Crypto Update: Tether Chaos Triggers Spike, Bulls Beware of Reversals

While the week started out on a negative note, with the major cryptocurrencies selling off after the Asian market open, the European session saw a price rally that originated in a major market dislocation in Tether, the largest stablecoin.

USDT/USD, 4-Hour Chart Analysis

The spike affected coins and exchanges differently, and sellers quickly took control of the market, so traders shouldn’t change their positions, until the top coins provide “organic” follow-through. For now, there seems to be no real buying strength behind the moves, so we remain defensive even with regards to the short-term outlook in the segment.

BTC/USD, 4-Hour Chart Analysis

Bitcoin spiked as high as $7500 on some exchanges and above $6750 on all of the major markets, but on Bitfinex it trades above $6800, other less affected exchanges show much lower prices. We base our analysis on the more consistent exchanges, and thus, the short-term trend signal in our trend model remains intact.

That said, for now, the coin is trading above the $6275 support/resistance level, and a sustained move above the $6500 level could open up the way for a new short-term rally. Further support is found at $6000 and $5850, while key resistance levels are ahead at $6750 and $7000.

Ripple Relatively Strong, but Altcoins Also Suspicious

XRP/USDT, 4-Hour Chart Analysis

Ripple rallied above the key $0.42-$0.46 zone amid the turmoil, briefly reaching up to the $0.51 level, as stop-loss and automatic orders have been triggered. Now the coin is back near $0.46, and although it is holding up above the declining trendline of the dominant triangle consolidation pattern, the short-term sell signal remains in place, given the nature of the move.

Support levels below $0.42 are found near $0.375 and $0.35, while further resistance is ahead near the $0.54 price level, and traders should still not enter positions here.

ETH/USD, 4-Hour Chart Analysis

Ethereum remained relatively weak even during today’s segment-wide surge, and it is currently trading near the key $200 level, still on both short- and long-term sell signals. While the coin is well above the bear market lows near $170, we still expect a test of that zone, with a likely dip to the stronger long-term zone near $160.

With that in mind, traders and investors should stay away from the coin, but in the case of a sustained rally the key resistance zones to watch are near $235 and $260, and the dominant broad declining trendlines are converging near $250.

LTC/USD, 4-Hour Chart Analysis

Litecoin is also among the weaker coins despite the spike above the key $56 level, and the sell signals on both time-frames remain in place, with the technical setup being unchanged. A break below the primary support level at $51 would still warn of the test of the $47 low, with the next major support being at $44 support, while further resistance above $56 is found at $59 and $64. Given the segment-wide trends and the weak techncals, traders and investors should still not enter positions here.

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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.