Crypto Today: Bitcoin rebounds, Ethereum eyes channel growth, XRP struggles below key support
- Bitcoin resurfaces above $113,000 on Wednesday after a nearly 3% drop the previous day.
- Ethereum bounces after dropping under $4,100 to test the lower boundary of a rising channel.
- Ripple’s XRP breaks under a crucial support stronghold, with sellers targeting the $2.75 zone.
Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) recover on Wednesday after two consecutive days of losses ahead of the release of the Federal Reserve's (Fed) meeting minutes later today. Bitcoin resurfaces above the $113,000 level on Wednesday following the 2.89% drop from the previous day.
Ethereum bounces off by over 3% from a support trendline of a rising channel pattern, hinting at a potential reversal. However, Ripple’s XRP struggles to find solid ground, with bears targeting further losses to test the monthly low.
Anticipation rises ahead of Federal Reserve meeting minutes
The broader financial market anticipates a possible interest rate cut by the Fed in September. However, optimism has faded to a 25 basis point (bps) reduction after the July US Producer Price Index (PPI) data release last week, from the previous 50 bps interest rate cut chances induced by the US Consumer Price Index (CPI) data.
The Minutes of the Federal Reserve's last meeting are scheduled to become public on Wednesday at 18:00 GMT. All eyes are on the minutes release, which could clarify the Fed's stance on possible rate cut decisions in September.
CoinGlass data shows that the Open Interest (OI) of the crypto market decreased to $195.34 billion on Wednesday from $201.80 billion the previous day. A drop in OI indicates that capital is flowing out of the crypto market as traders adopt a wait-and-see strategy.
Crypto Open Interest. Source: Coinglass
Amidst this, the liquidations in the crypto market have reached $447.98 million in the last 24 hours, comprising $362.31 million in long liquidations, which outpace $85.67 million in short liquidations.
Liquidations data. Source: Coinglass
Bitcoin holds above a crucial support level
Bitcoin trades above $113,000 at the time of writing on Wednesday after reaching a low of $112,566 earlier in the day. The minor recovery adds up to nearly 1% with bulls eyeing above $114,000, after the 2.89% drop on Tuesday breached the 50-day Exponential Moving Average (EMA) at $114,911.
If the market remains optimistic with the release of Fed meeting minutes, Bitcoin’s recovery could test the 50-day EMA at $114,911.
The Moving Average Convergence Divergence (MACD) extends the declining trend after crossing below its signal line on Saturday, which flashed a sell signal. A successive trend of red histogram bars below the zero line reflects a surge in bearish momentum.
The Relative Strength Index (RSI) is currently at 42 on the daily chart, showing a sideways movement above the oversold zone, which suggests weakened buying pressure.
BTC/USDT daily price chart.
Looking down, a slip below the monthly low of $111,920 could extend the decline to the 100-day EMA at $110,498. The next level below this dynamic support lies at $107,245.
Ethereum’s recovery in a channel eyes further growth
Ethereum recovers by over 3% at press time on Wednesday, bouncing off the support trendline of a rising channel pattern on the daily chart (shared below). An extended recovery in ETH could test the all-time high of $4,868.
The momentum indicators flash mixed signals on the daily chart. The MACD and its signal line decline after flashing a sell signal on Sunday. Additionally, the RSI at 55 bounces off the midpoint, remaining at neutral levels.
ETH/USDT daily price chart.
On the downside, a slip below the support trendline near the $4,000 psychological support would risk crashing the $3,941 support level.
XRP bulls eye to reclaim the 50-day EMA
Ripple’s XRP broke below the support confluence of a rising trendline, the 50-day EMA, and a Fibonacci retracement near the $3.00 psychological level, with a 6.56% drop on Tuesday. At the time of writing, XRP recovers over 1% on Wednesday, with bulls eyeing a reclaim of the 50-day EMA at $2.93.
If XRP resurfaces above this dynamic average line, it could test the 38.2% Fibonacci retracement level at $2.99, which is drawn from $1.90 on June 22 to $3.66 on July 18.
The RSI reads 42 on the daily chart, holding below the halfway line as buying pressure remains on the lower side. Additionally, the MACD and its signal line are edging closer to the zero line as bearish momentum increases.
XRP/USDT daily price chart.
Looking down, the immediate support lies at the 50% Fibonacci retracement level at $2.78.
Open Interest, funding rate FAQs
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
Author
Vishal Dixit
FXStreet
Vishal Dixit holds a B.Sc. in Chemistry from Wilson College but found his true calling in the world of crypto.
