The crypto market has been in the stabilization stage for the last week after a serious collapse of Bitcoin and altcoins. Most coins have acquired flat dynamics, and investors are biding their time and planning long-term strategies. In this situation, the cryptocurrency market has significantly reduced the level of volatility, and all the main metrics have returned to normal. Moreover, there was a local case of divergence between Bitcoin and the S&P 500 index. All these factors point to a full-fledged stabilization of the market and the likely beginning of an upward movement.
Most likely, this is exactly what would have happened if we were in any other cycle of the crypto market, except for this one. Bitcoin and other digital assets had the opportunity to resume the upward movement, and the market was ready for this. However, the situation around the UST stablecoin has changed the plans of medium-term investors and forced them to change their approach to forming strategies in the crypto market. According to Glassnode, the ratio of open put and call options has changed significantly in BTC. This suggests that crypto investors have drawn certain conclusions from the fall of Luna and UST, and began to build up positions to protect capital from unforeseen falls.
It is also important to note the priority Bitcoin prices for most investors in 2022. Glassnode reports that in call contracts, the greatest open interest is concentrated around the $40k mark. As for put options, the situation here is really depressing. Investors chose the range of $25k–$15k as the main profit-taking zones for a downward price movement. Thus, we see that the medium-term sentiment of crypto investors is aimed at making a profit in the conditions of the ongoing bear market.
This also indicates that the current market situation is unique, and even despite the update of local lows of on-chain metrics, investors do not believe in a price rebound. And there is no doubt that after a local pause and stabilization of the situation, the crypto market will continue to fall. In June, the quantitative tightening program starts, which causes direct damage to the liquidity of the crypto market and Bitcoin. Most likely this summer, the market will lose some of the projects with low liquidity, and large cryptocurrencies will update local lows below the levels that have remained untouched for more than a year until now.
In the case of Bitcoin, this level will be the range of $25k–$15k. Investor sentiment confirms that in the next 3–6 months, it is the decline to this zone that will be the key signal for a possible price reversal. So far, we have seen the $24k level once, after which the price recovered and began to consolidate. It is most likely that Bitcoin will fully decline into this range and begin trading with a gradual update of local levels. It is important to note that now the price fluctuates in the area of the main interest of the largest holders of BTC. Taking into account the Luna case, there is every reason to believe that companies such as MicroStrategy may have problems that will negatively affect the market.
As for the technical picture, we see the stabilization period of Bitcoin with the absence of visible pressure from sellers. The price in free flight moves in a narrow range of $39k–$31k without a hint of fluctuations or a breakout attempt. At the same time, on May 25, the head of the Fed is expected to speak, and therefore in the coming days, the volatility of the asset and the market may increase. Technical indicators demonstrate local market encouragement: the RSI and stochastic maintain upward dynamics, and the MACD is moving to zero on all pairs. With this in mind, the forecast does not change: as part of the stabilization movement, BTC/USD may reach a local high around $33k. Then June will come and turbulence will resume.
