Cryptocurrency Analysis: Bitcoin Undergoes 40% Correction as Altcoins Plunge Too

The sell-off that started out in BTC as a skirmish between Bitcoin and its forked counterpart Bitcoin Cash, accelerated overnight and today, and the most valuable coin dragged the whole segment sharply lower. The decline turned into a full-fledged crash later on, with the major coins falling by an average of 30% from the recent highs, and with deeper losses in some of the largest names.

BTC found short-term support near $15,000 yesterday, but after the coin fell below that level, waves of heavy selling pushed the coin to the primary support at $13,000 as we expected, and for now, the bottom formed near the $11,300 support.

The short-term downtrend is clearly intact, and although violent bounces are possible along the way, we still expect further downside in the market, as the long-term setup remains overbought. Below $11,300, further support levels are found at $10,000 and $9000, with stronger levels at $8200 and $7700.

BTC/USD, 4-Hour Chart Analysis

Ethereum also entered a violent correction, as the second largest coin spiked as low as $500 before rebounding above $60. The long-term overbought readings are not yet cleared, so the correction will likely continue, although volatile counter-trend rallies are likely. Key support levels are now found at $575, between $480 and $500, and near the prior all-time high at $400, where the long-term uptrend lone is also providing support currently.

ETH/USD, 4-Hour Chart Analysis

Litecoin

LTC/USD, Daily Chart Analysis

As correlations exploded in the segment, Litecoin also turned sharply lower after its recent failed break-out attempt. The coin broke below the primary support zone between $250 and $260 and got close to hitting the $170 level too amid the mini-crash, completing a 50% pullback from its all-time high. Despite the oversold short-term picture, we expect further correction with further support levels at $125 and $100.

Dash

DASH/USD, 4-Hour Chart Analysis

Dash continues to be among the relatively strong coins, even amid the sharp sell-off, but it also fell more than 40% top-to-bottom before the rebound. The short-term overbought readings are now cleared, but the long-term picture is still stretched and more bearish price action is likely, with major support levels still at $1000, $800, $650, and $600.

Ripple

XRP/USD, 4-Hour Chart Analysis

Ripple got very close to the $1.25 target level after yesterday’s break-out, and although the broad correction dragged the coin lower and it spiked below the previous high at $0.85, the steep short-term uptrend remained intact. That said, long-term investors shouldn’t buy the coin here, while traders could still play the rising trend with smaller positions. Further support levels below $0.85 are found at $0.68, at $0.4250 and in the $0.30-$0.32 range.

Ethereum Classic

ETC/USD, 4-Hour Chart Analysis

Ethereum Classic followed the other majors lower too, after failing at the lower boundary of the previous uptrend channel, and it hit a low near $25 after violating the $32 and $30 supports. Given the extremely overbought readings on the long-term MACD we expect an even deeper correction with a likely dip below the prior all-time high at $23 before the end of this cycle.

Monero

XMR/USD, 4-Hour Chart Analysis

Monero is still trading inside the rising short-term trend channel, despite the almost 50% retracement, as the coin found strong support at $300, following a series of spikes below that level. While a durable short-term bounce is possible after the mini-crash we expect a deeper correction in the coin in the coming weeks, with further support levels found at $240, $200, $180, and $150.

NEO

NEO/USDT, 4-Hour Chart Analysis

NEO re-tested the level of its recent break-out as the broad correction in the segment dragged the coin lower as well, despite the less overbought long-term setup. We still expect a rally towards the $100 level following the correction, but traders should expect a volatile consolidation period amid the segment-wide correction. Key support zones are still found near $0.56, $0.50, and around $0.40.

IOTA

IOTA/USD, 4-Hour Chart Analysis

IOTA has been the most volatile coin during today’s sell-off, and the coin flash-crashed to the $1.1 support on several exchanges after violating the dominant rising trendline. The coin has been trading between $3 and $3.50 since the spike lower, and we expect volatile conditions to persist in the market, as a longer corrective phase is likely still ahead after the recent exponential surge. Strong support is still found at $3 and $1.5, with a Fibonacci support level between those at $2.35.

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.

Author:
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.