Analyses

Elon Musk and the Crypto Drama He Leaves in His Wake – Analysis, 17 May

Bitcoin Coins Technical Analysis Bitvalex 17 May 2021

Last week, Elon Musk brought another surprise to the market. This time he started to criticize Bitcoin instead of praising the cryptocurrency. On May 13th, the Tesla CEO announced that they had stopped vehicle purchases using Bitcoin:

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Source: Twitter

Musk underlined that the reason behind the decision is because Bitcoin is heavily energy-consuming, and this needs improvement. 

The market reacted immediately to this news, and most of the top cryptocurrencies started to decline.

One day later, on May 14th, another surprise came when Musk wrote on Twitter he is starting to work with Dogecoin developers to improve DOGE transaction efficiency:

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Source: Twitter

On the next day, he hinted that Dogecoin would become more scalable than Bitcoin by increasing 10x the block size and speeding up 10x the block time:

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Source: Twitter

Later, Musk underlined that the cryptocurrency of Earth has to be scalable and with lower fees and higher transaction throughput, thereby criticizing Bitcoin once again:

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Source: Twitter

The biggest surprise came when on Sunday, the former Bitcoin bull hinted that he might sell all his Bitcoins and go all-in on Dogecoin:

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Source: Twitter

The cryptocurrency market reacted negatively to Elon Musk’s criticism of Bitcoin. This past week most of the leading cryptocurrencies recorded price declines in the range of -10% to -20% on average. And although many cryptocurrency enthusiasts believe that Elon Musk is insignificant for the crypto market and the effect of his criticism will fade very soon, the sell-off continues on Monday. At the time of writing, according to Coin360.com, one Bitcoin costs €37,045.98 (-8.47%), one Ethereum – €2,875.41 (-9.39%), one DOGE – €0.4132 (-5.88%), and one UNI – €28.86 (-9.82%): 

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Source: Coin360.com (Daily crypto market performance)

Now, let us analyze the price charts of the top cryptocurrencies against the euro in the most significant time frames.

BTC/EUR

In the daily chart (1D), BTC/EUR has dropped below the 30-day Moving Average (MA 30), 90-day Moving Average (MA 90), and even the trend line – a bearish signal indicating potential trend reversal:

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It is worth highlighting that even a Moving Average Crossover took place. That is a common trend reversal technical indicator signal that we are at the start of a deeper correction.

However, we think that it is still too early to say that the trend is changing. It may turn out that the current price decline of Bitcoin is just volatility caused by the recent fundamental news. That is why we think it is still too early to conclude that the trend is changing.

ETH/EUR

In the weekly chart (1W), this past week ETH/EUR formed a candlestick similar to Long-Legged Doji – indicating that the market was consolidating:

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In the daily chart (1D), ETH/EUR has dropped to the upper line of the Ascending channel (uptrend):

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We consider two scenarios. In the first scenario (S1), ETH/EUR receives support at the upper line of the channel and the 30-day Moving Average (MA 30) and rebounds. In the second scenario (S2), ETH/EUR pulls back further, and then it receives support at the lower line of the channel and the 90-day Moving Average (MA 90) and rebounds.

In our estimation, both scenarios are equally likely.

DOGE/EUR

Last week, in the four-hour chart (4H), the price of Dogecoin dropped below the lower line of the Ascending channel (uptrend). After that, it received support at the 30-day Moving Average (MA) and bounced off – one of the scenarios we outlined in our previous analysis:

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As can be seen from the chart, after the rebound from the 30-day MA, DOGE/EUR entered the channel again. However, after that, the price has started declining, and now it is below the lower line of the channel again.

We think that the price may receive support at the 30-day MA once again, but this time the probability of a potential rebound is slightly lower. 

UNI/EUR

In the daily chart (1D), UNI/EUR has dropped to the lower line (trend line) of the Ascending channel (uptrend):

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As can be seen from the chart, at the moment, the 90-day Moving Average is at the trend line as well. That is why it is highly probable that UNI/EUR receives support and rebounds.

However, for the uptrend to resume, first, UNI/EUR has to exit the Descending channel (downtrend) in the 1-hour chart (1H):

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At the moment, the price chart is in the lower part of the Descending channel. That means that there is still no confirmation that the uptrend is resuming. That’s why we have to wait for confirmation before opening a long position.

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The analysis is purely informational and does not constitute investment, financial, trading, or any other sort of advice and you should not treat any of Bitvalex's content as such. Bitvalex does not recommend that any cryptocurrency should be bought, sold, or held by you. You are solely responsible to conduct your own due diligence and consult an advisor before making any investment decisions.


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