Crypto markets are going through a really rough consolidation. They are not able to create momentum. Interestingly, many are abandoning crypto markets but returns are not there. We picked out one particular crypto chart that illustrates this very important point: crypto is not able to create momentum which means that risk is increasing but *potentially* opportunity is looming. No surprise, for our loyal readers, because we said in our 2022 crypto predictions that this year would be a special year for crypto investing.
The chart of the week is the one from Axie Infinity, symbol AXS.
Look at this, after a 14 month rising channel we got a violation of the long term channel. Remember, crypto moves 10x faster than any other market. So, in a way, this 14 month structure equals 140 months in regular markets (it’s an approximation, no exact science).
All we are saying is that the violation of this long term channel is significant, very significant.
AXS came down from 140 USD in November of 2021 to 47 USD at the time of writing. That’s a drop of 66%!
Astute readers will remark that AXS is still respecting support, as clearly visible on the daily chart shown below. That’s true, and this is exactly the point we are trying to make:
- Crypto is characterized by a long consolidation after a violent drop since Nov/Dec.
- Long term structures are giving up, however support is not giving up, not yet.
- Because of the previous point, risk is rising significantly.
- But as long as support is respected, there is only a consolidation and a ‘buy the dip’ opportunity.
In other words, key support levels MUST be respected in crypto, if not this market will be facing an epic breakdown.
How to know if and when crypto will break down? We explained this, in great detail, in our crypto weekend update. It is accessible for members in the restricted research area. The short version of the answer: please carefully look at the inverted head & shoulder setup on the Nasdaq, and take into account that May typically comes with wild moves in crypto markets. You got the answers!