Technical Weekly - It was the best of times, it was the worst of time

Key takeaways

• BTC prices rebounded after reaching its two-week low. However, the recovery could be short-lived.

• Conversations around ETH continued to increase as Ethereum daily gas used reached an all-time high.

• ETC and THETA in focus as upgrade approaches.

Market overview

The broader cryptocurrency market has initially stabilized after series of BTC-led pullbacks. The prices of the leading crypto have been hovering near USD 8800 levels in the early Tuesday Asia session after reaching a two-week low. The stability came after BTC failed to close above the psychological USD 10000 levels multiple times this month. 

Long-term investors from the traditional world of finance seem increasingly interested in crypto investment as an alternative, despite the somewhat lackluster short-term price actions after BTC halving.Sentix Bitcoin Strategic Bias has reached an all-time high this week, indicating investors have been even more bullish about BTC over a six-month timeframe.

Manfred Hubner, Managing Director at Sentix, said, “The current economic crisis, which was triggered by the Corona pandemic, is throwing the economy and society intoconfusion. An age of "disruption" seems to have dawned. This appears to be reflected in investors' expectations of currencies and currency alternatives.”

Figure 1: Sentix Bitcoin Strategic Bias (Source: Sentix)

Figure 2: Ethereum Daily Gas Used (Source: Etherscan)

On the other hand, we’ve noticed that ETH has received increasing social attention, as the prices of the second-largest crypto have largely remained above the 200 levels despite a pullback.There were some conversations about ETH could be undervalued as the Ethereum daily gas used has reached an all-time high this week.

Gas is the fee required to make transactions on the Ethereum network.Some believe that when the daily gas used is at an all-time high, meaning the network has been being used more than ever, and that could be a fundamental reason to drive the ETH prices.

Although there’s no direct evidence to show the correlations between gas used/gas price to ETH price, however, our study found that derivatives traders have been favor ETH trades more than BTC recently, read more why is that here.

Elsewhere, we’ve seen some small-cap altcoins outshined the rest, with HBAR surged 20%, and THETA jumped another 12% ahead of the Mainnet 2.0 upgrade. Meanwhile, ALGO gained more than 9%, ETC rose less than 1%.

Price Analysis

BTC/USD – Rebound could be short-lived, lower support to be tested?

In our last edition of Technical Weekly, we emphasized that the 20-200 MA Golden Cross was not a buying signal, and that is confirmed by a pullback, and the 11-month downtrend remained valid.

However, after a retreat to 8700 levels, the current condition may able to support a short-term rebound to around 9200 to 9300 levels. That could be supported by the MOM, which slightly recovered, reaching the levels where the previous lows were.

Even if a short-term rebound materialized, we believe the price still needs to find lower support before starting a new long-term trend. That is becausethe RSI and Stochastichave yet to show signs of recovery.

We maintain our long-term bullishness on BTC, while short-term price fluctuations are inevitable. The lower support at this point could be in the 8000 to 8200 area.

Figure 3: BTC/USD Daily Chart (Source: FX Street)

ETH/USD – A breakout is due?

ETHUSDT has formed a triangle pattern after failed to break the key 220 levels, although the pair hasmainly been trading above the 200 levels.

While it’s reasonable to expect a breakout of the price, the direction of the breakout could be hard to determine.

Part of the reason is that momentum indicators have shown a mixed signal. The RSI and OBV (not shown here) are still maintaining their uptrends. However, the fast line of the Stochastic already went below the slow line.

We believe the pair could find decent support near the 61.8% Fibonacci retracement, which is near 182. Also, 200 is another key level that many traders are eyeing on.

Figure 4: ETHUSD Daily Chart (Source: FX Street)

ETC/USD–Further consolidations ahead of Phoenix hardfork?

ETCUSD falls into a triangle pattern ahead of the Phoenix hardfork, which is expected to happen around June 3.

However, we expect the pair may need further consolidations before producing a breakout, as the Stochastic suggests that the price almost reaches the oversold level, while the ultimate oscillator has produced a lower high.

With the bias slightly on the negative side, we believe the price may test its support at the lower side of the triangle near 6.

However, the enthusiasm of the Phoenix hard fork could also increase the short-term price fluctuations.

Figure 5: ETC/USD Daily Chart (Source: FX Street)

THETAUSDT–Oversold before the upgrade

We covered THETAUSDT in our past publications, and we have highlighted the market's over-enthusiasm on the Mainnet 2.0 upgrade, which is due in less than 30 hours at the time of writing.

As we can see, both the RSI and the Stochastic were deep in the oversold area. With the widened Bollinger bands, we believe it would be challenging for the price to continue the uptrend after the upgrade is delivered.

If traders already have positions, they may considerlocking up their profits before the upgrade occurs.

Figure 6: THETAUSDT – Daily Chart (Source: OKEx; Tradingview)