The price of bitcoin has been in a corrective phase since the middle of March, against a backdrop of rising market interest rates in the West, while doubts remain about the pace of disinflation and the timing of the FED's pivot and the ECB. Will Bitcoin be hit hard by Sell in May and Go Away?
The fear of “Sell in May and go away” for cryptos
Is Bitcoin’s 20% correction since its all-time high in mid-March enough? This is the question that worries some crypto traders and investors, in particular those who arrived late and who for the most part saw their positions partly liquidated this corrective month of April.
In itself, the correction of BTC since its new all-time high is quite standard, because it fits into its mathematical average observed for 15 years when BTC presents itself at its previous ATH.
But these correction phases are always difficult to experience for investors who have little experience in the stock market, who arrived at the beginning of the year on the crypto market and who too quickly got used to the vertical rise phase between the end of January and mid-March.
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Indeed, if BTC has corrected by 20% (only) since its historic record, some altcoins have suffered real carnage with retracements which could reach 60/70% of the increase since last October.
So after such carnage, is it enough? Did the market have it on its side?
Despite the 4e halving of BTC which took place last Saturday, the answer will not come from the crypto ecosystem, but from the fundamentals of traditional finance.
Market interest rates have in fact been on a clear upward trend since the start of the year due to a return of overheating inflation in the United States and the resulting postponement of the FED's pivot.. The 10-year US bond rate is tending towards the alert threshold of 5%, it is imperative to never exceed this threshold otherwise we will see a crash in risky assets on the stock market, stocks and cryptos.
Consequently, the update this Friday at 2:30 p.m. of US PCE inflation (the FED's favorite inflation measure) will be decisive for the trend for the month of May. The ONLY way to avoid “Sell in May and go away” is an underlying inflation rate (core PCE inflation) which resumes its downward trend.
Chart that depicts the PCE Price Index, the United States Federal Reserve's (FED) preferred inflation gauge
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Bitcoin Low on Support at $60,000 Still Requires Confirmations
In terms of technical analysis, the price of Bitcoin recorded a double bounce off the support at $60,000 last week. This $60,000 support is highlighted by several technical analysis tools as being a major support.
However, has the low point of the correction been found?
As I often say, “holding support is good, but breaking through resistance is better”. This is what is missing to affirm that the low point is made on the graphic level, we must overcome a resistance, we must exceed 67,000 dollars and at the current stage, this is not done.
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Chart which reveals the Japanese intraday candles (H4) of the BTC/USD price
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Vincent Ganne is a market strategist, technical analyst, stock market trainer and speaker on BFM Business. With extensive experience in the field of analysis, he offers a global approach to financial markets. Both from a macroeconomic point of view and from a microeconomic point of view. Vincent Ganne also uses many aspects of graphical analysis with the aim of forecasting trends in financial assets over the medium and long term.
Vincent Ganne
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