It's all about $30k
4 min read

It's all about $30k

Cryptic ball: time to relax now.

You know I don't like to be right in times of doom, but Monday I told you that 1) capitulation was near, 2) that if $33k was truly lost then only $30k could save us, and that 3) Terra's LUNA and UST presented a massive systemic risk for the crypto market. Unfortunately, that was exactly what happened in between.

  • Firstly, as most US stocks continued to fall yesterday into very bearish territory, reaching new lows since March 2021, so did the entire cryptoasset space. But crypto compounded the losses due to excess fear instilled by Terra's stablecoin.
  • As often explained since mid-April, algorithmic stablecoins use unproven systems of incentives to achieve the holy grail of currency - stability. The full extent of the implications of their designs are difficult to fathom and yesterday we saw with our own eyes what many claimed to be "just FUD" - a depeg.
  • In other words, amid yesterday's bearish backdrop, Terra's UST, a stablecoin that aims to be pegged to the USD, fell as low as $0.65 and the price of Terra's LUNA, its sister token, lost up to 50% in the process - prompting Janet Yellen, the US Treasury Secretary, to call for renewed stablecoin legislation.
  • Secondly, as bears raced to attack this protocol, Luna used its bitcoin reserves - purchased over the last months and also widely covered here - to try to maintain the peg, further depressing bitcoin's price. Fortunately, bulls found that $30k bitcoin is a nice floor and decided to bid at that key level.
  • For now, this Tuesday saw bounces across equities - erased in the tech indexes - and crypto - which proved to be more resilient than tech stocks given the wilder carnage experienced last night. But we're not out of the woods yet.
  • Lastly, and as I've been saying since Friday, this Wednesday we have fresh US inflation data coming out. My bet is that we'll see at least some kind of peak in the price increases. If that's the case, weaker inflation should provide some relief to all markets and we could see bitcoin attempting to recover $40k.
  • Still, note, I'm not yet updating my wider view for the markets - just talking short-term here. We'll need to wait a while more for the Fed to decide whether they want to avoid a recession or not. And to see if the next blow-up of Terra or another algorithmic stablecoin has the potential to drive us down to $20k.

Chart art: time to bid now.

I've been sharing this exact chart for months and variations of it for the past year. It's incredible how well these support and resistance levels have informed the orange coins' major moves. What's next? If Wednesday's CPI goes according to plan, we'll likely be trading in the $30k to $42k range for the rest of spring and summer. Let's see.

Three things: time to shift now.

Tweet tip: time to tweet now.

Funny because it's true.
Lol, also funny because it's true.
And this is very sad because it's very possibly true.

Meme moment: time to inflate now.

Surely that was on the cards at a certain point.

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Our newsletter offers opinions and insights from analysts in the cryptoasset space. It is not intended to be investment advice, and should not be treated as such. You must not rely on its information as an alternative to financial advice from a qualified professional. Without prejudice, we do not undertake or guarantee that its information is correct, complete or non-misleading; or that the use of the guidance in the report will lead to any particular outcome or result.