Altcoins stage a relief rally while Bitcoin traders decide whether to buy the dip

Blockonomics
Altcoins stage a relief rally while Bitcoin traders decide whether to buy the dip
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Similarities in price action between cryptocurrencies and traditional financial markets remained fairly strong on May 10, as traders enjoyed a relief rally across the asset class following the May 9 rout, with Bitcoin (BTC) briefly falling to $29,730.

Market downturns often translate into bigger losses for altcoins due to a variety of factors, including thinly traded assets and low liquidity, but this also translates into bigger rallies once a recovery ensues.

Daily cryptocurrency market performance. Source: Coin360

Several projects posted double-digit gains on May 10, including a 15.75% gain for Maker (MKR), the protocol responsible for issuing the DAI (DAI) stablecoin, which could benefit from Terra (LUNA) and its TerraUSD (UST) stablecoin.

Other notable winners include Persistence (XPRT) and its liquid staking token pSTAKE (PSTAKE), which rose 16.4% and 39.8%, respectively, after Binance Labs revealed a strategic investment in the liquid staking platform. Polygon (MATIC) also rebounded with a gain of 14.59%.

bybit

Relevance to traditional markets remains

The correlation between Bitcoin and the stock market in 2022 remains high despite the general perception that the crypto market will act as a hedge against TradFi volatility.

If anything, the volatility typically associated with cryptocurrency markets has begun to pick up in traditional markets, as evidenced by the price action of the Dow Jones Industrial Average on May 10, which was up more than 500 points, only at the time of writing.

The Nasdaq and S&P 500 fared slightly better, gaining 0.9% and 1.92%, respectively.

Bitcoin analyst Willy Woo provided further evidence in support of the correlation between cryptocurrencies and traditional markets, posting the following chart, stating that “fundamentals [are] Take a back seat and be afraid of being driven deals. ”

BTC/USD 1-week chart vs SPX 1-week chart.Source: Twitter

Willie Wu says,

“I do think we are not trading BTC, we are trading macro and equities. The right pane is SPX support, which will determine the directionality of BTC, and the left pane is the equivalent BTC support.”

Related: Michael Saylor Reassures Investors After Market Plunge Hurts $MSTR, $BTC

S&P 500 could fall further

While the relief rally on May 10 drove cryptocurrencies and stocks higher, market analyst Caleb Franzen issued the following chart warning that a bearish head-and-shoulders pattern on the S&P 500 chart could lead to another 500-point drop.

SPX/USD 1-day chart.Source: Twitter

Franzen said,

“After my $4,000 call was hit, it’s hard to pick a downside target, but I think the most likely support area is around $3,530-3,590. This is the white resistance range for September-October 2020.”

The overall cryptocurrency market cap is currently $1.444 trillion, with Bitcoin dominance at 41.5%.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk and you should do your own research when making a decision.



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