- Broad market sell-off on risk aversion worsens an already damaged Crypto technical picture
- Critical situation across the board, with most of Cryptocurrencies just trying to stop the bleeding
It really seemed that the picture could not get worse for the Cryptocurrencies, but the risk-off mood triggered yesterday in the US stock markets has really complicated things much more, severely damaging the outlook in the short and mid-term. Bitcoin, Ethereum, Litecoin, Ripple and the rest of altcoins are trading back above trendlines coming from many months ago. Their ability to resist more falls will determine if Cryptos get into an even more bearish scenario in the long-term with a very uncertain fate.
Negative news keep crossing the wires: new regulations limiting and even banning cryptocurrency exchanges, open investigation on Tether, the loss of over $500 million on a security failure in Coincheck, some banks banning credit card purchasing of Cryptos... all these negative inputs are outweighing the positives, such as new companies accepting Bitcoin payments or even proposing their workers to pay salaries in BTC or the CFTC deciding not to intervene in the Cryptocurrency cash markets.
BTC/USD daily chart
-636535116181354377.png)
At the time of this writing, BTC/USD is trading around $6230, just slightly above the first long-term trendline, located around $6000. This level matches a congestion zone that might help bulls to resist. Below, the $4500 level repeats the same structure but if that one were to breach, it would impact the long-term charts and future projections would look severely negative.
In the weekly chart, we can see that the technical outlook is in a limit situation, not giving anymore margin to further falls:
BTC/USD weekly chart
-636535119601813421.png)
MACD is crossed to the downside, which doesn't hint anything positive for the price action of the upcoming weeks.
Directional Movement Index is also at a crucial technical point, with buyers and sellers at the equilibrium point.
Altcoins at the same critical point
ETH/USD, XRP/USD and LTC/USD in an identical situation
The main critical altcoins are trading in similar situations, with Litecoin being the one more advanced in its falls, already trading just above the main long-term trendline. Considering their technical pictures, we are considering similar fates for any of these, although divergence between them is not out of the cards. A natural selection on the Crypto board will sooner or later come, and this big sell-off could be a trigger to discard the purely speculative Cryptocurrencies and keep the ones that have a meaningful value.
ETH/USD daily chart
Ethereum's main support is at $530, which matches a consolidation area created back in December. If that support were to be broken, we should be trading straight down to $400, the level that acted as a resistance on last June and December.
XRP/USD daily chart
-636535126361380773.png)
Ripple is at the same situation, reaching decisive levels. Key support is at $0.46, in this case with no previous consolidation areas that might help XRP settle down. Next key area would be $0.25, next bearish target if the trendline doesn't hold.
LTC/USD daily chart
-636535128877831256.png)
As we already mentioned, Litecoin is already trading just above the main long-term trendline, which comes from April 2017. If that one doesn't hold, next support level is around $90. If we take a look at the MACD and especially at the Directional Movement Index, it looks quite difficult that the current level holds.
We don't recommend buying any of these Cryptocurrencies at least until the speed of the current sell-off diminishes and the indicators' outlook backs up new rises, something that is still far from happening. Giving a much-needed perspective on the current situation, nobody should be surprised by the falls we are currently witnessing. If Cryptos were able to rise above daily 20% rises, it is completely reasonable that they can also fall at the same rate. Volatility doesn't care about directions.
More about Ripple: Cryptocurrencies and US Equities Correlation? - XRP Supported at Key level
The bloodbath continued among major cryptocurrencies as well as in the US equities market on Monday. The US stocks fell the most since 2011, with the Dow sinking more than 1,100 points. It is interesting that the cryptocurrency market is getting cues from the US equities market and showing some correlation in that sense.
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