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
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/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.
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.
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.
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/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/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.
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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.