Crypto Update: Bitfinex Scandal Triggers Crash, Look Out Below?

The crypto market has been hit by a wave of selling on Thursday after the US close, pushing the top coins below important support levels. While the late-day plunge was triggered by the tether-related allegations against Bitfinex, from a technical perspective it’s a ‘natural’ continuation of Tuesday’s dip. The weak bounce after the initial crash also warrants caution here, and now, all of the top coins are on sell signals on both time-frames in our trend model due to BTC’s downgrade.

As tether is posing a systemic risk to the segment, wild moves are likely in the coming period across the board, and given the bearish technicals traders and investors should still stay away from entering positions here. As the counter-trend move is likely over, downside risks are high, although Bitcoin continues to show stability and despite the deep market-wide sell-off, Litecoin is also holding up relatively well.

That said, there is still no sign of a developing healthy leadership in the segment and that makes another leg lower in the bear market likely, so until we see signs of broad technical strength, we will remain defensive even regarding the short-term time-frame.

ETH/USD, 4-Hour Chart

Ethereum continues to be a great indicator of the segment’s general direction, and for now, the coin is showing technical weakness following the crash. While the $145 level held up during the dip, the coin is stuck below the key $160 support/resistance level and its recent swing low. Barring a quick recovery, a dip below $145 and the test of the $130 level is very likely and traders should still not enter positions here.

Despite the sell-off, the counter-trend rally might still resume, but that outcome is unlikely, and a quick move towards $112 and even the $95-$100 zone is possible. Our trend model is still on sell signals on both time-frames, and above $160 further strong resistance zones are ahead near the $180 and $200 price levels.

BTC/USD, 4-Hour Chart Analysis

While Bitcoin fell below its recent swing high, triggering a short-term sell signal yesterday, the coin managed to hold up above the $5050 support, leaving the hope for another higher alive. That said, given the broad weakness in the market and the weak post-crash bounce, traders shouldn’t enter new positions here, especially in light of the still bearish long-term setup.

The $5400 level remains the line-in-the-sand resistance regarding the short-term outlook, while a dip below the initial support zone would likely open up the way towards $4850 and $4450. Further support zones are found near $4200 and between $4000 and $4050, while above $5400 the next resistance zone is ahead near $5850.

Ripple Tests $0.28 as Litecoin Shows Stability

XRP/USDT, 4-Hour Chart Analysis

Ripple followed the broader market lower, and the fact that the relatively weak coin couldn’t show resilience once again confirmed the bearish technicals in the coin. The $0.28 level held up despite the strong selling pressure, and although the short-term pattern is bearish, the losses compared to this week’s low are limited, for now.

Our trend model is on clear sell signals on both time-frames, and we continue to expect the bear market to resume even in the case of a quick short-term recovery in the segment. Below $0.28, the $0.26 level is the last resort support, marking the August low, while strong resistance is now ahead near $0.30 and $0.32.

LTC/USD, 4-Hour Chart Analysis

Litecoin dipped below the key support zone between $72.50 and $75 yet again, while also violating a rising short-term trendline, the coin remained relatively stable, currently trading above the $70 level. Given the fact that LTC was the early leader of the counter-trend move, its stability is a slight hope for bulls here, but without further signs of strength, it’s not a reason to turn bullish.

The coin remains on clear sell signals on both time-frames in our trend model and below the initial resistance zone, the short-term trend is now bearish. Initial support is now found near $64, with the next level below that at $56, while further strong resistance is ahead between $85 and $90 and just above $100.

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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.