The evolution of the market during the past week was still quite negative and Bitcoin is now trading just above the important level of USD 30,000. What can we expect next? We’ll break this down later in the article but first, let’s go over the main industry news.
News is one of the factors that impact cryptocurrency prices. It is important for every trader to stay up-to-date with the latest developments in the sphere. We’ve hand-picked some of the most interesting ones for you:
Do Kwon proposes Terra hard fork to save ecosystem
On Monday, Do Kwon, co-founder of the troubled Terra Luna blockchain, announced a revised plan to restore the ecosystem after a combination of significant market volatility and inherent protocol design flaws wiped out a vast majority of the blockchain’s market cap. As told by Kwon, Terraform Labs will put forth a new governance proposal on May 18 to fork the Terra Luna blockchain called Terra (token name: LUNA).
However, the new chain will not be linked to the TerraUSD (UST) stablecoin. Meanwhile, the old Terra blockchain will continue to exist with UST and will be called Terra Classic (LUNC). Under Kwon’s plan, if passed, the new LUNA blockchain will go live on May 27.
Portugal to lose crypto tax haven status as state announces gains duties
To the chagrin of many Golden Visa seekers, Portuguese Finance Minister Fernando Medina has confirmed that his country will begin taxing cryptocurrency but has not committed to a date.
The move to start taxing crypto was seconded by Secretary of State for Tax Affairs António Mendonça Mendes on Friday, according to Sapo, a local news outlet.
There is not yet an effective date for the tax to start or a set rate, however. It will be levied on investment gains made from cryptocurrencies like Bitcoin (BTC), the largest crypto by market cap. This would reverse the tax law that was established in 2016 which stated that since crypto is not legal tender, gains cannot be taxed.
California regulator will revisit long-running ban on crypto donations on May 19
A California state regulator may be looking at overturning a ban on cryptocurrency donations to political campaigns which have been in effect since 2018.
According to its May 2022 agenda, California’s Fair Political Practices Commission, or FPPC, has scheduled a “pre-notice discussion” on Thursday on the use of cryptocurrencies f campaign contributions in the state. The commission said it will be considering drafting amendments to its regulations requiring that “no contribution may be made or received in cryptocurrency.”
Last week Bitcoin closed once again in the red, making it the seventh straight week of steady decline for BTC. In the past few weeks, we have seen a spike in volume with a peak last week when the USD 26,000 mark was tested.
The reason for this spike in volume could be the capitulation of holders, who are exiting the market at a loss, thinking that it will sink into the abyss. This is a possibility of course, but in general retail traders are wrong and this capitulation could very well be a sign of an upcoming rebound.
No rush here, we will of course wait for USD 34,000 before doing anything!
The last few weeks have also been difficult for Ethereum but unlike BTC, it has not registered a lower high. The fateful USD 1700 level has indeed been preserved on Ethereum.
The daily technical situation is starting to show signs of positivity with a buy signal already on the WaveTrend and a MACD that will soon cross to the upside. On a 4-hour time frame, the indicators are also positive.
Before taking a position, however, even in the short term, we will wait for Ethereum to manage to get back above its 4-hour average.
Altcoin of the week : ALGO
The ALGO/USDT pair is currently trading in its support zone between USD 0.41 and USD 0.50.
If ALGO manages to hold above this area, then we will be looking for upside entries.
Market sentiment can reverse very easily on cryptos as we just saw this week again. Careful though, as long as we don’t have confirmation, we must base our decision on fact and for now we must be patient.
There is nothing more important for success in trading. Plan the trade and trade the plan! As simple as that. In fact, don’t be tempted to take dangerous positions and wait for confirmation.
I’ll see you next week, stay safe and take care of yourself!
Have a great week everyone!