Crypto market weakness continues into May as analysts suggest that deteriorating sentiment could lead Bitcoin price to re-test $28,000.
The start of May has seen a continuation of the weakness in crypto and equities markets and at the moment, there is no indication of any short-term factors that could reverse the bearish trend.
“Block, Tesla, Microstrategy and Coinbase are down between 20%–50%.”
Data from Cointelegraph Markets Pro and TradingView shows that an early morning attempt by Bitcoin (BTC) bulls to rally above $39,000 was easily defended by bears, resulting in a pullback to the $38,200 level.
Here’s a look at what several analysts are saying about the current price action and what lower levels to keep an eye on in the case of further decline.
More downside until the 200-EMA flips to support
According to independent market analyst Rekt Capital, watching for a close above the 200-day exponential moving average (EMA) is an easy way to assess the current weakness of Bitcoin. The analyst described the metric as an “indicator of long term investor sentiment towards Bitcoin.”
Rekt Capital said,
“Since mid-2021, BTC hasn’t been able to hold above the black 200-day EMA for too long. Every time BTC would break above the EMA, it would swiftly lose it as support and retrace lower.”
$28,000 could be the macro bottom
Insight into what could come next for the BTC price was touched on by crypto trader and pseudonymous Twitter user ‘Cantering Clark’, who posted the following chart highlighting the similarities between the current price action and BTC’s price action in July 2021.
Cantering Clark said,
“Similar pattern of forceful sell-offs followed by weak attempts to pop upward as we saw in July 2021, again after a longer-term sideways range had forms and lows began to be favored. Possible trap setup.”
Veteran trader Peter Brandt also shared a similar sentiment, noting that the Bitcoin price could break down to new lows if the current “bear channel” plays out.
“The completion of a bear channel typically results in a decline equal to the width of the channel, or in this case a hard test of $32,000 or so — my guess is $28,000.”
Long-term accumulation continues
Despite the current downtrend, data from glassnode suggests that BTC accumulation continues to increase, a fact highlighted by Twitter account Negentropic.
The analysts said:
“Panicking short-term holders realized losses while the long-term holder net position change increased.”
The overall cryptocurrency market cap now stands at $1.72 trillion and Bitcoin’s dominance rate is 42.5%.
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