Analytical Review. Weekly 25.05.2021

After last week’s impressive drop, we offered you a choice of several market recovery strategies related to different crypto assets. Subsequent events showed that idea related to BTC was more profitable. That’s why we propose to strengthen this position by taking advantage of the fact that BTC’s dominance in the market has increased, and therefore more active trading will be associated with this cryptocurrency in the near future, which may allow it to grow faster than the market.

We remind you that in order to take advantage of this idea, you need to do the following actions:

1. Sell PUT option with an execution date of June 25, the strike price of 28,000 and, this time with a slightly lower premium of 1,750 USD.

2. Buy CALL option with an execution date of 25th June, strike price of 50 000 USD and a premium of 1475 USD.

In that way we get the opportunity to take part in the market recovery and an additional net premium of USD 275.

It was not an easy week for the crypto community. Storm volatility led to a significant and sharp decline in the capitalization of crypto markets, the decline in trading results amounted to -28%. Capitalization at the beginning of the week stabilized around USD 1.6 trillion.

The price of BTC fell sharply several times, testing the level of 30,000 USD, but then invariably recovering. The final decline from the high of 46,600 USD was -21%, the current price is around 36,500 USD.

ETH exchange rate was subjected to a more significant decrease of about -36%. Having started the week near the local highs of 3,560 USD, the price followed the entire market and fell to 1,800 USD, correcting to 2,250 USD by the beginning of the week.

The basis for this move was the continued negative news backdrop. Initially, the non-profit association of financial institutions under the National Bank of China issued a statement urging its members to refrain from trading cryptocurrencies and investing in Bitcoin. While this kind of news comes quite often from China, this time it was received rather sensitively by many market participants. After the market was down last week due to negative news from the U.S., additional bans on the other side of the ocean earlier in the week killed any hopes for a recovery, and the market headed down to break new price levels and look for a bottom from which it could bounce back up.

The situation was exacerbated by a meeting of the Chinese Communist Party’s Finance Committee, which repeatedly, but at an official level, voiced the authorities’ concerns about mining and investing in cryptocurrencies on the part of citizens. Such reports led to changes in the work of China’s largest exchanges Huobi and OKex, which temporarily suspended some of their operations in China.

The news pressure did not end there. The new U.S. president’s administration, in an effort to find sources of funding for global economic support plans, came up with an initiative and plans to tax crypto assets over 10,000 USD.

This environment led to increased volatility in the market, with a sharp drop in price to margin calls for positions opened with leverage. Forced closing of high-risk positions on futures platforms led to pressure on the spot market and a subsequent cascading drop in price. Most trading activity occurred in BTC and ETH pairs, but other altcoins also fell heavily, leading to frenzied sell-offs, liquidations amounted to more than USD 10 billion, momentarily the daily decline was over 50%, many exchanges software worked with interruptions, and some types of trading were halted.

As a consequence, cryptocurrency values reached early spring levels, prompting many large and experienced market participants to increase their crypto assets. However, the recovery momentum was limited, and the market has not yet fully recovered.

Stocks of ETH on cryptocurrency wallets are currently at the average level of the last month, while the amount of BTC remains quite significant, which will continue to put pressure on the price. Especially considering that bitcoin’s dominance index is up 7% and now stands at 45%.

At the moment, the focus of analysts and traders has shifted from strategic growth levels to current open-interval levels and near-term calendar option execution levels.

For BTC this week, levels of 35,000–38,000 in terms of support, and 45,000–46,000 as resistance levels will matter. The large option trading level at 50,000 may act as a maximum benchmark in case of large inflows to the exchanges.

For ETH, the 3,000–3,200 USD range is the growth target, with possible areas for price support at the 2,200–2,500 levels.

Prices and the entire crypto market can be supported by Consensys, a crypto forum that takes place at the end of May. This year, from the 24th to 27th, there will be many authoritative speakers, not only from well-known and promising crypto projects or investment funds, but also regulators represented by representatives of the Federal Reserve, the US Securities Committee. Such concentrated amount of positive comments (and as Dr. Lael Brainard’s speech from the FED showed, in general the officials are quite positive) may finally help the market to grow.

If you have any questions, you can contact us as follows

via Telegramm — @DeltaTheta_Research

via email — Research@deltahteta.tech

The information published on the website, including the results of research, forecasts, estimates regarding financial instruments, on the nature, characteristics of a financial instrument (combination of financial instruments), changes in its (their) value, the results of technical and/or fundamental analysis is not an individual investment recommendation, and financial instruments or transactions mentioned in it may not match your investment profile and investment goals (expectations). It is your task to determine if a financial instrument or transaction meets your interests, investment objectives, investment horizon and risk tolerance level.

DeltaTheta Inc. disclaims any liability for potential losses in case of executing transactions or investing in financial instruments referred to in the information and does not recommend the use of this information as the only source of information when making an investment decision. The information may not be regarded as guarantees or promises of future returns on investments, risk levels, costs, break-even investments. The outcome of past investments does not determine future returns.

Analyses, reviews, news articles of DeltaTheta Inc are internal documents of the company, as well as for the purpose of informing clients. They are not advertisements for securities. Information is based on public sources deemed reliable, but DeltaTheta Inc is not responsible for its accuracy. Investing in securities involves significant risk and decisions about investments should be made by the investor.

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