Long-Term Cryptocurrency Analysis: Sharp Christmas Correction in Crypto-Land

Compared to the lull in most of the traditional financial markets, cryptocurrencies market experienced a surge in volatility before Christmas, as Bitcoin entered a deep correction, dragging the rest of the market lower as well. The largest coin that has been losing market share lately still has a dominant role in the dynamics of the segment, and the stellar rise of the last couple of month led to an extremely overbought state in the BTC market.

The digital currency tumbled as much as 40% from but with that it remained positive even for the month of December, underlying the extent of the previous advance. Although the Friday massacre ended with a huge bounce, carrying Bitcoin back near the $16,000 level, from a low of $11,200, the technical setup remains bearish, and further corrective price action is likely. Primary support is still found near $13,000, with further levels at $11,300, $10,000, $9000, and stronger levels at $8200 and $7700.

BTC/USD, Daily Chart Analysis

Ripple broke out above the $1 level this week, after triggering a long-term sell signal following its historic surge, and topped out near the $1.25 level, for now, still hitting new highs during the early stages of the Bitcoin correction. The short-term uptrend is still intact, but we expect the long-term overbought readings overcome the bullish momentum and cause a deeper correction soon. Key support levels below $1 are found at $0.85, $0.68, and at $0.4250.

XRP/USDT, Daily Chart Analysis

Let’s see how the mini-crash changed the outlook for the other major altcoins.

Ethereum

 

ETH/USD, Daily Chart Analysis

Ethereum spiked as low as $510 during the sell-off, but it bounced back towards the previous primary support at $740 afterwards, as volatility skyrocketed. The long-term MACD is just turning lower following the previous break-out, and we expect a longer consolidation period before the next durable rally, with a possible test of the break-out level at $400. Above that support is found at $625 and $575, while the all-time high is ahead at $850 as resistance.

Litecoin

LTC/USD, Daily Chart Analysis

Litecoin also got smacked lower, below the $200 level, before the rebound that surpassed the previous support zone between $250 and $260, and the coin even spiked above $300. As the majority of largest coins, LTC is also still stretched regarding the long-term picture, and the correction will likely continue after the bounce. Key support levels are found at $125 and $100, with weaker levels at $260, $250 and $170.

Dash

DASH/USD, Daily Chart Analysis

Dash broke below the steep short-term uptrend line on Friday, and fell almost 50% from its recent all-time high, getting close to the support zone between $815 and $865. While the remains relatively strong among the majors, we expect it extend the correction together with the segment, with further key support just above $600, at $500, $470, and near $410.

Ethereum Classic

ETC/USD, Daily Chart Analysis

Ethereum Classic is now trading in a short-term downtrend despite the strong bounce and investors should wait until the still extreme momentum readings get cleared, before adding to their positions. A decline below $23 remains likely in the coming weeks with support levels also at $25 and $18.

Monero

XMR/USD, Daily Chart Analysis

Monero is still the strongest altcoin from a technical standpoint, trading inside a steep short-term uptrend and above the crucial $300 level despite yesterday’s spike. Despite that, a deep correction is likely in the coming period, and now even traders should stay away from opening new positions until a more favorable long-term setup emerges. Key support levels below $300 are still found at $240, $200, $180, and $150.

IOTA

IOTA/USD, Daily Chart Analysis

IOTA flash-crashed amid the broad sell-off on Friday, and although it recovered above the $4 level and still trades slightly north of the dominant rising trendline. We expect the correction to continue, with strong support is still found at $3 and $1.5, with a Fibonacci support level between those at $2.35. The long-term MACD is still in extreme territory, and it remains in a bearish setup.

How to Use These Charts?

As we stressed in our article on Bitcoin: “…not all strategies are binary (either holding an asset or not).There are many long- and short-term investment and trading strategies that can be successful in a roaring bull market like the one that the crypto-coin segment is experiencing, but mixing the time-frames and mixing trading and investing (see our article on the topic) could lead to troubles.”

Here is a reminder of some of the possible strategies once again:

  • Buy and hold, without caring about day-to-day (or even month-month) fluctuations
  • Buy and hold a core position and add on the major dips; a very powerful strategy
  • Buy a certain amount every week or month, and even-out your entry price, without the hassle of timing the market
  • Try to catch major turning points to reduce and “re-boost” your position
  • Trade short-term movements with stop-losses, targets, and strict risk management (this is trading not investing)”

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.
Comments
  • I will ask again, what makes you sure there is more correction to come?A 40% sell off is right in line with all other corrections? Especially considering the profit takings by whales, and all the new people that bought the top that sold their weak hands.

Leave a Reply