Are Bitcoin and Ethreum permanently stuck in neutral? |

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  • Bitcoin and the $40,000 pivot point.
  • Ethereum is near the $2,900 level.
  • Closer to January 2022 lows than November 2021 highs.
  • Three bullish factors and three bearish factors
  • Tightly wound springs

One of the issues facing the cryptocurrency asset class is that of expectations. After surging from five cents in 2010 to nearly $69,000 per token in mid-November 2021, market participants have grown accustomed to wild price swings and meltdowns that provide gold buying opportunities. The asset class was dynamic, creating incredible profit opportunities. Many market players who ventured on and had no ideological connection to the libertarian means of exchange. Their ideology was profit.

When Bitcoin and Ethereum found lows on January 24, 2022, both digital tokens fell asleep. Profit ideologues have left the asset class in search of other, more volatile places with better profit potential. Bitcoin and Ethereum have entered volatility hibernation, which continues in early May 2022.

Bitcoin and the $40,000 Pivot Point

After years of wild volatility in the cryptocurrency arena, the price action of bitcoin and other 19,150+ tokens has calmed down in 2022.

Source: Barchart

The chart shows that bitcoin’s 2021 range was between $28,740.04 and $68,906.48 per token, a trading band of $40,166.44. In the first four months of 2022, the range is between $33,076.69 and $48,187.21, or $15,110.52. While the 2022 price range for most assets would be volatile, participants in the crypto arena market are expecting much higher price variance than seen so far this year.

Meanwhile, bitcoin has been making higher lows since June 2021, which is now a bearish setup for the crypto that continues to consolidate around the $40,000 pivot point, which is the midpoint of the trading range of 2022.

Ethereum is approaching the $2,900 level

Ethereum, the second leading crypto, has also settled into a trading range since late 2021.

Ethereum price

Source: Barchart

In 2021, the Ethereum price range was $716.919 to $4,865.426 per token, or $4,248.507. Over the first four months of 2022, it was between $2,163.316 and $3,888.805, or $1,725.489. At the $2,761 level on May 1, Ethereum was $240 below the $3,000 midpoint, which is the pivot level for the past few months.

Meanwhile, like bitcoin, Ethereum has made higher lows since June 2021.

Closer to January 2022 lows than November 2021 highs

At $2,760 for Ethereum and $37,950 for Bitcoin, prices remain much closer to the January 24, 2022 lows than the November 10, 2021 highs. Bitcoin, Ethereum, and many other cryptocurrencies have been sleeping in 2022 compared to their activity in previous years.

On May 1, the market capitalization of the asset class stood at $1.71 trillion, well below the 2021 record. of tokens placed on the market. At the end of 2020, there were 8,153 tokens in cyberspace, and last year ended with 16,238, nearly double the level in a year. On May 1, there were 19,206 tokens, and by the time publishes this article, there will be even more.

Three bullish factors and three bearish factors

The bullish and bearish factors pull cryptocurrencies in opposite directions in 2022.

On the bullish side:

  • The incredible returns of the past decade continue to entice investors and traders looking for the next bitcoin to rise by five cents to near $69,000 at the high.
  • Declining trust in fiat currencies is increasing the demand for alternatives, and cryptos are filling that void. In 2021, El Salvador made bitcoin its national currency. Last week, the Central African Republic adopted bitcoin as its official currency.
  • Futures, options, ETFs, ETNs, and pick-and-shovel companies that rise and fall with cryptocurrency values ​​have evolved them more into mainstream investment assets.

On the downside:

  • Custody and security remain important factors and roadblocks for the asset class as increasing piracy causes market participants to lose assets.
  • The correction from the November 2021 highs has resulted in losses for speculators who bought cryptocurrencies too late and held them too long. The price action needs to turn bullish for them to get back into the asset class.
  • Governments continue to hate cryptocurrencies because they threaten their control of the money supply.

These opposing magnetic forces have created a narrower trading range in 2022 than in 2021.

Tightly wound springs

I take the pattern of higher lows in Bitcoin and Ethereum as a sign that they will come out of the 2022 doldrums. Although the technical pattern suggests substantial movement, it could be higher or lower. In the meantime, the odds favor the upside due to declining faith in fiat currencies and the benefits of blockchain technology that is powering the crypto asset class.

This weekend at Berkshire Hathaway’s (NYSE:) annual event in Omaha, Nebraska, Warren Buffett said he would never buy bitcoins, even at $25, because they “don’t produce anything. tangible”. He also said that he would not pay $25 for all the bitcoins in the world. Support for the cryptocurrency asset class has grown, but critics have not retreated. Last year, Mr Buffett’s partner, Charlie Munger, called bitcoin “disgusting and contrary to the interests of civilization”.

The trading patterns of bitcoin, ethereum, and many other cryptocurrencies (over 19,200) create tightly coiled springs that will eventually race up or down. My bet remains on the upside, because the fintech revolution is financial evolution.

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Are Bitcoin and Ethreum permanently stuck in neutral? |

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