Digital asset firm Kraken notes in its latest Kraken Intelligence report that May was a rather “unpleasant” month for crypto.
The Kraken Intelligence team points out that with such a “severe” price correction, some may now be wondering whether “the party that began last September is now drawing to a close.”
As mentioned in the update from Kraken, context and factual data are necessary or important tools for market participants to “remove emotional decision making when volatility surges.” Kraken Intelligence has carefully looked at various historical trends and “current influences” to determine or anticipate what may “lie ahead” for Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Dogecoin (DOGE), and Polkadot (DOT).
When examining which group of investors/traders were actually the buyers and sellers, long-term crypto holders – or “smart money” – held through (for the most) during this recent selloff while participants who might have joined within the past year were “most likely to capitulate,” the report revealed (consistent with other reports). That may “well indicate resilient demand among the more experienced crypto investors who have seen similar corrections before,” the report added.
The crypto market report also mentioned:
“Ethereum continues to attract market buyers in 2021. On-chain data shows that the number of Ethereum whales soared in May and remained largely unchanged despite ETH falling as much as 60%. Furthermore, certain technical tools indicate that demand for ETH has yet to reach peak market cycle euphoria. Both metrics have many analysts wondering whether ETH will continue to outperform BTC in this cycle.”
The main takeaways, according to Kraken, from the report are as follows:
- Bitcoin’s Correction – The plunge from all-time highs “brought great unease to the crypto markets.” This was the “worst drop in price since March 2020.”
- It’s Elon’s Market, Everyone Just Lives In It – The eccentric entrepreneur behind Tesla “made headlines in the crypto market in May.” Not only did DOGE pump in anticipation of his Saturday Night Live appearance, Musk “sent shockwaves among the crypto community after he raised concerns about Bitcoin mining – only to later meet with Bitcoin miners and urge a commitment to renewable resources.”
- Taking A Breather – The bulls “failed to defend BTC’s bull market support, which resulted in BTC slipping back down below said support for the first time since April 2020.” While this “suggests the bears are in control, it’s also possible that BTC is in a period of consolidation.”
- Expect Corrections – Previous bull market corrections have “regularly exceeded -30%, so the -50% drop in May was not out of the ordinary.” Historically, BTC has “corrected, on average -40%, over a period of roughly 14 days.”
You may check out the full report from Kraken here.
