Cryptocurrency Update: Bitcoin and Ethereum Down by 30-40% as Correction Accelerates, Time to Buy?
How long will the correction last? This is probably the biggest question in the minds of the crypro-trading community right now. As we warned yesterday, and (a little early) last week, Bitcoin and Ethereum were overbought on the long run and we concluded that:
(…) a 30%-40%-50% correction, that has been the normal for Bitcoin in the past, is a huge psychological burden that makes a panic sale likely, usually just before the bottom. Because of this, it is better to wait for the correction and oversold readings, even if you will buy it at a higher price later on.
This is true for long-term investors who plan on holding on to the coins and adding to their core holdings on the dips. Short-term traders should still wait for the short-term trend to turn higher before buying into the coins. In this update, we will focus on the two major coins, as they still likely to dictate the trends, but we will come back later with the analysis of the other majors and an update on the long-term picture.
The biggest coin is testing its long-term trendline currently, and that corresponds with a strong previous support level between the $2150 and $2200 levels providing a possible base for a bounce. The short-term charts are getting oversold already, so a bounce back towards $2400 is in the cards today. If I were shorting Bitcoin (which I don’t do) I would close a large chunk of my position around these levels. Long-term investors may already add to their positions here, although the re-test of the $1875-$2000 zone is still possible.
Ethereum followed BTC lower despite its recent strength, and as we wrote yesterday, the $270-$250 zone looks ideal for long-term investors to add to their existing positions. A spike towards the $200-$230 zone is still possible after the monster rally, but the fundamental story remains intact for Ethereum, and we expect the bull market to continue after the correction runs its course.
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