April was an interesting month for the cryptocurrency market, marked by high volatility, new yearly highs, and sharp declines. BeInCrypto takes a look at the cryptocurrency forecast for the coming month of May
The month is coming to an end and the volatility has died down almost completely. However, the month of May may bring excitement to the cryptocurrency market.
Here are the biggest cryptocurrency predictions for the month of May, regarding bitcoin, the cryptocurrency market, and other popular cryptocurrencies.
Bitcoin (BTC) price will reach its first bearish monthly close in 2023
Bitcoin price has created three consecutive bullish monthly closes. Unless the price closes below $28,476 in the last two days of April, the monthly candle will also be bullish, leading to the fourth consecutive candle like this.
However, the future forecasts for the month of May do not look so bright. The main reason for that was the negative reaction at the $31,000 horizontal resistance area.
While BTC price initially moved above it, it was sharply rejected, leading to a short-term decline. The area is crucial as it has intermittently acted as support and resistance since the beginning of 2021.
Additionally, the Weekly Relative Strength Index (RSI) appears to be ripe for decline. Traders use the RSI as a momentum indicator to assess whether the market is overbought or oversold, and to determine whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is up, the bulls still have the advantage, but if the reading is below 50, the opposite is true.
Since the RSI has reached the 50 line from below (red circle), it is possible for the indicator to cause rejection, in line with rejection from the horizontal resistance area.
If BTC price reaches a close above the $31,000 resistance area, that would invalidate this bearish outlook and could cause a pump towards $42,000.
Bitcoin Dominance Rate (BTCD) will drop dramatically
The bitcoin dominance rate shows the relationship between the market capitalization of bitcoin and the rest of the cryptocurrency market. A BTCD value of 48.50% means that 48.50% of the entire cryptocurrency market cap comes from Bitcoin.
Although BTCD is approaching a new yearly high, it is showing several bearish signs. First, I created a shooting star candle on the weekly time frame (red icon).
A shooting star is a type of bearish candlestick that features a long upper wick and a bearish close. This means that the upward movement cannot continue, and the sellers have pushed the price down below the opening of the period.
After that, the weekly RSI is in the overbought zone. The last time this was overbought was at the beginning of 2021 (red circle), before a very sharp drop.
Therefore, the BTCD is likely to drop by 42%. This forecast will be invalid on a weekly close above the 48% resistance area. In this case, the BTCD can go as high as 62%.
Polygon price (MATIC) will fall out of the top ten
Looking at the cryptocurrency in the month of May, the cryptocurrency forecast is not in favor of Polygon (MATIC). Currently, MATIC is ranked in the top 10 cryptocurrencies based on their market cap, and has been in the top 10 for a long period of time.
However, the price action is showing several bearish signs that the next few months will not be positive for the MATIC token price.
The main reason for this is the fact that the digital asset is trading below the support line of a long-term bullish parallel channel.
These channels usually contain corrective patterns, which means that an eventual breakdown from them is the most likely scenario. If that happens, Polygon price could drop towards the $0.75 support area and possibly drop below the June 2022 low at $0.32.
A close above the support line will invalidate these bearish expectations. In this case, MATIC price could move towards the middle line of the channel at $1.45.
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