36 Hours: Can Bitcoin Close the Month of May in the Green?

4 min readMay 30, 2022

As the S&P500 recovers lost ground, battered and bruised Bitcoin bulls are seemingly reluctant to smell the coffee. Is the long-overdue relief rally about to start, or will investors drill deeper for the pristine digital asset?

Let’s dig in.

Dear readers,

The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service. While I cannot promise perfection I do my best to be honest and transparent.

Thank you for reading.

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Technically speaking

Can Bitcoin Close May in the Green?

Bitcoin/Dollar closed a 9th consecutive red weekly candle, falling -2.9% to $29,400. This price-action officially sets another all-time record selling streak amidst a backdrop of US stock-market strength.

BTC/USD is in unchartered territory, with bulls being unable to mount a successful relief rally in record-breaking-oversold conditions so far. Price bounced off the historically significant 200-weekly exponential moving average ($27,000), which tends to roughly dictate market cycle bottoms and accumulation ranges.

On the daily time-frame, BTC/USD is up a modest 5%, exchanging hands at $30,650 at the time of writing. Price has yet to take out key liquidity order blocks ($31k-$33k), and may be setting up for continuation in the run-up to the monthly close due in less than 36 hours. A surprise rally into the close would set BTC up for $34,000; and a close above $37,600 (capped by macro range POC) would turn BTC/USD green for the month of May.

Admittedly, the last target is more hopium than analysis (in the immediate short term).

Locally, BTC/USD continues to range without setting a convincing directional bias to either side.

Should the coin give back the $29,500 level, then sub-$27,000 is probable. But, on the off-chance that Bitcoin is about to experience a well-overdue prolonged market rally, a local dip and bounce from $30,000 provides a base-case for price to take out higher resting liquidity. Alternatively, strength near $31,000 may also be interpreted as an opportunity for bulls to step in too.

SPX & BTC decoupling?

But the interesting technical picture isn’t painted in Bitcoin this time around.

Indeed, the S&P 500 has finally decoupled from Bitcoin, though not as traders might have anticipated. Since May 25th, the SPX is up 6% while Bitcoin has only increased a meagre 4%. Bearing in mind the correlation narrative assumes higher volatility in Bitcoin, it’s safe to say the decoupling has taken place.

The SPX bounced from the value area ($3,900) and could be about to complete a text-book broadening wedge described last week. If it’s playing out and Bitcoin is simply lagging, then the next alpha trade is a BTC/USD bid once the SPX reclaims $4,194 (pivot).

Dollar Index Drops

One tail wind for risk-assets is the sustained drop in US-Dollar strength, which currently stands at 101.3 points.

If the DXY continues its trajectory lower in the immediate short term, a local bounce at 97.2 could be reasonably expected, in part due to the lengthy consolidation block which preceded the original breakout (i.e. buyers would likely defend this level).

Risk — asset bulls would then look for a potential double-top pattern to emerge below 103.5 before initiating the degenerator 9000 on supersonic, high growth high tail-end risk assets.

It might not be the bull run the market deserves, but it’s certainly the one it needs.

Over and out.

p.s. This is my opinion. It is not financial advice.

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