Crypto Markets Remain Stagnant as Meme Stock Mania Grows
• Bitcoin (BTC, Tech/Adoption Grade “A-”) has been channel trading for over a week but could be eyeing a breakout.
• Chainlink (LINK) has regained the $30 level but struggled to push above it.
• Dogecoin (DOGE, Tech/Adoption Grade “B-”) is on the move again after some bullish news.
Bitcoin hasn’t done much in the last few days. It’s been stuck trading sideways between $35,000 and $40,000 — notably below its 50-day moving average.
But stagnation is preferable to the potential “Death Cross” forming on the charts as the 50-day moving average is getting nearer to a cross below the 200-day moving average. The “Death Cross” is typically used as a sign that a bear market is near, so BTC will need to make a move upwards if it hopes to avoid this cross.
How far upwards? Well, the next significant level is $40,000 (corresponding to the 200-day moving average), which should alleviate worries about the “Death Cross.”
Looking in the near future, we can find one big reason to suspect Bitcoin can cross this key level. Starting on Friday is the much-hyped Bitcoin Conference 2021, where thousands of people in the Bitcoin industry will gather to share thoughts and opinions on the market and new tech developments.
This conference is sure to spark some bullish sentiment among industry insiders and could be a catalyst for some bullish price action over the next few days.
Here’s BTC in U.S. dollar terms via Coinbase Global, Inc. (Nasdaq: COIN):
Chainlink has recovered nicely from the lows it set on May 23 and is back to trading above the $30 level yet again. The price oracle network token traded at just over $50 in mid-May before the market sell-off pushed the price down to a low of $16 — suffice to say that May was a volatile month for the asset.
The next levels ahead would be a close above the 21-day moving average at about $32; LINK will need to push above that key metric if it hopes to extend its current rally. If it does, the next level of resistance on the charts lies around $37.
Here’s LINK in U.S. dollar terms via Coinbase:
Everyone’s favorite memecoin has jumped back into the headlines today as Coinbase decided to list DOGE and enable trading on CoinbasePro. That was the catalyst for today’s 30% price hike, bringing DOGE up more than 50% from Saturday’s lows of about 28 cents.
Dogecoin has had a thrilling 2021. The price run year to date has been astronomical, to the surprise of many crypto insiders. DOGE has benefited from the unique retail trading style stemming from social media, namely the r/WallStreetBets and crypto spin-off r/SatoshiBets crowd from Reddit and Twitter, Inc. (NYSE: TWTR).
Retail traders are continuing their push to get DOGE to above $1 — a level much higher than any crypto insider would have predicted at the start of the year.
Dogecoin is a prime example of the power retail traders have when they band together on a mission — especially in the crypto market.
While most crypto analysts have been very wrong about DOGE’s performance so far this year, this asset is still far too unpredictable for it to be a safe trade for anyone without a preexisting position.
We will continue to take a neutral stance on this highly entertaining memecoin.
Here’s DOGE in U.S. dollar terms via Binance:
Notable News, Notes and Tweets
• There is a lot of overlap between the meme stock mania and crypto markets. Ari Paul notes that as these traders discover the power of their investments, they may move on to other assets ...
• Here’s a deeper dive into Tesla, Inc. (Nasdaq: TSLA) and Elon Musk’s involvement in crypto.
What’s Next
Despite the relative inactivity in most major cryptocurrencies, there’s still plenty to be excited about.
Meme stock mania is surging again in the traditional markets. AMC Entertainment Holdings (NYSE: AMC) — a favorite of the Reddit crowd going back to the GameStop Corp. (NYSE: GME) days — took a rocket ride today as shares peaked at $70, more than doubling its most recent closing price. And even that closing price, at $32, was triple the trading price from a month ago.
Many of the same factors we saw in the GameStop runup are at play here. But more interesting is the fact that these moves are happening in tandem with DOGE’s rise.
We believe these retail investors — eager to claim market influence previously reserved for larger investors — are sure to migrate into the crypto market.
Why? Because eventually, they’ll realize they’re playing a losing game.
The power that centralized institutions hold over the stock market will be a nigh impossible barrier to overcome. But the level playing field of cryptocurrencies and decentralized finance (DeFi) offers a much friendlier environment for retail investors to leave their mark. Exactly as they’re doing for DOGE.
We are likely in the early stages of an investing revolution.
If the Reddit traders do make a full transition into cryptocurrencies, there could be a surge in volume and demand that would push prices to new highs.
The question then would be which cryptos would they get into first — Bitcoin ... or DOGE and other memecoins?
Eventually, you have to figure that they would at least shift some money into blue chip cryptocurrencies like Bitcoin and Ethereum (ETH, Tech/Adoption Grade “A-”) and at least some of their trading volume would leak into DeFi. But nothing is certain.
This is an interesting development, one we’ll continue to keep an eye on.
Best,
Alex
