The Crypto market saw its biggest drop for seven weeks on Thursday, weakening the prospects of a bullish breakout. In an epic dump that wiped out $8 billion in 60 minutes crypto markets are back near $120 billion market capitalization again.
Essentially, the hard-fought gains of the last two weeks have been erased in the last 24 hours. The Crypto market had carved out a bullish-momentum but looks like the Bears are not done yet.
The world’s largest cryptocurrency by market value hit a 3.5-week low of $3,503 yesterday, before closing (as per UTC) at $3,627 – down 9.4 % on the day. That was the biggest single-day drop since Nov. 24 and the fourth biggest daily loss of the last two months, according to Coin market cap.
The interesting thing to observe here is that the gains of last week were wiped out in yesterday’s drop.
Prominent analyst Alex Krüger has highlighted $3,600 as a key level stating that consolidation below this price would likely lead to further downsides.
What a majestic dump. $BTC back to my buying area of 3500-3600. Below 3300 exit and reassess. I’d like to see BTC ending the day above 3700. Consolidation below 3600 (bottom of prior area) would tilt the balance towards further downside.— Alex Krüger 🇦🇷 (@Crypto_Macro) January 10, 2019
Throughout the past two weeks, the Ethereum price nearly doubled from $85 to $160 in anticipation of the scheduled Constantinople hard fork that is set to be executed between January 14 to 18.
The volume of Ethereum spiked as the trading activity of the second most valuable cryptocurrency in the global market surged on ever major digital asset exchange.
However, large short-term gains leave assets vulnerable to large short-term corrections and in the last several hours, the price of ETH dropped by 14.9
As sell pressure on the cryptocurrency market intensified and bears initiated a sell-off of digital assets, cryptocurrencies that demonstrated decent gains throughout December and January in the likes of Ethereum, Bitcoin Cash, and Litecoin portrayed the largest losses on the day.
As early as January 7, traders including The Crypto Dog suggested that the technical indicators of ETH suggest a short-term downward movement.
The trader said on Monday:
Although major crypto assets and small market cap tokens showed signs of short-term recovery in the last two months, several analysts suggested that without a breakout above key resistance levels, it is difficult to declare the establishment of a proper bottom in the cryptocurrency market.
In late December, Mark Dow, a trader who shorted Bitcoin (BTC) from its all-time high at $19,500 all the way down to $3,500, said that if Bitcoin fails to recover beyond $6,000 in the short-term, the market is in trouble.
“Still a beautiful chart. If bitcoin can’t bounce to at least $5k – $6k soon, it’s a really bad sign for the cyberbulls. And if it breaks down thru the yellow line at any point, even the HODLers need to GTFO,” Dow said at the time.
- Ripple price topped near the $0.3820 level and later declined sharply below $0.3500 against the US dollar.
- There is a short term connecting bearish trend line formed with resistance at $0.3300 on the hourly chart of the XRP/USD pair (data source from Kraken).
- The pair is currently consolidating losses, but it may soon resume its decline below $0.3200 and $0.3100
Recently, we saw an upside break above $0.3600 and $0.3700 in ripple price against the US Dollar. The XRP/USD pair even broke the $0.3800 resistance and traded as high as $0.3819. Later, there was a solid increase in selling interest, resulting in a significant decline below $0.3500. The price traded below the $0.3460 support and the $0.3300 pivot level. Moreover, there was a close below the $0.3350 level and the 100 hourly simple moving average.
A low was formed near $0.3165 and later the price corrected higher. It moved above the $0.3250 level, but upsides remain capped. An initial resistance is the 23.6% Fib retracement level of the recent decline from the $0.3819 high to $0.3165 low. Moreover, there is a short term connecting bearish trend line formed with resistance at $0.3300 on the hourly chart of the XRP/USD pair. If there is a break above the trend line and $0.3320, the price may recover further. The next major hurdle for buyers is seen near the $0.3480-0.3500 zone. It also represents the 50% Fib retracement level of the recent decline from the $0.3819 high to $0.3165 low.
- BTC risks breaching the bullish-higher low of $3,566 over the weekend. That would add credence to the bearish setup on the weekly chart and open the doors to $3,250 (200-week SMA).
- A quick recovery above $4,000 would abort the bearish setup, although the probability of BTC picking up a strong bid in the short-term is quite low.
- A convincing weekly close (Sunday’s UTC close) above the 200-week EMA $4,148 will likely put the bulls back into the driver’s seat and allow a stronger rally towards $5,000.