Sensible consolidation of the market or transition to a weaker summer?

Thought of the week

Bitcoin spot ETF inflows and outflows have normalised and the halving has also been completed in the media. Now the biggest catalysts for the digital asset market have been used up for the moment and the market is consolidating at very high levels. This could argue in favour of a strong rise towards Q3 and Q4 of the year, but for the snapshot this could mean that a longer consolidation will continue and dominate the market.

Digital Asset News

Runes protocol activity has dropped significantly since the first week of trading. There was a notable drop in activity on 10 May, with very few new mints and few new wallets interacting with the protocol.
According to the Dune Analytics dashboard, the protocol’s fee revenue has been steadily declining. Although Runes is still earning hundreds of thousands of dollars in fees daily on the Bitcoin blockchain, total fees have only surpassed the $1 million mark twice in the last 12 days, indicating a downward trend.
Runes is a new Bitcoin token standard that allows users to create fungible tokens on the blockchain and was created by Ordinals inventor Casey Rodarmor. Ordinals enabled non-fungible tokens on Bitcoin.
In the coming weeks, it will become clear whether this is once again just short-term hype or a meaningful expansion of the blockchain offering.

ARK Invest and 21Shares have removed plans for Ethereum staking from their updated application for a spot Ethereum exchange-traded fund (ETF).
The updated application, filed on Friday 10 May, removed the clause stating that 21Shares would stake a portion of the fund’s assets through third-party providers. It previously stated: “The Provider may, from time to time, stake a portion of the Trust’s assets through one or more trusted staking providers.”
In their original application dated 7 February, the companies had included a clause stating that 21Shares expects to receive ETH as a reward for staking and intends to classify the resulting income as income of the fund.
However, in the now amended application, the relevant section is deleted, but all other planned mechanisms are retained, including losses due to penalty cuts, temporarily inaccessible funds during staking and unstaking, and potential impact on the price of Ethereum.
According to Eric Balchunas, an ETF analyst at Bloomberg, the update may be an attempt to refine the application as a proactive response to potential feedback from the US Securities and Exchange Commission (SEC), although no official feedback has yet been received.
The SEC has been slightly cautious, if at all, about the Ether ETFs.

Some Bitcoin traders are pointing to a real “hammer” in BTC’s weekly chart that could herald the beginning of the end of last month’s downtrend.
“The Bitcoin price still looks like it could jump higher soon,” as Jan Happel and Yann Allemann, founders of the crypto analysis service Glassnode, noted on 9 May.
They noted that the Bitcoin price chart closed on May 5 with a bullish hammer – the name given when there is a small body above a thin long line, referred to as a “wick.”
They point out that Bitcoin formed a “bullish hammer” on 5 May, which is indicated in the price chart by a small candle with a long thin “wick”.
“Bitcoin has formed a bullish hammer in the weekly chart…the trend reversal is imminent”, as other traders have also stated.
The supposed trend reversal can be inferred from the fact that although traders have exerted high pressure on the Bitcoin price over the last seven days, it was still able to close almost back at the opening price because sentiment seems to be turning with regard to demand.
“This week’s downturn seems like a healthy correction before it goes up again. Corrections often amount to 50% or 61.8% of the previous price movement,” as the Glassnode experts explain.

Digital Asset Market

Market report including trading idea

The majority of digital assets experienced a slightly negative trading week, which was particularly evident in altcoins due to relatively low trading volumes. Overall, this can be seen as a re-establishment of support zones in most coins and tokens, which may strengthen the markets in the long term, but did not determine any positivity in the short term.
On a weekly basis, the overall market performance is around -3.4%.
The message for the coming week is: If the support zones hold, then smaller positive price jumps are likely!

Chart technology

From a chart technical point of view, Bitcoin is now in a narrower trend channel between $60,000 and $65,000, which is taking volatility out of the market and could lead to a breakout from this trend channel with increased volatility in the longer term.
The strong support zones around $60,000 should give the market a boost this week, otherwise lower support zones could follow.

Next upside price targets: ~$64,500, ~$66,000, ~$68,000

The next price targets in the event of a negative development: ~$60,500, ~$58,750 ~$57,000

Trading idea

The focus should be on trend reversals in the market. Almost all digital assets currently offer good entry opportunities for short-term trend confirmations.