullish as long as the price stayed above the cloud. However, a fall below $1,808 could result in ETH entering the cloud, potentially breaking the bullish trend.

In the past two weeks, ETH has demonstrated impressive resilience. However, a break below the weekly low of $1,762 would cause ETH to breach the daily trend level, turning the daily trend from bullish to neutral. I think there is a strong chance that this level gets hit, and we drop below it to trigger long stop losses.

For long-term holders, the golden pocket 1 buy area lies between $1,440 and $1,500, while the golden pocket 2 buy area ranges from $1,269 to $1,300.

Additionally, we saw a daily sell signal towards the end of May, around $1,950. Although not perfect, it is worth noting. I will share the next buy signal on the daily timeframe when it occurs. While it may not provide the perfect entry point, it will strongly indicate that a rally has begun on the daily timeframe.

On-Chain Analysis

BTC onchain edge index

The current Onchain Edge index value is 47.47, which is Neutral or Medium Risk.

• A value under 40 is a good time to accumulate.

Here are the values as a reference:

• Onchain Edge Index <= 10: "Extremely good time to buy (Extremely low risk)."

• Onchain Edge Index > 10 and <= 20: "Very good time to buy (Low Risk)."

• Onchain Edge Index > 20 and <= 40: "Good time to buy (Moderate-low risk)."

• Onchain Edge Index > 40 and <= 60: "Neutral (Medium Risk)."

• Onchain Edge Index > 60 and <= 80: "Good time to sell (Moderate-high risk)."

• Onchain Edge Index > 80 and <= 90: "Very good time to sell (High risk)."

• Onchain Edge Index > 90: "Extremely good time to sell (Extremely high risk)."

BTC on-chain metrics

Let’s have a more detailed look at this week’s onchain metrics.

Between the week of 03/05/2023 and the week of 10/05/2023, there have been slight changes in the metrics. Here's a summary of the changes:

1. Price: The price increased by 0.13% from 27,631.02 to 27,668.13.

2. RSI: The RSI decreased from 51 to 43.8, indicating a shift towards a more oversold condition.

3. PM: The PM increased from 1.17 to 1.27, indicating a higher momentum in price change.

4. MVRV: The MVRV increased slightly from 1.38 to 1.37, indicating a marginal change in the market value to realized value ratio.

5. NUPL: The NUPL remained constant at 0.27, suggesting no significant change in unrealized profits or losses.

The next support for the net unrealized profits and losses is between 0.18 and 0.2

In summary, the changes between the two weeks are relatively small. The price has slightly increased, while the RSI has decreased, suggesting a more oversold market condition. In addition, the PM has increased, indicating higher momentum in a price change, while NUPL remained constant, and MVRV showed a marginal increase. Overall, the risk level remains neutral, and there's no significant change in the market's cycle.

Uptrend Downtrend Indicator reaches a value of -2.21, slightly below the yellow trendline. The further the indicator drops, the better it is to buy.

Based on the UPDI values, we can see that Bitcoin has a lot lower values than Ethereum, suggesting that Bitcoin might have a more substantial rally or is closer to bottoming out than Ethereum. Therefore, the lower the UPDI values, the more it makes sense.

The long UPDI should have a higher weight since it has a protracted timeframe.

Trade Ideas

I’m watching a few coins with buy areas at the first and second golden pockets (the two horizontal lines). Remember that the coins I’m watching from last week are still valid: RNDR, GMX, Mina…

STXNarrative: If you are bullish on Bitcoin and ordinals, it might make sense to bet on STX. Price: $0.40-0.45

LDONarrative: LSD NarrativePrice: $1.31-$1.40

FOLD (manifold)Narrative: LSD NarrativePrice: < $15

TLDR;

The global crypto market cap is $1.013 trillion, shifting from bullish to neutral. Altcoin market cap decreased to $468 billion, turning neutral as well. Bitcoin broke below the distribution range, suggesting movement towards accumulation ranges. Ethereum may shift from bullish to neutral if it falls below its weekly low. On-chain analysis indicates a neutral risk level, with slight increases in price and price momentum. Investors should monitor cryptocurrencies like STX, LDO, and FOLD. prepare for volatility, and hedge positions using options or low-leverage shorts. Bitcoin seems closer to bottoming out than Ethereum, suggesting a more substantial rally potential.

Cheers,

Onchain Edge