Cryptocurrency loyalists got a respite from recent market struggles thanks to a rally in decentralized finance tokens (DeFi) and Dogecoin (DOGE) on June 2. There may be a small breakout in the price of Ether (ETH) and Bitcoin (BTC). it also raised sentiment, but for the moment, top-ranked digital assets are still facing pullbacks at key general resistance levels.
Data from Cointelegraph Markets Pro and TradingView shows that the price of Bitcoin rose 7.3% from a low of $ 35,645 on June 1 to an intraday high of $ 38,250 on June 2, and Ether saw a similarly sized gain. of 7.7% to briefly recoup the $ 2,800. support level.
While the price rally has many calling for the continuation of the 2021 bull market, some analysts have highlighted a possible bearish pennant formation on the Bitcoin chart, which could result in a price breakdown as low as $ 16,000.
Structure of the Bitcoin pennant and its main downside target. Source: TradingView
Top of the market or a bullish respite?
Bitcoin’s volatile price action over the past month has led many to speculate whether the top is at BTC or whether the current correction is just a mid-cycle respite that will prepare the asset for continuation once trading resumes. rally.
More in-depth information on the matter was provided in a recent Delphi Digital report that discussed the MVRV ratio, an on-chain metric that measures the market value (MV) of Bitcoin against its realized value (RV) as an indicator that can help Traders determine market peaks and bottoms.
Bitcoin MVRV ratio versus price. Source: Delphi Digital
The chart above shows that the MVRV index overextended in early 2011, late 2013, and early 2018, “all of which represented cycle peaks,” as Delphi Digital highlights. The researchers also suggested that “the May 2021 reading could very well indicate the peak of this cycle.”
While the peak may be in the current cycle, Delphi Digital also noted that there is a possibility that the market “will see a result that resembles the ‘double bubble’ of 2013, where BTC achieved an ATH [máximo histórico] , the price fell sharply and then rallied well beyond the ATH in the same year. “
The report further highlighted the fact that the threshold for determining Bitcoin’s bottom has increased over time, which could change the outlook for bull markets in the coming years.
According to Delphi Digital:
Given the steep decline in MVRV so far, it is possible that BTC could see a lesser drawdown and a quicker bottom than in previous cycles. This would look something like global stocks, which have multi-month corrections and multi-year bull cycles. “
As a note of caution, the report noted that while “there is a lot of conflicting data and opinions” in the market today, there is likely to be “a mean reversion episode in the coming weeks as the price deviated a lot from its 50-day moving average. ”
BTC base case: mean reversal. Source: Delphi Digital
“Historically, the price of BTC has been pretty close to its 50-day MA. And looking at the drawdowns above, BTC has always featured a healthy relief rally after a deep pullback. This is the result of the natural reflexivity of the market. “
Altcoins organize double-digit rallies
Altcoins posted double-digit gains during price action on June 2, led by a 53% gain in the price of Kyber Network’s KNC token, which is now above $ 2.50. KAVA also secured a 37% rally and is currently trading close to $ 4.70.
Daily performance of the cryptocurrency market. Source: Coin360
Dogecoin, Kusama’s KSM token, and Curve DAO’s CRV token also helped lead the altcoin load, with price spikes of around 25%, while OKB made a 33% gain and is trading close to $ 17.70.
The overall cryptocurrency market capitalization is now $ 1.709 trillion, and Bitcoin’s dominance rate is 41.5%.
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