Bitcoin (BTC) and US equities markets fell sharply on January 5, reacting negatively to minutes of the Federal Reserve’s December FOMC meeting, which showed that members expect an increase in interest rates once the Fed begins to hike interest rates. The balance sheet will start declining. 2022.
Adding to the negative sentiment was the closure of the world’s second largest bitcoin mining hub in Kazakhstan, where the internet was shut down following mass protests from citizens. This caused the overall hash rate of the bitcoin network to drop by about 13.4%, from 205,000 petash per second (PH/s) to 177,330 PH/s.
According to Mike Novogratz, CEO of Galaxy Digital Holdings, the current decline was accompanied by lower volumes and he believes the market will be volatile in the next few days. Novogratz suggested that a significant amount of “institutional demand” was waiting on the sidelines and that he expects bitcoin to bottom out in the $38,000 to $40,000 area.
Can bitcoin and major altcoins continue selling or will they bounce off strong support levels? Let’s study the chart of the top 10 cryptocurrencies to find out.
BTC/USDT
Range-bound action in bitcoin resolved to a downside on January 5th when bears pulled the price below strong support at $45,456. This shows that supply exceeds demand.
A modest attempt was made to defend the $42,500 support on January 6th, but continued selling has pulled the price closer to the next support at $39,600. This leg down has invalidated a positive divergence forming on the Relative Strength Index (RSI).
The RSI near the downsloping moving average and the oversold zone suggest that the bears are in control. If the bears decline and maintain the price below $39,600, the BTC/USDT pair could drop towards $30,000.
Conversely, if the price bounces off $39,600, the bulls will again attempt to push the pair above the 20-day exponential moving average (EMA) ($46,811). Such a move would be the first sign that the downtrend may be ending.
Bullish momentum is likely above and above the 50-day simple moving average (SMA) ($50,610).
ETH/USDT
Ether (ETH) fell below the 20-day EMA ($3,756) on January 5 and intraday lows on December 4 at $3,503.68. This shows that the bears have re-established their dominance.
The downsloping moving average and the RSI in the oversold zone suggest that the bears are in command. If the bears maintain the price below $3,250, a decline could extend to the support line of the channel.
The bulls will attempt to defend this level and push the price towards the resistance line of the channel. A break and close above the channel would indicate a change in trend.
Alternatively, if the bears push the price lower below the channel, the ETH/USDT pair could decline to a strong support level of $2,652.
BNB/USDT
Binance Coin (BNB) broke below a strong psychological support of $500 on January 5. The subsequent selloff has pulled the price to the next support level at $435.30.
If the price bounces off the current levels, the BNB/USDT pair could rally towards $500 where the bears are likely to hold strong resistance. The downsloping moving average and the RSI in the oversold zone suggest that the bears are in control.
If the $435.30 support gives way, the pair can extend its decline to $392.20 and later to $320. This negative view will be rejected if the price breaks out and remains above the channel. Such a move could open the doors for a possible move to $575.
SOL/USDT
Solana (SOL) fell below $167.88 on January 5 and came to an intraday low of $148.04 on December 13. This indicates that the bears have regained dominance.
The sell-off is continuing and the bears will now try to pull the SOL/USDT pair towards the strong support at $116. This level could attract strong buying from the bulls but a relief rally could face a selloff near the 20-day EMA ($170).
Such a move would indicate that sentiment remains negative and traders are selling on the rallies. This could increase the chances of a break below $116. The next stop could be the support line of the channel.
The pair will need to push above the resistance line of the channel and sustain it to signal to buyers that the downtrend may be ending.
ADA/USDT
Cardano (ADA) broke below the 20-day EMA ($1.33) on January 5 and fell to strong support at $1.18. The bulls successfully defended this level but failed to push the price above the 20-day SMA.
If the bears pull the price below $1.18, the ADA/USDT pair may decline to the important support level of $1. This is an important support to watch as if it breaks, selling momentum could increase and the pair could drop to $0.68.
Conversely, if the bulls drive the price above the moving average, the pair could move up to the resistance line of the channel. A break and close above the channel would indicate a possible change in trend. After this the pair can rebound to $1.87.
XRP/USDT
Ripple (XRP) broke below the $0.75 support level on January 5th, but a long tail on the candlestick shows that the bulls have bought the decline. However, one minor downside is that buyers have not been able to build on the rebound.
The XRP/USDT pair formed a Doji candlestick pattern on January 8th and the bulls are currently attempting a downside correction below $0.75. If this happens, the downtrend may resume and the pair may drop to $0.60.
Downsloping moving averages and the RSI in negative territory indicate that bears are in command. Contrary to this assumption, if the price rebounds from the current levels, the bulls will attempt to push the pair above the moving averages.
If they succeed, it would suggest that selling pressure could ease. The pair can then move up to $1.
Luna/USDT
Terra’s LUNA token fell below the 20-day EMA ($81) on January 5, indicating that short-term traders may be booking profits after the bulls failed to clear the hurdle at $93.81.
The bears pulled the price towards the 50-day SMA ($69), which could act as a strong support. If the price rebounds from the current levels, the bulls will attempt to push the LUNA/USDT pair to the descending trend line of the descending channel.
A break and close above the channel would indicate that the correction may be coming to an end. The bulls will then try to push the price towards $93.81. Conversely, further closing below the 50-day EMA could trigger a selloff and the pair could fall to the psychological support of $50.
related: Bitcoin and Ether Heading towards $100K and $5K in 2022: Bloomberg Intelligence
dot / usdt
Polkadot (DOT) is confined in a downtrend. The price has been fluctuating between $22.66 and $32.78 for the past few days.
The 20-day EMA ($28) has started to turn lower and the RSI has declined into negative territory, indicating that the bears have the upper hand. If sellers sink and sustain the price below $22.66, the DOT/USDT pair could decline to $16.81.
Contrary to this assumption, if the price rebounds from $22.66, the bulls will attempt to push the pair to $32.78. A further close above this level may indicate a possible change in trend. The pair can first rise to $40 and later to $44.
AVAX/USDT
Avalanche (AVAX) broke below the $98 support on January 5 and fell on an uptrend line of a symmetrical triangle on January 7. The bulls will attempt to defend this level and push the price back to the downtrend line.
The 20-day EMA ($104) has closed and the RSI is below 38, indicating that a selloff is likely. If there is a rebound from current levels either below $98 or below the 20-day SMA, the chances of a break below the triangle increase.
The AVAX/USDT pair may then decline to the $75.50 support level where the bulls will try to stop the decline. This negative view will be invalidated if the price rises and breaks above the triangle. The pair can then move up to $128.
doge/usdt
Dogecoin (DOGE) fell below the $0.15 support level on January 5th, but the long tail of the candlestick shows that the bulls have defended this level. This was followed by the Doji candlestick pattern on January 6, which shows indecision between the bulls and the bears.
The bears tried to resolve the uncertainty downwards on January 7, but the bulls are not ready to back down. However, unless buyers quickly push the DOGE/USDT pair above the 20-day EMA ($0.17), the risk of a breakout and closing below $0.15 increases.
If this happens, the pair can slip to $0.13 and then to $0.10. Alternatively, if the bulls push the price above the 20-day EMA, it would suggest that buyers are attempting a pullback. The pair can then rise to $0.19 and if the bulls clear this barrier, a rally to $0.22 is possible.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should do your own research when making a decision.
Market data is provided by hitBTC transaction.
