Cryptonomics – your weekly crypto & blockchain readings 📰
13th May – 19th May
This is Rizvi, entrepreneur and crypto enthusiast based in Zurich, Switzerland. Every week, I’ll share with you some of my weekly readings and thoughts around crypto and blockchain topics, from market insights to trading activities. Feedback is more than welcome!
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📈 What happened in the markets this week
It wasn’t narrative but market structure that drove the big move down. It may seem the drop was controlled and planned by the riches but maybe the real reasons has very little to do with Elon or China. The recent bull run was heavily driven by derivatives trading with individuals over-leveraged with 100x. Cascading liquidations made the down moves even more so extreme. First signs of fear could have been already identified by crypto moving onto exchanges. 📰 CoinDesk
Huobi scales back due to the China crackdown. As undoubtedly noticed by most people China started to crack down on crypto (again). This lead Huobi, one of the largest exchanges, to scale back some of its services. Services include futures contracts and leveraged investment products for new customers in certain countries. Additionally, Huobi suspended the sales of mining machines in mainland China. 📰 CoinDesk
💡 Deep dive into the markets
The bull run is not over yet. Yes, the dip was huge and yes there is an opportunity, that we might head for a (short-term) bear market. Still, I am very positive about this year and what Bitcoin, Ethereum and other cryptos with good fundamentals can reach. There is still a lot of gas left in the tank and zooming out a bit, you will realise that the market needed a correction. During yesterday’s dip over 700K wallets were liquidated and further analysis showed that these wallets contained on avg. 1000 USD worth of crypto. Was does that tell us? There were a lot of new players entering the market with overconfidence and leverage of 10x, 50x, and yes also 100x, banking on all sorts of meme coins. Also in my friend’s circle, I have come to realize that some entered this space smelling that they can get rich tomorrow and also giving me tips on what meme coins I should consider.
Looking at the charts also reveals a bearish pattern. The 200-day moving average is a strong indicator of whether we are in bull or bear territory.
As long as we are not able to go above the 200-day MA, the power will lie in the hands of the bears. Zooming out a bit there are now 2 scenarios we might be in.
Looking at the market phases illustrated above we could be either in a bear trap (halfway through the bull market) or in the bull trap (already peaked with BTC hitting 64K USD). Both scenarios are possible whereas I believe we are more in a bear trap, where strategic FUD is put into the market so people with money and power can scope up more BTC before the bull run continues to its peak. However, I am not a financial advisor and you should always do your own research before making investment decisions.
During this bull run, this was the correction Nr. 3. Looking at the 2017/18 bull run, we had overall 6 major corrections before entering the bear market. Yes, history does not repeat itself, but it certainly tries. Where I see Bitcoin heading next is to 70K and that very quickly. I wouldn’t be surprised to see these figures before August. That would immediately also push the entire crypto market. I also expect to see a DeFi-mania and I hate to say that but also many meme coins will do well.
Don’t get pushed out of your Bitcoin and Ethereum because of some FUD in the market. I am in crypto since 2016 and have seen heavy market manipulations during the last bull run. The best thing is to HODL through and you will be rewarded!
🎯 My top crypto picks for May
1️⃣ Ethereum – ETH
Ethereum has a bright future ahead especially with all the upcoming releases such as EIP 1559 expected in July. It’s a no-brainer that Ethereum has always been and still will be a very strong asset to hold in your portfolio.
2️⃣ Chainlink – LINK
Many projects rely on third-party data. Chainlink being the largest oracle platform with huge backing from all corners is a top project to consider.
3️⃣ Uniswap – UNI
Uniswap just proves its strength by demonstrating how stable it ran during the huge market movements the past two days. While many CEX abandoned ERC20 transactions due to overload Uniswap processed billions of transactions with ease. A great hold in your portfolio.