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(Kitco News) - The crypto market diverged from the equities market on Tuesday as the start of the latest Federal Reserve meeting and the prospect of a rate hike announcement led to a pullback across the stock market while cryptocurrency prices edged higher.
Banking stocks led the decline in equities as the fallout from the collapse of First Republic Bank continues to ripple through financial markets. The resulting reticence by investors led to a negative close for the S&P, Dow and Nasdaq, which finished the day down 1.16%, 1.08%, and 1.08%, respectively.
Data provided by TradingView shows that after trading sideways near $28,100 throughout the morning session, Bitcoin (BTC) saw a burst of buying in the afternoon that propelled the top crypto to a high just below $29,000, with bulls continuing to press for further gains.
BTC/USD 4-hour chart. Source: TradingView
The move higher by BTC was hinted at by the price action in the May Bitcoin futures markets as prices were higher in early U.S. trading on Tuesday, according to Kitco senior technical analyst Jim Wyckoff.
The sideways, choppy price action as of late has “the bulls and bears on a neutral overall near-term technical playing field,” Wyckoff said. “The direction in which prices move above or below the resistance and support lines seen on the chart [below] will very likely be the direction of the next sustained trending price move.”
BTC/USD 1-day chart. Source: Jim Wyckoff
To sell in May, or not: that is the ultimate question
The start of the new month has many crypto investors pondering on the well-known “Sell in May and go away” saying popular among equities investors and wondering how the adage applies to cryptocurrencies.
According to analysts at Altcoin Buzz, “history shows mixed results when it comes to Bitcoin,” but still provides some interesting observations.
Bitcoin price performance in May. Source: Crypto Quant
“Looking at the chart of Bitcoin's monthly candles over the last 12 years, we see seven out of twelve May candles were green, indicating positive returns,” Altcoin Buzz wrote. “However, the size of these green candles has been diminishing over time, which could suggest a decline in Bitcoin's maximum gains. Furthermore, the last two May candles have been red, indicating a sell-off in May. While this doesn't necessarily mean that the principle applies to Bitcoin, it does highlight the potential for some seasonality in the market.”
Altcoin Buzz noted that while the saying mentions the month of May, the real meaning behind it is to move cash to less risky assets for the summer months and return to the market later in the year.
But overall, the ‘Sell in May’ principle “doesn't strongly impact Bitcoin's market behavior,” Altcoin Buzz concluded.
For those looking for a little more insight into how an experienced crypto trader is approaching the uncertain times traders find themselves in, Crypto trader Koroush AK posted the following tweet outlining his approach to the ‘Sell in May’ meme.
$BTC
— Koroush AK (@KoroushAK) May 1, 2023
"Sell in may and walk away" is a fun meme, not a trading strategy.
Here's my plan.
Key resistance $30k, I'll look to buy a breakout above here.
Key support $27.2k, I'll look to short a breakdown below here.
Until my key levels on #bitcoin I'll be cautious of taking any…
Altcoins start to recover
After a slow start to the month on Monday, altcoins kicked it into high gear on Tuesday, with more than a handful of tokens recording double-digit gains on the day.
Daily cryptocurrency market performance. Source: Coin360
Radicle (RAD) led the field with a gain of 59.6%, which lifted the token to a high of $4.67, followed by a 13% gain for Stacks (STX) and an 11.55% gain for Alexar (AXL).
The overall cryptocurrency market cap now stands at $1.185 trillion, and Bitcoin’s dominance rate is 47%.
