A mini crash occurred in the crypto markets yesterday, which is followed today by a partial recovery.
This dynamic was far from trivial, and it originated two days ago. It is well understood by analyzing the trend of the last three days in the price of Ethereum and Bitcoin.
Today’s snapshot of the crypto market: the rebound of Ethereum after yesterday’s crash
It all began on 25 April, when the small hemorrhage of ETH from staking ended.
This hemorrhage, albeit very small, had begun a few days after the release of ETH from staking due to the Shapella update on 12 April.
In fact, on 19 April, when Binance activated staked ETH withdrawals, the price of Ethereum fell from $2,100 to $1,970, and then fell again to just above $1,800 on 24 April.
On the 25th there was a reversal, with the price returning to $1,870.
Yesterday, however, on the wave of the small rebound on 25 April, the price rose as high as $1,960 in just four and a half hours, but this rapid and significant growth proved to be unsustainable.
In fact, thereafter, in just 70 minutes, the price of ETH fell by nearly 8%, returning for a very brief moment even below $1,800.
This drop was also too large and rapid to be sustainable, and so a further rebound then occurred that brought the price back around $1,900.
At this time, this particular dynamic of exaggerated growth, followed by an excessive mini crash and a further rebound, seems to have ended.
Bitcoin’s mini crash: the crypto queen seems to be recovering ground today
Truth be told, this dynamic is even sharper when analyzing the price of Bitcoin.
It is worth mentioning that until 24 April it was most likely the price trend of ETH that affected the crypto markets, but since the rebound on 25 April it seems that the price trend of BTC has come back to prevail.
Before the 25 April rebound, Bitcoin’s price was below $27,500. With that rebound it was back above $28,300, but yesterday in just four hours it jumped to over $30,000.
This is a very important threshold, both because it is the one whose crossing generated the 2023 annual high in mid-April and because it is the one that characterized the brief moment of lateralization in May 2022 after the implosion of the Terra/Luna ecosystem, before the collapse due to the Celsius bankruptcy.
However, such a quick return above $30,000, after four days below $28,000, seemed hardly sustainable, and indeed yesterday within just 50 minutes the price briefly returned below $27,300 with a sudden mini-collapse.
But just as the rise above $30,000 seemed to be too sudden, to the point of being excessive, yesterday’s mini-crash also seemed to be excessive.
And so it was followed by a rebound that brought the price back to where it probably should be at this time, which is around $29,000.
So after making annual highs well above $30,000 in mid-April, the price had fallen back to just above $27,000 because of Ethereum’s decline due to sales of ETH withdrawn from staking.
This phase ended on 25 April with a rebound that triggered a brief excess of enthusiasm that brought Bitcoin’s price back to $30,000 yesterday but only for a brief moment. The excess of enthusiasm resulted in an excessive mini-collapse that within a few hours receded.
What to expect in the coming days
The first week of May could be pivotal.
First of all, the staked ETH on Lido will also be unlocked, although to date it seems that Ethereum’s decline due to the unlocking of staked ETH is now behind us.
On Wednesday, 3 May, the Fed will make its new rate decision known, although the market has already largely priced in another 25 basis point increase.
However, it is often the words spoken at a press conference that move the market rather than the eventual rate hike. Furthermore, it is also possible, at least in theory, that the Fed will always decide not to raise them.
Finally, it is important not to forget that if Bitcoin’s price trend in this 2023 continues to behave in some ways similar to that of 2019, another small bull run could be expected at the beginning of May that could bring it back as high as $35,000.
Therefore, the current phase seems to be just a wait-and-see phase for what will happen in early May, with an attempt to recover the annual records set in mid-month.
In short, a sort of reverse bounce may be underway after the losses following 19 April.
Yesterday, this reverse bounce seemed to have been completed, but the mini-collapse showed that the time is not yet ripe for a stable return above $30,000.
Crypto Crash, common creative license