Crypto Update: Altcoin Weakness Leads to Sell-Off

While the major cryptocurrencies had a quiet Independence Day and Bitcoin traded above the key $11,300 level for the better part of the day, the broad weakness in the segment remained apparent. The top coins all turned lower in late trading, with the likes of Ethereum and Ripple already showing signs of selling pressure earlier on. Bitcoin gave back all of its gains, plunging back below $11,300, while ETH and XRP look to be ready to test their recent lows.

We could be in for a volatile Friday following the U.S. holiday, and given the momentum of last week’s sell-off and the weak bounce that followed, caution is still clearly warranted, and traders should wait for signs of broad technical strength before reentering the market of even the relatively stronger coins. Our trend model remains on sell signals on both time-frames for all of the top coins, and although a new downtrend is not yet confirmed, and the recent lows are still holding up, odds are not in favor of bulls here.

BTC/USD, 4-Hour Chart Analysis

While BTC has clearly been the strongest major in the last couple of days, the coin’s rally attempt wasn’t enough to warrant a renewed buy signal, as the market-wide conditions remained bearish. While a recovery is still possible, the coming days will likely be crucial in deciding the fate of the rally, and another strong decline wouldn’t be a surprise here.

Our trend model remains on sell signals on both time-frames, and although BTC’s recent low is not in immediate danger, a test of the $10,000 could soon happen. Below that, all eyes would be on the prior swing low and the key support zone near $9200, with further levels at $9400, and $8400, while in the case of a less likely recovery, resistance is ahead near $13,000 and at the prior swing high just below $14,000.

ETH/USD, 4-Hour Chart Analysis

The $300 resistance level stopped Ethereum’s relatively weak bounce and the coin couldn’t recover today despite BTC’s rally, and it sold off together with the broader market in late trading. The coin’s weakness points to a coming test of the $275 level and the recent low, and a key breakdown seems likely in the coming days. While a recovery rally is still in the cards, in light of the long-term pressures traders should still stay away from entering new positions here.

Our trend model is still on sell signals on both time-frames, and the coin would need a quick recovery to recapture the broken rising trendline and avoid further, possibly steep losses. Below the initial zone near $275, further support zones are found near $260, $230, and $200, while resistance above $300 is ahead near $330, and at the prior swing high near $360.

Litecoin’s Bounce Fades as Ripple Eyes Prior Low

LTC/USD, 4-Hour Chart Analysis

Litecoin briefly recovered above the $125 level today, but it failed to retain its relative strength despite BTC’s rally and the coin sold off in late trading together with the other top coins. LTC’s market has been very choppy ever since last week’s plunge, but the rising double trendline still hasn’t been broken, and the coin is still in better technical shape than the other altcoins and the other prior leaders of the rally.

The coin is still well above the $110-$112 support zone, but in the case of a market-wide sell-off a breakdown seem very likely, but and bulls would need a quick recovery to avoid a clear trendline break as well. Below $110, further support levels are found near $100, between $85 and $90 and near $75, while above the initial $125 level, resistance is ahead near $140 and $150.

XRP/USD, 4-Hour Chart Analysis

Ripple is dangerously close to its recent low, and due to the late-day dip, a breakdown looks inevitable in the coming days. The $0.3750 support level could soon be in play again, while the $0.40 level still lies ahead as strong resistance, and the coin remains relatively weak from both short- and long-term perspectives.

Our trend model is also on sell signals on both time-frames, and traders should still stay away from entering new positions, even in the case of an unlikely recovery, as the bear market will likely resume in the coming weeks. Below the $0.3750 level, further support zones are found near $0.3550, just above $0.33, and near $0.32, while resistance levels above $0.40 are ahead near $0.42, $0.46, and $0.51.

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Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.