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Market data is provided by the HitBTC exchange.
The trend in crypto continues to be down. After a period of low volatility, cryptocurrencies are again headed south. There are no takers for cryptocurrencies even after such a huge fall because money is moving back into the traditional safe haven, gold, according to Jan Van Eck, CEO of Van Eck Associates.
The demand for funds from crypto companies is on the rise. Michael Novogratz backed Galaxy Digital is planning to raise $250 million for loans to crypto companies by March. Most large investment banks and funds are dipping their feet into these companies but Nouriel Roubini still believes that blockchain “is no better than Excel spreadsheet.”
Iran wants to use cryptocurrencies to circumvent recent U.S. sanctions. The Islamic Republic plans to issue a state-backed cryptocurrency, which it hopes will bypass the existing global messaging system “SWIFT” that facilitates cross-border payments.
While we are upbeat on the crypto space for the long-term, the price action in the short-term continues to be depressing. The market has still not found a solid bottom and initiating positions in a downtrend is not a good strategy. How far will cryptocurrencies plunge? Let’s find out.
Similar to the previous occasion in mid-Nov. of last year, the tight range in Bitcoin (BTC) has resolved to the downside. The bears will now attempt to break down of the yearly low at $3,236.09 and resume the downtrend, while the bulls will try to defend it.
The price is below both the moving averages and the RSI is close to the oversold level, which suggests that the bears are in command. Every pullback is likely to face selling at the moving averages and above it at the downtrend line.
Below $3,236.09, the BTC/USD pair can fall to $3,000, which is a psychological support. If this level also fails to hold, the downtrend can extend to $2,600 and below that to $2,400.
Our bearish view will be invalidated if the digital currency rebounds sharply from $3,236.09 and stages a sharp recovery. We shall wait for the trend to change before recommending any trade in it.
Ripple (XRP) plunged below the $0.30550 to the $0.31 support zone on Jan. 27, after which selling intensified.
The immediate support is at $0.27795, below which a retest of the yearly low of $0.24508 is likely. The trend is clearly down as both the moving averages are sloping down and the RSI is close to the oversold level.
The XRP/USD pair will exhibit strength if the bulls push the price above the downtrend line and both the moving averages. We shall wait for a new buy setup to form before proposing a trade in it.
Ethereum (ETH) broke down and closed (UTC time frame) below the strong support at $116.30 on Jan. 27. It can now slide to $100, which is a psychological support, below which a retest of $83 is possible.
The moving averages have completed a bearish crossover and the RSI has dropped close to the oversold zone, which indicates that the sellers have an upper hand.
The ETH/USD pair will show a sign of recovery if the price sustains above the moving averages. We shall wait for a trend reversal pattern to develop before recommending a trade in it.
EOS has turned down from the moving averages. The bears are currently attempting to break down of the support at $2.1733. If successful, the decline can extend to $1.7746 and below it to $1.55.
However, both the moving averages are flat, which points to a likely consolidation. If the bulls defend the support at $2.1733, the EOS/USD pair will remain range bound. We might suggest a trade if the price sustains above $2.60. Until then, we remain neutral on it.
Bitcoin Cash (BCH) broke below the tight range of $141– $121.3 on Jan. 27. It is currently just below the 78.6 percent Fibonacci retracement of the up move from $73.50 to $239.
If this support breaks, a 100 percent retracement of the up move is probable. There is minor support at the psychological support at $100 but it is unlikely to hold.
The 20-day EMA has turned down and the RSI has reached close to the oversold level, which shows that the sellers have the upper hand. We shall wait for the BCH/USD pair to form a reversal pattern before turning positive on it. Until then, we suggest traders remain on the sidelines.
The attempt by the bulls to push Litecoin (LTC) above the top of the tight range at $33 failed on Jan. 26.
Currently, the bears are attempting to sink the LTC/USD pair below the support zone at $29.349 and $27.701. Unless the whole crypto universe plunges, we expect the bulls to defend the above-mentioned support levels. Hence, we suggest traders retain their stops at $27.50. If the bears sink the price below $27.50, a retest of the low at $23.090 will be in the cards. The cryptocurrency will gain strength if the price closes (UTC time frame) above $33.
Tron (TRX) triggered our buy recommendation on Jan. 26 when it closed above the resistance of its long-term range.
However, the fall in the crypto space has dragged it back into the range once again. It is currently trying to hold the 20-day EMA. If the support holds, the bulls will again attempt to push the price above the range.
However, if the TRX/USD pair plunges below the 20-day EMA, it will be a negative sign. Therefore, traders who are long should keep a stop loss at $0.023. If the bears sink below $0.023, the slide can extend to the 50-day SMA and below that to $0.0183. The trend turns negative if the bears force the price below $0.0183.
Stellar (XLM) has broken down of the yearly low at $0.09285498. This is a negative sign. Both the moving averages are trending down and the RSI is close to the oversold level, which shows that supply exceeds demand.
If the XLM/USD pair closes (UTC time frame) below $0.09285498, it can decline to $0.07864971 and below that to $0.05795397.
Conversely, if the bulls quickly push the price back above $0.09285498, it can move up to the downtrend line. We shall wait for a bullish pattern to form before turning positive on it.
After a period of low volatility, the range has expanded to the downside. The 20-day EMA is sloping down and the RSI is close to the oversold level, which shows that the sellers are in command. Bitcoin SV (BSV) has corrected to the critical support at $65.031.
If the bears sink the BSV/USD pair below $65.031, it can slide to the next support at $57, below which a retest of $38.528 is probable.
Our bearish view will be invalidated if the bulls bounce off the current support and sustain the price above $80.352. We shall wait for a trend reversal to be signaled before suggesting a trade in it.
Cardano (ADA) broke down of the small uptrend line and the 50-day SMA on Jan. 27. The bears latched on to the opportunity and pushed the price back to the support line of the ascending channel.
If the zone between the support line of the channel and $0.036815 holds, the bulls will try to scale above the uptrend line and the 20-day EMA.
However, if the support zone crumbles, the ADA/USD pair can fall to the yearly low of $0.027237. The 20-day EMA has started to slope down and the RSI is back in the negative territory. This shows that the path of least resistance is to the downside. We shall wait for the price to sustain above the 20-day EMA before turning positive on the cryptocurrency.
Market data is provided by the HitBTC exchange. Charts for analysis are provided by TradingView.