Crypto Update: Coins Slightly Lower as Global Stock Sell-Off Weighs

Yesterday’s risk-off shift in traditional financial markets spilled over to cryptos during the overnight session, as the weakness in Asia translated into a dip in most of the majors. The pullback was also likely helped by new reports about the Chinese crackdown on the segment, but the losses are muted so far, and no major technical support levels have been violated yet, leaving bulls in control.

BTC/USD, 4-Hour Chart Analysis

Bitcoin has been leading the market higher yesterday, and the coin topped $11,000 today in early trading, before turning lower amid the altcoin weakness. The most valuable coin is now back at the short-term support level near $10,500, with nor the short- or the long-term technical picture being changed by the move.

The currency is trading well above the recent correction lows and the line-in-the-sand zone between $9000 and $9200, so we remain positive on the outlook, despite the dip.

ETH/USD, 4-Hour Chart Analysis

Altcoins are also marginally lower today in European trading, with Ethereum still hovering within a narrow range just below the dominant declining trendline that we have been monitoring. The number two digital currency is still above the $845 level that has been in focus ever since the initial post-crash bounce, and even another test of the $740 level would leave the positive setup intact.

Correlations Remain Low as Early Leaders Still Consolidating

The relative weakness in the early leaders of the rally, most notably ETC and LTC points to further consolidation before another momentum move. The rotation between the coins is a bullish sign from a long-term perspective, and as long as investors don’t dump their holdings without discretion, we expect the recovery to continue.

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic is trading in the $32-$34 zone again, as it continues to correct the lofty gains of its initial rally. For short-term traders the swing low near $30 should be monitored, while long-term investors should still hold on to most of their positions, even as the coin is now slightly stretched from a long-term perspective.

Ripple remains the biggest concern for bulls here, as the coin still failed to show relative strength despite the lengthy correction, and XRP should hold above $0.85 to avoid technical deterioration.

Among this week’s leaders, NEO, Monero, and IOTA are all down so far today, but traders should keep a close eye on them for signs of strength that could signal the resumption of the advance.

Stay tuned for our detailed technical analysis later on 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.

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.