The prices of the cryptocurrencies Ethereum (ETH), Axie Infinity (AXS), Polygon (MATIC), Chiliz (CHZ) and Cosmos (ATOM) could improve in the next six months compared to the last semester.
The Halloween effect, or “Halloween effect,” is a market timing trading strategy that suggests that stock or cryptocurrency prices will perform better over the six month period from October 31 to April 30 rather than April 30 and on October 31st.
Historically, this strategy has outperformed the efficient financial market hypothesis, providing returns in excess of the average price of stocks or cryptocurrencies. This led to the mantra “Sell in May and disappear“.
To simplify, this strategy suggests that cryptocurrencies perform better during the winter months rather than the summer months. This principle has proved prophetic in the market this year, as we have seen a 50% drop in prices since early May.
So we’ll take a look at five cryptocurrencies whose price could significantly outperform its May-October 2022 performance over the next six months. These coins will be chosen for both their long-term outlook based on their price charts and their potential new developments over the next six months.
The price of Ethereum could exceed $ 2,000
The price of Ethereum has been declining within a parallel descending channel since August 14th. These channels usually contain corrective moves, which means that the price is expected to eventually move above it. The move to the downside led to a low of $ 1,220 reached on September 21st.
Hence, the price of ETH rebounded at the confluence of the $ 1,250 support zone and the support line of the channel. Since then, both the RSI and the price have created higher lows (green line). This is a sign of the creation of a bullish structure.
Therefore, the technical indicators and ETH action present a bullish outlook. A price move above the parallel channel would confirm that the bullish price reversal has begun for this cryptocurrency.
In this case, an upward movement towards at least $ 2,360 would be expected. This ETH price target is found by measuring the length of the previous (highlighted) rise and projecting it to the current low.
Additionally, the long-awaited news from Ethereum about its merger, The Merge, was confirmed on September 15. This update has finally changed the consent mechanism for the proof of participationor proof-of-stake, thus dispelling many concerns about the sustainability of the blockchain, as well as creating a new fork.
Since the beginning of May, Ethereum has fallen by 53% (highlighted in red). Hence, to outperform this period, the price should be above $ 600 in May 2023.
Due to the bullish readings from the daily timeframe, the price of ETH seems unlikely to drop below $ 1,300 in May 2023, let alone $ 600.
Therefore, the price of Ethereum is expected to post a positive performance from November 2022 to April 2023.
Will Axie Infinity (AXS) be able to get back on its feet?
The performance of Axie Infinity (AXS) since early May has been disappointing to say the least. So far, the price has dropped by around 66%. On October 13, the asset hit a new annual low of $ 11.05.
However, the AXS is approaching a crucial support zone at $ 9. This area represented resistance in May 2021 (red arrow) before turning into support in July (green arrow).
Therefore, once this level is reached, a significant rebound in the AXS price is likely.
To underperform over the next six months, the AXS is expected to fall by more than 66%. In turn, this would lead to lows below $ 3.80.
Considering the very strong support at $ 3.50, which will likely initiate a rebound as well, it seems unlikely that this scenario will come true for Axie Infinity.
Many new features are planned until the end of the year, including the release of the game for the public on IOS / Android, as well as the gameplay of the terrain and the alpha version of the Lunacia SDK.
Combine this with the development of the Axie Infinity ecosystem and the first ever AxieCon event, and it’s possible the game will regain much of the initial hype it had garnered from cryptocurrency enthusiasts and attract even more new players.
Finally, it is worth mentioning that the relationship between burning and creating Smooth Love Potion (SLP) tokens, the utility cryptocurrency in the game, has finally stabilized. Over the past month, the number of cryptocurrencies burned has far exceeded the number of units minted.
The MATIC price is nearing the end of its correction
The price performance of the Polygon cryptocurrency since early May has been more positive than that of ETH and AXS prices, with MATIC down just 29%.
This is mainly due to the massive upward reaction once the price of the MATIC dropped to the yearly low of $ 0.31. The resulting five-wave rally (in black) caused a 200% appreciation, leading to a high of $ 1.05.
Since then, the price of the MATIC has corrected within a parallel downtrend channel and appears to gradually decline to the support level of the 0.618 Fibonacci retracement located at $ 0.60.
This level also coincides with the support line of the channel. We would therefore expect MATIC to initiate a rebound.
If the resulting increase shows the same magnitude as the previous one, it will lead to a high of $ 1.35.
To outperform the previous six months, the Polygon price must be above $ 0.55.
Can Chiliz (CHZ) reach a new record?
The Chiliz price has been fairly neutral since the beginning of May. It is currently slightly above the May 1 price of $ 0.18. However, the long-term outlook for the altcoin looks decidedly bullish.
With its June lows (green circle), the CHZ appears to have completed a fourth pullback wave (in red). Therefore, even if the price has presented a neutral performance since the beginning of May, it is not excluded that it will rise until it reaches a new all-time high by the end of the year.
Furthermore, the weekly RSI has broken away from its downtrend line (green line) and is trying to hold above the 50 line.
With the launch of mainnet 2.0 expected by the end of the year, this could further improve Chiliz’s performance.
Cosmos (ATOM) violates a long-term resistance line
The trend in the price of ATOM cryptocurrencies since the beginning of May hasn’t been bad, considering it only dropped by 37%.
More importantly, Cosmos has broken through a long-term descending resistance line that has been in place since its all-time high. This means that the price correction has come to an end.
To underperform over the next six months, ATOM should close below the $ 8.50 horizontal zone and resume its bearish move to a new low.
Cosmos’ Lambda update will take place during the first quarter of 2023, which could have a positive effect on the price of ATOM and the cryptocurrencies in its ecosystem.
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