May 19, 2022 will go down in crypto market history as “Black Wednesday.” Bitcoin lost $13,000 in a day (over 30%), coming close to the psychologically important $30,000.
Altcoins fell even more, many of them by more than 50%. Thus, within 24 hours, the capitalization of the crypto market fell by a third, falling by $720 billion. Today BTC is trading at $36,600, but there are no signals for future growth yet. What situation is developing in the market - is it a correction followed by new highs, or the beginning of another crypto winter?
There is talk from all sides about the onset of a crypto bear market - a period during which the prices of digital assets are constantly declining. Bitcoin is once again being buried and a long crypto winter is predicted. If the pessimistic forecasts are correct, then this time the bull market ended too quickly - most experts were confident that it would last at least until the fall or winter.
But maybe the pessimists were in a hurry, and we are not seeing a change in trend, but only one of the predicted corrections? This is supported by the repurchase of assets at a drawdown by institutional and large investors, a number of technical indicators and models for forecasting the price of military-technical cooperation. We figured out what the probability is that we are dealing with another correction, and not with a change in the long-term trend.
Why did the crypto market fall?
We recently examined in detail the main reasons for the fall of Bitcoin and altcoins. Let us briefly list them.
Bad news for BTC. Bitcoin is a highly volatile asset, the value of which is highly dependent on the news background. And, as if on purpose, over the past few weeks the news on the crypto market has not been encouraging:
- On April 22, US President Joe Biden announced that he intends to increase the tax on investment income for wealthy Americans. This may affect large cryptocurrency holders.
- On May 7, the new chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, announced the need for additional regulation of the crypto market to protect investors from fraud.
- On May 12, Tesla stopped accepting BTC for payment due to the alleged unenvironmental friendliness of Bitcoin mining, and the head of the company, Elon Musk, criticized the first cryptocurrency and the energy consumption of its network on Twitter.
- On May 16, Sichuan miners in China faced restrictions on their electricity consumption, which reduced the hashrate of the Bitcoin network by 20%.
- On May 18, China banned financial and payment companies from providing services related to cryptocurrencies.
- On May 21, a whole wave of negative news hit the crypto market: the State Council of China announced the need to combat Bitcoin mining and crypto trading, Gary Gensler announced that the SEC was ready to bring cases against scammers in the crypto sector, and Hong Kong authorities announced plans to ban cryptocurrency trading among retail investors, leaving This opportunity is only available to large players. On May 24, it became known that the ban on mining and trading in the country was related to the launch of the digital yuan.
- On May 23, it became known that the Huobi crypto exchange banned clients from China from trading crypto derivatives and limited access to mining services, and the OKEx platform will soon deny residents of the country access to the internal OKB coin.
A cascade of negative news prevented Bitcoin from recovering from its recent correction and triggered a massive sell-off.
Panic among retail investors. The negative news background led to the dumping of assets by retail investors, frightened by Musk's comments and news from China. This led to the liquidation of a huge number of margin positions - more than $8 billion per day. Traders got carried away with trading crypto derivatives with leverage and paid for it. At the same time, institutional investors and crypto funds did not sell, but, on the contrary, bought Bitcoin when it fell. More about this below.
Correction in the stock market. Nowadays, not only cryptocurrencies, but also stock market shares—primarily technology companies—are showing high volatility. For example, over the past month, Tesla shares have lost 20% in price, the NASDAQ index (NDX) - 3%. And shares of companies related to cryptocurrencies sank even more: Coinbase - by 30%, MicroStrategy - by 28%, Square - by 16%.
Securities are falling amid rising inflation - investors are increasingly concerned that rising inflation could prompt the US Federal Reserve to tighten monetary policy and raise interest rates. This is a move that could weaken investors' willingness to invest in risky assets.
This time, Bitcoin, unfortunately, did not prove itself as a defensive asset that hedges against turmoil in the stock market. The first cryptocurrency is an asset built on new technologies. Therefore, investors perceive it as a share of a technology company - the prices of Bitcoin and stock market indices have been correlated with each other for some time.
Bitcoin to dollar quotes on exchanges
| Exchange | Well | Min. (24h.) | Max. (24h.) | Changes | Volume |
| Coinbase 09.05.2021 | 57832.6$ | 57611.3$ | 59559.8$ | -807.87 -1.3777% | 16814.3Ƀ |
| Bitfinex 09.05.2021 | 57842$ | 57519$ | 59450$ | -770 -1.3137% | 7147.41Ƀ |
| Kraken 09.05.2021 | 57911.8$ | 57595$ | 59521.4$ | -714.7 -1.2191% | 4752.38Ƀ |
| ExtStock 09.05.2021 | 66578.5$ | 66506.9$ | 68309.6$ | -754.562 -1.1206% | 4000.85Ƀ |
| Bitstamp 09.05.2021 | 58032.5$ | 57519$ | 59564.2$ | -627.72 -1.0701% | 2870.38Ƀ |
| Gemini 09.05.2021 | 57775.2$ | 57600$ | 59560$ | -858.77 -1.4646% | 1932.98Ƀ |
| Bittrex 09.05.2021 | 57891$ | 57302.5$ | 59514$ | -644.86 -1.1017% | 702.639Ƀ |
| P2PB2B 09.05.2021 | 57661.6$ | 57492$ | 59481$ | -844.93 -1.4442% | 600.918Ƀ |
| CoinsBit 09.05.2021 | 57645.7$ | 57459.2$ | 59500$ | -894.28 -1.5276% | 364.571Ƀ |
| itBit 09.05.2021 | 57865.2$ | 57600.8$ | 59522.8$ | -753.25 -1.285% | 329.722Ƀ |
The difference between a correction and a bear market
There is no clear difference between a correction within a trend and a bear market (that is, a change in trend).
Typically, a bear market is said to have begun if an asset has fallen by more than 20%. But if we are talking about the crypto market, then volatility of even 30% is not very surprising. What is important here is the direction of movement of quotes - up or down.
A correction is a temporary deviation of prices from the main uptrend. That is, if conditions for growth remain in the market, but prices suddenly fell and then returned to growth, then this is precisely a correction. If there are no more reasons for growth and prices have stopped rising, then the market is bearish. The investor’s task is to determine whether there is a correction or a trend change in the market. But no one knows the exact answer.
Now there is more and more talk that cryptocurrencies have entered a bear market. However, such pessimism may be premature. Despite the horrifying numbers of recent losses, we may well have seen not the beginning of a collapse, but only a false breakout like the one that happened in March 2022. Then on Black Thursday, the price of Bitcoin fell by 40% in one day - from $7,970 to $4,777 and even locally to $3,600. The reason was the announcement of the World Health Organization about the global COVID-19 pandemic. Then not only the cryptocurrency market, but also the world stock market collapsed. But when investors calmed down, we saw one of the strongest bull trends in history: the cryptocurrency and stock markets renewed their highs.
Corrections in Bitcoin and other coins were expected. Any asset that has risen as much as cryptocurrencies have over the past year will have pullbacks in price: the higher the price, the more investors will take profits and sell the asset. Just last year, the price of BTC at $65,000 seemed almost fantastic - traders were waiting for an update to the previous high of $20,000, but did not even dream of current prices. Therefore, corrections at such levels are not surprising.
So what is on the market now: a change in trend or a correction? Let us examine the arguments in favor of both points of view.
Bitcoin rate forecast for 2021
Different analysts predict the Bitcoin price in completely different ways. Some expect Bitcoin to grow unrealistically to $100,000, while others threaten to fall to $50,000. No one can give an exact answer to what awaits us. But you can familiarize yourself with the forecasts, draw parallels and draw your own conclusions.
| May | 52979-75673 | 67175 | 16.3% | 16.3% |
| Jun | 51094-81920 | 76561 | 14.0% | 32.6% |
| Jul | 69948-80478 | 75213 | -1.8% | 30.2% |
| Aug | 75213-93354 | 87247 | 16.0% | 51.1% |
| Sep | 87247-108291 | 101207 | 16.0% | 75.2% |
| Oct | 101207-121472 | 113525 | 12.2% | 96.6% |
| But I | 113525-140907 | 131689 | 16.0% | 128% |
| Dec | 131689-163452 | 152759 | 16.0% | 165% |
What indicates a change in trend?
The pace and depth of Bitcoin's fall scares investors the most. After reaching a historical high of almost $65,000, the first cryptocurrency has been falling in price for more than a month and has lost almost 40% during this time.
Technical indicators. A number of technical indicators also speak in favor of a bear market. For example, Bitcoin has now fallen below the 21-week moving average (it was above this line almost all of last year) and the Pi Cycle Top indicator, based on the 111-day average price of BTC and the 350-day moving average multiplier.
Viktor Dorokhov, expert of the Digital Economy program at the Institute of Economics and Economics of the RUDN University, noted:
“On the daily chart, the price of BTC at the time of publication of the article is at the level of the 200-day average cost, before that it broke through this level, and even earlier the 100-day average was tested.” According to the expert, this indicates “high sales pressure on at least a medium-term scale.”
The Greed and Fear Index, which measures investors' expectations and appetite for risk, is currently at 10 points out of 100, indicating a period of "extreme fear."
There are no drivers for new growth. For several months now, the price of Bitcoin has been in the range of $50,000–$60,000, and this despite the fact that some altcoins have grown several times over this time. This indicates that the “fuel” for the next rally has run out. For new growth of the military-technical cooperation, some super-positive news is needed.
What indicates that there is just a correction in the market?
Signals in favor of a bearish market seem convincing, but there is reason to believe that these are false breakouts and the crypto market is maintaining an upward trend.
This is not the first time the crypto market has crashed as part of this upward trend. Let's look at the Bitcoin price chart over the past year. During this time, several major corrections can be noted:
- From January 9 to January 28: from $40,000 to $31,500 - by 21%;
- From February 21 to February 28: from $57,900 to $45,000 - by 22%.
- From March 14 to March 25: from $61,000 to $53,000 - by 13%;
- From April 14 to April 26: from $64,800 to $49,000 - by 24%. After that, until May 10, the BTC rose to $59,000;
- From May 10 to May 19, Bitcoin fell from $59,000 to $31,000—a 47% drop. During the day, the asset gained 29% and remained around $40,000 for two days. But after the news about the ban on mining in China, it fell to $33,000–$35,000.
If we compare it with previous corrections, the recent collapse still stands out for its depth, but it already looks a little less frightening. During past bull cycles, corrections of 20-30% also happened and did not surprise anyone.
It is too early for the bullish trend to end. Previously, we talked in detail about the main models for estimating the price of Bitcoin and looked at when, according to them and the predictions of experts, BTC will reach its peak as part of this uptrend.
Let us remind you that, according to experts, Bitcoin can reach prices from $100,000 to $400,000 by the fall or before the end of this year. The main models for assessing the value of the first cryptocurrency, for example, the Bitcoin Rainbow Chart, the NVT (Network Value to Transactions Ratio), and the Hyperwave Theory, also predict that the upward trend should continue until the end of this - early next year.
Vitaly Kirpichev, director of development in Russia at TradingView, noted that it is too early for the onset of a bearish cycle:
“The galloping growth cycle of 2017–2018 lasted 12 months. Transferring this time interval to the current situation, we can assume the implementation of this pattern in the fourth quarter of 2021.”
Yulia Zakharchenko, a trader, teacher and member of the RACIB association, believes that there has not yet been a change in trend and it is worth talking about a bear market only if Bitcoin consolidates below $30,000. Now we are only talking about a deep correction. According to Zakharchenko, the bull market will continue until approximately the end of the year.
Stock-to-Flow (S2F), the most popular Bitcoin price prediction model, also suggests that the first cryptocurrency still has to rise to at least $100,000 as part of this upward cycle. Previously, the model was able to predict previous boom and bust cycles. Its creator, an analyst at PlanB, believes that the decline in Bitcoin’s relative strength index (RSI) suggests that the coin is only in the middle of its bullish cycle, as it was in previous periods.
How accurate is Stock-to-Flow? Previously, the model was repeatedly criticized for its mathematical unreasonability and methodological errors. But, according to a recent study by Iconic Funds and Cryptology Asset Group, a leading European crypto asset manager, the authors of which analyzed 19 factors influencing the value of cryptocurrencies, the price of Bitcoin is determined, first of all, by the ratio of BTC reserves to its growth.
Redemption of drawdowns by large investors. During the recent fall, Bitcoin was sold mainly by short-term investors who bought it recently. They sold it at a loss, fearing the coin would fall further. But large investors and funds, according to Chainalysis, on the contrary, bought the fall below $40,000.
So, for example, during the “sale” the price of BTC on the American Coinbase, which is considered an exchange for institutions, was several thousand dollars higher than on other exchanges. This may indicate increased demand from large investors in the United States.
What also seems important is the quick rebound of Bitcoin from local lows of $31,000 to $39,000 in just a few hours - investors perceived this price as a gift. Several well-known and large investors also announced the retention of BTC: for example, Michael Saylor and his company MicroStrategy, Elon Musk and Tesla, as well as the head of TRON Justin Sun, who bought BTC for $150 million.
A reset of the asset could benefit Bitcoin - more coins will end up in the hands of long-term investors who are not prone to panic and sales. The surge in the outflow of bitcoins from exchanges on May 19 may indicate that large investors bought coins at a decline and transferred them to personal wallets. In 10 minutes, 16,895 BTC were withdrawn:
Altcoin season. While Bitcoin was hanging out sideways, some altcoins grew several times, and experts started talking about the onset of the so-called “altcoin season” - a period when other cryptocurrencies grow much faster than Bitcoin.
Vitaly Kirpichev noted that the harbinger of the past bear market and the crypto winter of 2022 was the strong growth of crypto assets from the “third echelon”. Closer to the peak, Bitcoin's dominance reached an all-time low, and Ether and coins created on its platform showed the largest market share.
The expert believes:
“If we draw a parallel with that time, then during the May collapse, Bitcoin dominance was near the lows of January 2022, but did not break through the previous level. If we rely on this historical pattern, then it is logical to expect another wave of growth, primarily in altcoins. This rally will form a new peak in the total dominance of Ethereum and Binance blockchain-based tokens, as well as an all-time low for Bitcoin dominance.”
Ethereum Leads in DeFi and NFTs
ETH is the second largest cryptocurrency after Bitcoin (BTC). Its market capitalization as of June 10 was about $291.6 billion, less than half of Bitcoin's $689.5 billion. And this reflects the dominance of the first digital coin. There are about 116 million ETH coins in circulation, compared to 18.7 million Bitcoin.
Programmer Vitalik Buterin proposed the Ethereum network in 2013 to develop blockchain technology that could connect real assets. Along with several other co-founders, Buterin crowdfunded the development of the network in 2014 and launched it in 2015.
At the beginning of December 2022, work began on the Ethereum 2.0 update. The update is designed to improve network scalability and security. Notably, the network will switch from Bitcoin's Proof-of-Work (PoW) consensus algorithm for validating blocks and mining coins to the Proof-of-Stake (PoS) algorithm.
As written in a blog post by the Ethereum Foundation, the update includes the so-called “Eth1” PoW chain, applications and tools, and “Eth2” software and protocol layers.
“Eth1 is, first of all, the work and update of Ethereum at the user level: state, transactions, accounts. That is, everything that the end user takes into account when interacting with Ethereum. Eth2, on the other hand, is a series of updates designed to redefine Ethereum's core consensus - moving from energy-intensive, inefficient proof of work to more resilient, scalable proof of stake."
As part of the update and transition to PoS, on April 15, 2022, the Berlin hard fork (division of the block chain) was activated in block 12.244.000. The update includes contract optimizations to improve transaction efficiency, which has seen fees skyrocket, an update to how the Ethereum Virtual Machine (EVM) reads code, and changes needed to prevent DDOS attacks.
Simon Peters, cryptoasset analyst at eToro, commented: “Following the network upgrade, Ethereum is proving its use case, and with developers flocking to the platform, it is no surprise that it is so popular with investors.
The basis is demand from institutional investors.
Although they have now accepted Bitcoin, institutional investors are diversifying their portfolios and Ethereum is a natural next option for them. Thus, the second largest crypto asset by market capitalization is well positioned to benefit in the future.”
The Ethereum ecosystem has become the first choice for developers launching decentralized finance (DeFI) applications and NFT sales, although there are some new applications that are turning to alternative blockchains.
Ethereum played a key role in the emergence of DeFi, which runs smart contracts on EVMs and allows holders of various cryptocurrencies to use their coins as collateral for financial services, including loans, insurance, trading and savings. And the ability to attach real assets to contracts allows developers to launch NFTs on Ethereum.
DeFi applications emerged in 2022, offering new opportunities to the emerging fintech space. NFTs came to the fore in early 2022 as high-profile multimillion-dollar sales caught the attention of investors.
Why might the upward trend continue?
Previously, we have already examined in detail what could lead to a new cryptowinter and why it may not happen.
In short, the crypto market has changed a lot since the 2022 bull run. The growth is due to fundamental reasons - the role of large capital has grown, all the infrastructure necessary for it has appeared, cryptocurrencies have become part of the financial world, and their use is becoming widespread. Without a sharply negative news background, the crypto market may well remain within the long-term upward trend, experiencing short-term corrections of even 50%. In this case, once panicked short-term investors run out of Bitcoin, the downward pressure will ease and the price will go up.
However, the situation may repeat itself, and after reaching the peak, Bitcoin will go into a protracted bear market. But even in this case, it is likely that the crypto winter will not be very strong and will be shorter than the previous one - analysts predict a strong support level for BTC in the region of $20,000–$30,000 and a more optimistic $40,000.
Therefore, now most analysts remain confident that the current pullback will only fuel the crypto rocket for a stronger rally. The experts we interviewed also believe that it is premature to talk about a change in trend.
Victor Dorokhov considers two possible scenarios for continuing the upward trend:
- Less likely is a dynamic return to the $40,000–$60,000 zone, consolidation in it and exit from it;
- More likely is the formation of a new trading range at the level of $30,000–$42,000 and a gradual entry into the trend after a consistent breakdown of previous resistance levels. At the same time, it is important that Bitcoin consolidates above the 200-day moving average - now the average price for 200 days is at $40,000.
Weekly forecast table in USD
| date | Forecast price | Min. | Max. | Change, % |
| 10.05.2021 Monday | ↑ 74 307,2 | 71 605,7 | 77 108,3 | 26,50 % |
| 11.05.2021 Tuesday | ↑ 75 685,9 | 72 746,4 | 78 417,6 | 0,81 % |
| 12.05.2021 Wednesday | ↑ 76 217,9 | 73 472,5 | 79 047,3 | 0,70 % |
| 13.05.2021 Thursday | ↑ 76 758,4 | 74 069,9 | 79 604,2 | 0,71 % |
| 14.05.2021 Friday | ↑ 77 313,4 | 74 694,9 | 80 100,7 | 0,72 % |
| 15.05.2021 Saturday | ↑ 77 830,2 | 74 967,3 | 80 743,5 | 0,67 % |
| 16.05.2021 Sunday | ↑ 78 274,4 | 75 484,3 | 80 987,3 | 0,57 % |
BTC price forecast for tomorrow 2021-05-10: The daily price fluctuation is predicted in the range from $71,606 to $77,108. The average price for 2021-05-10 will be: $74,307. Trading price range in percentage: 7.14%
BTC price forecast for the day after tomorrow 2021-05-11: The daily price fluctuation is predicted in the range from $72,180 to $77,805. The average price for 2021-05-11 will be: $75,080. Trading price range in percentage: 7.23%
BTC price forecast for 2021-05-12: The daily price fluctuation is predicted in the range from $72,746 to $78,418. The average price for 2021-05-12 will be: $75,686. Trading price range in percentage: 7.23%
BTC price forecast for 2021-05-13: The daily price fluctuation is predicted in the range from $73,473 to $79,047. The average price for 2021-05-13 will be: $76,218. Trading price range in percentage: 7.05%
BTC price forecast for 2021-05-14: The daily price fluctuation is predicted in the range from $74,070 to $79,604. The average price for 2021-05-14 will be: $76,758. Trading price range in percentage: 6.95%
BTC price forecast for 2021-05-15: The daily price fluctuation is predicted in the range from $74,695 to $80,101. The average price for 2021-05-15 will be: $77,313. Trading price range in percentage: 6.75%
BTC price forecast for 2021-05-16: The daily price fluctuation is predicted in the range from $74,967 to $80,744. The average price for 2021-05-16 will be: $77,830. Trading price range in percentage: 7.15%
What should investors do now?
Specific actions now depend on the chosen strategy and when the investor entered the market.
For short-term investors and margin traders, any mistake can be fatal.
If you are a long-term investor or hodler, don't panic and stick to your basic strategy. Set a stop loss or stop limit - this will allow you to exit the market with a profit before the assets fall below the purchase price. When exiting, it is better to use stablecoins and wait out the market turmoil in them.
If you are ready to take risks, use drawdowns for purchases, but remember the golden rule of averaging - enter with a “ladder” and do not catch a “falling knife” (buy when the trend changes to an upward one).
If you are not trading with leverage and did not buy coins at the highs, then there is no need to panic about the correction.
Technical analysis
Quotes of the asset have reached a significant level of $55,151, and you should carefully monitor the price reaction to this area, since the further short-term dynamics of the asset largely depends on this.
Indicator signals on the W1 interval:
- RSI - buy.
- Stochastic - overbought.
- MACD - buy.
- ADX - buy.
- Williams %R - buy.
- CCI - buy.
- ATR - high level of volatility.
- Simple moving average 100 and 200 - buy.
Summary: from a technical point of view, long positions are also relevant.
