Crypto Update: Chinese Crackdown Triggers Next Leg of Correction
The cryptocurrency segment is crashing again, with double-digit losses across the board, and with several coins shedding around 30% in one day amid the widespread and heavy selling. The sell-off was triggered by reports on a new set of measures by the Chinese authorities limiting crypto trading, which added to the still looming South Korea related regulation worries. Bitcoin tested the mini-crash lows at $11,300 today in early trading, dipping slightly below that level before a strong bounce started.
The most valuable coin is now between two crucial support/resistance lines, with the other ahead at $13,000, and as the downtrend is entering its more mature phase the $10,000 and $9,200 levels could come in play, with a possible dip to the support zone near $7,650.
BTC/USD, Daily Chart Analysis
Interestingly, the coin is still hovering within the daily range of the crash of December 22nd, and that points to a very active and volatile period ahead near the low at $11,300, as automatic orders will likely get triggered on both sides of the market.
The short-term setup is bearish, and although it’s possible that the primary support level will hold, odds still favor another leg lower, following the exponential run-up at the end of last year that pushed sentiment into bullish extremes.
BTC/USD, 4-Hour Chart Analysis
Ripple is leading the way lower among the major altcoins, dipping below the $1.50 and briefly the $1.25 levels, and almost completing a 70% decline from its recent all-time high. Now, long-term investors could already accumulate the coin near the major support levels at $1.25, and $0.85, although with the short-term downtrend firmly intact traders should wait with entering especially through leveraged positions, as volatility is expected to remain high.
XRP/USDT, 4-Hour Chart Analysis
Ethereum is also significantly lower after the anticipated trend break, and as the second largest coin is in a different phase of the market cycle, a later bottom is likely, so both traders and investors should wait for the correction to run its course before adding to their holdings or entering short-term trades.
ETH/USD, 4-Hour Chart Analysis
Among the other majors, recent laggards Litecoin, Dash, and IOTA are all sporting heavy losses, while ETC also gave back most of its recent gains as expected. Monero remains the strongest from a technical perspective, despite the still overbought long-term setup, while NEO is in a very similar position to ETH, likely just starting a deeper correction after its rally to all-time highs.
As the majority of the segment is now getting closer to a tradable bottom, stay tuned for a look at the long-term technical picture later today.
Featured image from Shutterstock
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.