- Crypto analyst Daniel Yan has shared his predictions for Bitcoin and altcoins for the month of May.
- Yan believes the market will remain calm until May 15, with the U.S. Consumer Price Index (CPI) data on that day determining the direction for the second half of the month.
- He also predicts that Solana, AI, and Memecoin categories will outperform Bitcoin in May, making them the best choices for compensation trade.
Crypto analyst Daniel Yan provides insights into the expected performance of Bitcoin and altcoins in May, highlighting the potential of Solana, AI, and Memecoin categories.
Analyst’s View on the Crypto Market
Before sharing his detailed analysis, Yan mentioned that he closely follows the Federal Open Market Committee (FOMC) meetings and macro data. He addressed three main questions: Why was there a crash in April? Can such a crash be justified? What will happen in May?
Factors Behind the Crypto Crash
According to Yan, two main factors caused the crash in Bitcoin (BTC) and Ethereum (ETH), and an additional factor led to a larger-scale crash in altcoins. First, persistent inflation and a hot labor market in the U.S. caught the macro market on the wrong side, leading to a significant sell-off in U.S. Treasury bonds, to which cryptos are sensitive. Second, the BTC ETF flow reversed in April. The market expected the ETF to behave like stock ETFs, where people tend to invest continuously and are not very price sensitive. However, people are using it more as a trading tool, buying high and selling low.
Altcoins’ Weak Liquidity and Unlocks
Lastly, weak liquidity in altcoins and intense unlock schedules in May combined to crash the altcoin market in an unprecedented way since 2022. Yan believes the drop in BTC and ETH was fair and justified, but the scale of the drop in altcoins was too much. He explained that a 15% drop in BTC is quite healthy in a bull market when the bull overextends itself. However, the 30-50% drop in top altcoins was likely exaggerated, according to the analyst.
Conclusion
Despite the recent downturn, Yan shared some positive news from the past week. The U.S. Treasury Department launched its first bond buyback program since 2002, and Powell’s dovish FOMC statement and $35 billion/month QT reduction were seen as positive signs. Additionally, weaker non-farm payroll numbers, weaker wage growth, and a 0.1% increase in the Unemployment Rate (currently 3.9%, the highest since March 2022) helped normalize the market. This helped Bitcoin recover over 10% from its lowest level within just a few days. Yan concluded by saying that May will continue to be a very macro event-driven month for crypto.
