The entire crypto market is resting on critical support. That makes this a pivotal week for the whole space.
Can Bitcoin remain above support and muster a relief rally?
Or will the levels I’m about to show you trigger the next leg lower?
By the time you finish with today’s issue, you’ll know the exact triggers I’m watching to determine the next move for Bitcoin, Ethereum, VeChain, and others.
Short Term Vs. Long Term Thinking
I’m often criticized for sounding bearish on Twitter. However, I’m not always entirely sure why since staying relatively bearish since April has worked out exceptionally well.
Ironically, the difference between being bullish and bearish usually comes down to timing. Nothing more.
If you look at my tweets from June 2020 to March 2021, they were 90% bullish. So again, it’s simply a matter of timing.
I’m incredibly bullish on cryptos over the next few years and decades. I wouldn’t be publishing newsletters like this one and spending time on Twitter if I wasn’t.
But the fact is that most people care about the price they pay for an asset.
Even the most ardent dollar-cost averagers have a difficult time ignoring price entirely. That’s why I try to time my bullish and bearish stance appropriately.
How long might cryptos remain in a downtrend?
Nobody knows for sure. But if the bull market is ongoing, there’s an excellent chance we see a meaningful bottom develop sometime before the end of August.
Those of you who saw issue 37 know why I think that.
Of course, if we’re already in a deeper bear market, then we could see sideways to lower prices for several more months.
But regardless of where we are in the cycle, the long-term future for cryptos is very bright. That’s why I continue to believe in dollar-cost averaging when the market is trading at an extreme discount.
Total Crypto Market Cap (TOTAL)
The total crypto market cap appears to be testing the bottom of the March 2020 channel.
I originally had this level a bit lower. But if you draw the level to connect with several lows from September and October of last year instead of the one, you get the placement below.
That makes the $1.25T level a must hold for buyers. If the market closes below that, it would open up $1.1T and perhaps $1T support.
As I’ve maintained for weeks, the market needs to carve a higher high to resume its upside momentum. That means a close above $1.5T. That would also break the May trend line resistance.
Until then, expect prices to remain under pressure.
Bitcoin is sitting on a critical support level I’ve mentioned all week.
The $32,400 area is the location of a trend line from the February 2020 high. That level also connects with the late November and early December highs.
BTCUSDT dipped below that level on Wednesday. However, as I’ve stated recently, where the day closes at 8 pm EST is key.
As long as Bitcoin remains above $32,400, the level is intact as support. Alternatively, a daily close below that area would open up $30,000 and potentially $24,000.
Alternatively, a move above $34,700 would likely start the recovery effort for Bitcoin and cryptos at large.
ETHUSDT is retesting the $2,000 area today as new resistance following this week’s close below it.
That’s going to be a key hurdle for buyers. If we see ETH close back above the $2,000 region (maybe as high as $2,050), it will open the door to $2,400.
On the other hand, a rejection from the $2,000 resistance area could take ETHUSDT back to $1,700. That’s been a critical support for ETH since late May.
This LINK chart is the big one, in my opinion. It illustrates the overall vibe in the crypto market perfectly.
I’ve talked about how $16 is a must hold area for buyers in the past. That means that a daily close below $16 could signal the start of the next leg lower, potentially to the $8 to $10 region.
That $8 to $10 area is the bottom of a broad ascending channel from the April 2019 low.
Alternatively, LINK would need to close above $20 on a daily closing basis to start the reversal process and expose $25.
The last time I mentioned ADA, it was breaking down from consolidation near $1.40.
Wednesday’s session hit a low of $1.20 before bouncing back to $1.29. However, it’s unclear whether this reversal is sustainable.
Part of me still thinks we see ADAUSDT trend lower to the $1 region before yet another bounce. The $1 area has been a critical area for ADA since February.
Below that is the $0.80 support area.
ADA needs to start carving higher highs (like the rest of the market) to start showing signs of a reversal. That means a close above $1.40 and $1.50.
Until then, I’ll continue to expect lower prices toward the $1 region.
VET is also pressuring a key support area. There’s a trend line that extends from the December 2020 lows that intersects near $0.07.
A daily close below that could open up the $0.06 region.
However, I still have my eye on the confluence of support between $0.04 and $0.05. It’s the intersection of a 2018 trend line and trend line support from March 2020.
VET would need to take out the $0.08 resistance area to start the reversal process.
I’ve received a lot of requests to analyze TELUSDT. The consolidation structures since the start of 2021 are textbook. And even the recent pullback looks relatively orderly apart from the May 19th wick.
As for key support, I’d keep a close eye on $0.009. That’s the previous range top from March and April. Below $0.009, there isn’t much until $0.004.
I can make a case for a bull flag during this recent consolidation. However, the lows make it difficult to determine a support level.
If you’re looking for places to add during this pullback (apart from DCA’ing), I’d look to $0.009 and $0.004. That would put TEL down 86% to 92%, which is substantial even for a first-era bear market.
Today’s Top Stories
Brazil’s SEC Approves First Ethereum ETF in Latin America
The Brazilian Securities Commission (CVM) has approved the first exchange-traded fund tracking the performance of Ethereum (ETH) in Latin America.