Forex Analysis & Reviews: 01.06.2022 - Long-term investors continue...

01.06.2022 11:06 AM

Long-term investors continue to accumulate Bitcoin despite a deep correction

Bitcoin and the cryptocurrency market are saying goodbye to one of the most negative months in history on a positive note. It was in May that the main digital asset formed a record nine weekly red candles in a row, and investors massively fled from crypto assets due to the fall of the Luna stablecoin. It became finally obvious that investors were disappointed in Bitcoin as a means of protection. And the final nail in the coffin was hammered by the Federal Reserve, which monetary policy finally turned investors back to Bitcoin.

On June 1, the US Federal Reserve's quantitative tightening program will start. Its main task is to reduce liquidity in all available markets due to excessive inflation. The consequences of the last meeting in mid-May are well known to every crypto investor. Bitcoin hit a new low at $25k, retail investors launched a massive capitulation, and some long-term owners joined them. Due to panic, market volatility jumped, which also played against buyers. As a result, investors are still dealing with the consequences of the May Fed meeting and the events that followed.

Despite all the negativity around the crypto market, Bitcoin had a significant audience that continued to stubbornly accumulate BTC coins at a good discount. According to leading analytical resources CryptoQuant and Glassnode, the market showed a confident bullish reaction in the $25k–$28k region, which is called "buy the dip." The accumulation phase, which continues to this day, has largely contributed to the successful implementation of this process. According to Glassnode data, during the May crisis, several main categories of investors emerged who actively bought the bottom and continue to accumulate BTC coins.

The first category that actively bought the bottom was investors with a balance of up to 100 BTC. After the drain of Bitcoin reserves from LFG, it was they who began to actively buy cryptocurrency below $28k. In total, this category of buyers purchased more than 80.7 thousand BTC coins. Thanks to this, the asset managed to withstand the selling pressure in the $25k area and start a recovery momentum. The second beneficiaries of the fall of Bitcoin were wallets with a balance of more than 10,000 BTC. Investors also actively purchased the stocks of cryptocurrency sold by Luna, thanks to which they brought their investments in May to 46,000 BTC coins.

We also see that despite the negative May, most venture capital investors continued to actively invest in the cryptocurrency market. In May, crypto funds received more than $500 million in investments, and last week's increase was about $87 million. It may seem that the combination of all these factors indicates a likely change in trend due to the activation of buyers and large investors. Indeed, the number of participants in the futures market is growing, and the volumes of longs prevail on short ones.

Despite this, it is important to understand that the current weakening of the negative in the market is due to several factors. First of all, the market reached a certain bottom of the negative, which provoked a local upward correction, which we are seeing. In addition, the encouraging news from the WHO regarding monkeypox and the relative lull in hostilities in Ukraine gave the market time to readjust and begin to act in new circumstances. However, the same Glassnode points out that on-chain activity in the BTC network remains at a low level, despite active accumulation.

An important factor indicating an increase in the likelihood of an upward movement will be a bullish breakdown of the fibo level of 0.236 in the $33k–$35k zone. As of June 1, Bitcoin is trading near the challenging $31.5k resistance zone, which is the upper end of the $29k–$31.5k swing range.

A bullish breakdown of this formation will open the way for the coin to the next area, $33k–$35k, and based on the results of its working out, it will be possible to judge the further movement of the BTC/USD price. However, given the start of the QT program and its unpredictable impact on the markets, it is hard to believe in a full-fledged reversal of the Bitcoin trend.

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# Trading # Crypto industry news # Bitcoin # American markets # BTCUSD Crypto-currencies

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