Today is Monday, 21st September, and this is Cointribune’s Crypto analytics. You will learn about everything that’s been going in the market, and also what to expect next in our new article! If you’d like to read the previous instalment, please follow the link. Here we go!
Monday so far has proven a hard day for crypto traders and investors worldwide with Bitcoin dropping down to $42,500.
It’s Blood Monday, the day all cryptocurrencies have been painted bright crimson, the colour of the blood shed by bulls on the battlefields against the trend. However, even though the bears were able to push buyers back, all this was a natural outcome dictated by two unsuccessful attempts to gain a foothold above the resistance level. Two unsuccessful retests add up to a bounce back.
At the time of this writing, the first cryptocurrency is trading near $41,800, and so far, it’s even managed to reach $40,300.
The reason for such a steady downward movement is the current overheating alongside the inability of BTC to break through the resistance that’s been holding us back for a while. The two failed retests are a perfect depiction of this problem. Previously, we had assumed that the first cryptocurrency would not immediately go for such a volume of local reversal because the subsequent panic and the withdrawal of disappointed retail players from the market would be unprofitable for large holders. However, whales only seem to care about creating an opportunity for themselves to buy lower, and new traders and investors will always come and go. To make a new wave it will only take to stir up a little hype around the market, which the whales will gradually do when we reach the price range, which is at this point recognised as the bottom of this movement.
At the same time, according to Glassnode analysts, miners have significantly reduced the volume of sales of the BTC they have mined. This, in turn, means that users involved in maintaining the Bitcoin network are determined to keep their savings and will only sell them as a last resort.
The Stock-2-Flow model of the popular analyst PlanB most likely needs adjustments. Even to a positive-minded trader who sees this collapse as an opportunity to acquire more assets, it comes off as unlikely that in ten days, on October 1, the BTC price will reach $100,000. This suggests that the research-based shortage model contains an error. On the other hand, this might not be a mistake at all, and the theory itself from the very beginning was only feasible in ‘laboratory conditions’ since it does not consider the influence of fundamental factors driving the market. Or perhaps it does, but only to a small extent, making it necessary to overhaul the entire model.
It’s also hard to believe that the current drop is a harbinger of the onset of a crypto winter. Our global analytics remains unchanged. But we’ll get back to that a bit later.
On Monday, the market saw over $1.25 billion in liquidations caused by the fall of BTC. However, each wave of this fall has bounced and continues to bounce even at the time of writing. All this suggests that the demand for Bitcoin is still there, and many players see the volume dump as an opportunity to replenish their reserves in BTC and other assets. Moreover, the behaviour of altcoins looks pretty interesting. In light of the significant decrease in the price of Bitcoin, they are steadily going down, but this downward movement is not as bad as it could be. Usually, in cases like this, they’re much worse off.
This fall may have a justification in purely technical terms. However, many associate this move with the imminent crisis of the developer company Evergrande, which is $300 billion deep in debt and is on the verge of default. The company will have to pay the first $83 million in two days. Against the backdrop of this event, the stock prices of other Chinese developers have fallen by 90%, putting both the stock and the crypto market in danger.
How is Evergrande related to digital assets, you might wonder? Some believe that Tether (USDT) is in close ties with the developer and is currently holding the Evergrande commercial papers, which provides a large part of the USDT issued by the company. Thus, the collapse of the Chinese developer could lead to the depreciation of the popular stablecoin. However, this is not completely accurate, although it’s still advisable to play it safe by switching to other stablecoins.
But let’s get back to the technical bit. The current slump is caused by the double failure of BTC to break through and gain a foothold above the key resistance level. As with any other asset, two or three unsuccessful retests always cause the asset price to reverse and go down to test another key area. In our case, it’s support.
The lower the price goes, the more buyers will buy, ultimately allowing the market to determine the current local bottom which also serves as support, having tested which, the asset will likely take a u-turn and go up again.
The global picture for bitcoin has not changed. The dump fits perfectly in the triangle. As you can see on the chart, the decline that has been going on for several hours is bouncing pretty actively, and there is almost nothing left of today’s red candlestick.
The current drop is nothing more than a natural correction, within which BTC is trying to find support and gain some strength for a breakthrough. This formation completely fits into the triangle and the bull wedge that are both made possible by a powerful upward impulse following a series of bounces off support and resistance while moving along the narrowing downward channel.
Having reached resistance but not having overcome it, we naturally pushed towards support, only to bounce off it again and make a new leap upward. In the process, we reached the level of psychological resistance of $40,000, and this milestone, at this stage, was enough for Bitcoin to start bouncing back. The imminent onset of the crypto winter is out of the question at this point, despite numerous people panicking and proclaiming Bitcoin’s ascent done, and we’re only looking at a couple of years of tedious bottoming ahead.
The current movement is still fully in line with the global bullish picture. We are still operating within a triangle whose key element is the “bullish wedge”. Consolidation (accumulation) is an invariable factor in this pattern, which we can also observe on higher time frames. Visually, it looks like a series of green and red candles on the chart, forming towards the upper and lower walls of a narrowing trading range. Instead of two parallel lines, we have two walls (same lines) moving in the same direction, but showing a clear tendency of convergence.
In the big picture, the situation has not changed for Bitcoin. We are still in accumulation, and in case there is a drop, you can take advantage of it. The first key support region is at $40,000, which is also an important psychological level. The next one is $35,000, which acts as a support within the triangle pattern. The next stop on the potential move down is the area around the $30,000 mark, which is the upper border of the expanding descending trading channel (yellow). And the last one is $20,000, acting as the lower border of the downward purple trading range. Only in case it goes any lower than that could we start talking about the possibility of a crypto-winter.
There is no growth without corrections. So you shouldn’t view a mere drop in price as the beginning of the coin’s imminent downfall. Even bulls need to take profits. The idea is that when the price goes lower, you can buy even more assets with the money earned to keep them until the growth dynamics allows you to count on the best.
The current fall of Bitcoin is merely an instance of venting an overheated market and redistributing forces within the triangle. After BTC regains its strength, it will continue to climb and will likely approach the former peak by the end of this year or even set a new, absolute price maximum.
The Ethereum chart at this point pretty much exactly mimics the movements of Bitcoin. So, whatever is true for BTC will be true for ETH as well.
Monday ended for the second-largest coin with a solid red candle, dropping down to $2900.
Tuesday started with a blow no lighter when ETH, just a few hours after the emergence of a new candle, quickly fell to $2,750.
Right now, just like in the case of BTC, Ethereum buyers are on a spree. The decisiveness of the bulls completely absorbed the new red candlestick and has even begun to form a green one. At the time of this writing, the largest altcoin is trading near $3,013.
Technically, ETH is moving within the same triangle as Bitcoin. Consequently, the current reversal and the search for support, followed by a bump and breakout of resistance, is an equally true scenario for both currencies, dictated by the influence of the bullish wedge.
Thus, the current pullback is an excellent opportunity to replenish the portfolio with this promising asset.
It is likely that at this level, the fall in both ETH and BTC will not stop. However, that is no reason to call it quits since this movement is still clearly within a bullish formation.
The Fear and Greed Index, as expected, has shifted into the fear zone. However, the very fact is a strong signal to start buying. Even if the price eventually does go a little lower, this will allow you to seriously adjust the average purchase price of all the assets you hold and, as a result, get much larger profits after the market recovers. Don’t be hype-buying hamsters. It’s best to replenish your portfolio on drawdowns like this.
While everyone else is afraid to buy BTC and merge their positions, the coins will be bought dirt-cheap by larger players en masse, which will then push the market to grow further.
It’s no secret that the pendulum of the market is constantly being swung. Trading digital assets is a game not unlike a tug of war, one that is beneficial to both sides. And by that, I don’t mean just bears and bulls, but rather the whales and the smaller fish of the market, like you and me.
When the entire market is in a buying frenzy, the whales will start to sell. When everyone is in a hurry to dump their assets and fix a loss, they confidently gain positions. And that’s what’s happening right now. The more afraid retail investors are, the more big guys will buy. Ultimately, when they’ve bought enough, the pendulum of the market will swing again, and we will start buying in our turn, thus increasing the price of the assets owned by the whales.
The top ten altcoins per CoinMarketCap are all in the red. However, it’s worth noting that compared to the fall of BTC, the losses of altcoins don’t seem to be so significant. In truth, in the wake of such a strong movement, alternative cryptocurrencies should have dropped in price much more. However, so far, they’re holding on rather well, which inspires some degree of optimism.
A notable change here is that Tether (USDT) has become the third-largest digital currency by market cap, ousting Cardano (ADA) from the place. Also, Solana (SOL) is preparing to take the place of Ripple (XRP) once again. Only in this case, it’s not on its own merit, but because the fall of XRP is happening much faster than the decrease of SOL’s capitalisation.
OMG Network (OMG) becomes the gainer of the day. Over the past day, this asset has brought its users over 20% despite the ongoing dumps.
According to CoinMarketCap, NEAR Protocol (NEAR) becomes the loser of the day. This asset has brought about 15% of losses to its holders.
Bitcoin has seriously lost its value. However, this movement was nothing you wouldn’t expect. At the time of this writing, BTC is already trading around $42,900, which is $2,500 more than the first cryptocurrency just a few hours ago.
Use this crash wisely and don’t panic. Nothing that’s happening is out of the ordinary. Bitcoin just took a few steps towards the support zone, which is a natural outcome that must have followed its unsuccessful retests.
Don’t neglect stop losses, and don’t forget about risk management.
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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
|BITCOIN (BTCUSD) ₿||$28,810.58||-4.89%|
|ETHEREUM (ETHUSD) Ξ||$1,931.54||-4.28%|
|IMM. US (REIT)||$2,430.38||-0.59%|
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