Crypto Market Forecast: Week of May 3rd 2021

Bitcoin and crypto markets enjoyed a strong bounce in the last week returning to the form that has seen the Bitcoin price rise ~96% so far this year and Ethereum (ETH) rise ~302%. This week, BTC is up ~18%, ETH is up ~35% – and the third-largest asset on the Brave New Coin market cap table, Binance Coin (BNB), is up ~29%.

Trading in the Bitcoin market this week revolved around a major options expiry on April 29th. Around US$4.2 billions worth of options expired last Friday. The week began strongly with the BTC price rising by 5% as trading opened and approached US$54,000 by Tuesday. US$54,000 was the Max Pain price for the bitcoin Options Contracts market at the expiry on Friday and after the big pickup on Monday the price of BTC ranged around that level in the lead up to it.

The maximum pain point option price is the price point that would cause the most number of options to expire worthlessly. In other words, the US$54,000 price level was where options buyers lost the maximum amount on aggregate because this is where they earnt the lowest premiums. For sellers this is where they would be set to earn the highest premiums. Typically institutional traders with enough capital will attempt to manipulate and move the price of an underlying asset towards a max pain point in the lead up to an expiration and find arbitrage opportunities.

There is generally price volatility around the max pain point as traders try to take advantage of trades unwinding and price differences between the options & spot market. Following the options expiry and the removal of the potential barrier of options sellers trying to keep the price artificially at the maximum pain point level, the Bitcoin price jumped again by ~9% on Friday to trade for around US$58,000 by Saturday.

Bitcoin, however, was once again overshadowed by Ethereum hitting new-all-time highs for the second week in a row. ETH’s price rise has come with strong fundamental support and burgeoning network activity. Metamask, Ethreum’s most popular wallet for connecting to Dapps, has crossed 5 million monthly active users for the first time and the number of unique Ethereum Defi users hit the 2 million users milestone.

Crypto news for the week ahead

5th May – Uniswap V3 launches

The third iteration of Uniswap (UNI), currently Ethereum’s most popular decentralized exchange, is set to launch Wednesday. The update will introduce “Concentrated Liquidity” positions which are set to increase the capital efficiency of liquidity providers and enable them to achieve higher returns on capital. Following the initial mainnet release, a scalable version utilizing Optimism’s Layer 2 solution will follow soon after. The price of UNI is up ~28% this week.

7th May – Decred launches new treasury system

On Friday a new version of Decred’s treasury system which was approved by consensus vote will activate. Nodes running software older than v1.6 will be forked off the network and Decred’s operators have urged nodes to upgrade to stay on the network. The update is set to further decentralize the process of spending from the Decred treasury and was approved by 83% of voters. DCR is up ~7% this week.

Trading set-ups for the week

Pro trader Josh Olszewicz explores trading options and signals for BTC and ETH – and lays out the trading setups he’s watching for the upcoming week. Start your week off right with Josh’s thoughts on trading strategies on a weekly basis.

Bitcoin, ALTs and Ethereum – Trading setup for the week of the 3rd of May 2021

Top 10 Crypto Summary

It was a strong week of trading for large cap assets on the Brave New Coin Market Cap table. The top performing asset in the top 10 was Dogecoin (DOGE) which rose an impressive ~45% and looks set to soon rechallenge its all-time-high of US$0.44. The token continues to receive mainstream attention. On Tuesday popular talk show host Ellen Degeneres discussed Dogecoin after asking entrepreneur Mark Cuban about cryptocurrencies and NFTs. Google search interest for Dogecoin also hit new highs in the last week.

Bitcoin Price Chart

Bitcoin has traded around the US$57,500 for most of the weekend after strong pumps on Monday and Friday. European bitcoin markets received a boost after a leaked blog revealed that popular Fintech App Revolut will soon allow users of its premium products to transfer Bitcoin holdings off the app.