Analysts and traders prepare for the worst after Bitcoin price broke below $31,000 and triggered a sell-off in major altcoins.
Bitcoin (BTC) broke below the immediate support at $31,000 today and that has resulted in selling across several major altcoins. Coincidently, the fresh push to the downside in Bitcoin has come a day after the much talked about unlocking of shares worth about 16,000 Bitcoin from the Grayscale Bitcoin Trust.
The sell-off in cryptocurrencies could also be due to the broader risk-off sentiment on concerns of rising Covid-19 cases. The Dow Jones Industrial Average dropped over 800 points on Monday, on track for its worst decline of the year.
Daily cryptocurrency market performance. Source: Coin360
In a bearish environment, positive statements are generally ignored. While speaking to CNBC on July 19, Grayscale CEO Michael Sonnenshein projected a positive picture about the possibility of a Bitcoin exchange-traded fund (ETF) receiving regulatory approval.
Sonnenshein said it was only a matter of “when” and “not if” that one of the ETF applications will be greenlighted. He also said that GBTC would be transformed into an ETF when the conditions are right.
Let’s study the charts of the top-10 cryptocurrencies to determine the critical levels on the downside that could attract buyers.
BTC/USDT
The bulls defended the $31,000 support for the past four days but could not achieve a strong rebound off it. This indicates that demand dries up at higher levels.
BTC/USDT daily chart. Source: TradingView
The bears have renewed their selling and pulled the price below $31,000 today. There is a minor support at $30,000 but if this support cracks, the BTC/USDT pair could drop to the critical support at $28,000.
Both moving averages have turned down and the relative strength index (RSI) has slipped below 38, indicating that the path of least resistance is to the downside.
The bulls may not let go of the $30,000 support easily. If they achieve a strong rebound off it and push the price back above $31,000, it will suggest accumulation at lower levels. A breakout and close above the 20-day exponential moving average ($32,966) will be the first sign of strength.
ETH/USDT
Ether’s (ETH) recovery attempt hit a wall at the 20-day EMA ($2,034) as seen from the long wick on the July 18 candlestick. This suggests that negative sentiment prevails and bears are selling on rallies to the 20-day EMA.
ETH/USDT daily chart. Source: TradingView
The sellers will now try to sink the price below the critical support at $1,723.74. If they manage to do that, the selling could pick up momentum and the ETH/USDT pair could resume the downtrend.
The next support on the downside is $1,536.92 and if this level also fails to hold, the pair could slide to $1,293.18.
Alternatively, if the price rebounds off $1,728.74, the bulls will try to push the price above the 20-day EMA. A breakout and close above the 50-day simple moving average ($2,245) will signal a possible change in trend.
BNB/USDT
After staying close to the 20-day EMA ($307) for the past few days, Binance Coin (BNB) is witnessing renewed selling pressure today. The altcoin could now drop to the $276.40 to $264.26 support zone.
BNB/USDT daily chart. Source: TradingView
The RSI has slipped into the negative zone, indicating that the momentum has turned bearish. If bears sink the price below the support zone, the BNB/USDT pair could drop to the critical support at $211.70.
Contrary to this assumption, if the price rebounds off the $276.40 to $264.26 support zone, the bulls will again try to push the price above the 50-day SMA ($327). If they manage to do that, it will be the first sign of a possible change in trend.
ADA/USDT
Cardano (ADA) closed below the $1.19 support on July 16. The bulls tried to trap the bears and push the price back above $1.19 on July 18 but failed to sustain the higher levels. This suggests that bears continue to sell at rallies.
ADA/USDT daily chart. Source: TradingView
The bears have renewed their selling today. If sellers sink the price below $1.10, the ADA/USDT pair could retest the critical support at $1. This level has held on several occasions in the past few months, hence the bulls will again try to defend it aggressively.
A strong rebound will indicate accumulation at the $1 support. On the other hand, if bears pull the price below $1, long liquidation may occur. That could open the doors for a further decline to $0.80 and then $0.68.
XRP/USDT
XRP broke below the $0.59 support on July 16. The bulls tried to push the price back above this level on July 18 but they could not sustain the higher levels. This indicates that bears continue to sell at rallies.
XRP/USDT daily chart. Source: TradingView
The XRP/USDT pair has resumed the downtrend today and the next stop could be the psychological support at $0.50. The bulls are likely to defend this level aggressively.
If buyers can push the price back above the 20-day EMA ($0.63), it will signal the start of a relief rally that may reach the 50-day SMA ($0.74).
Conversely, if sellers sink the price below $0.50, the bearish momentum could pick up and the pair may slide to $0.45. If this level also fails to hold, the decline could extend to the next support at $0.40.
DOGE/USDT
Dogecoin (DOGE) bounced off the $0.15 support on July 17 but the bulls could not clear the $0.21 resistance. The long wick on the day’s candlestick suggests that bears are defending the $0.21 level aggressively.
DOGE/USDT daily chart. Source: TradingView
The failure to rise above $0.21 has attracted selling by the bears who will now attempt to pull the price below the critical support at $0.15. If they manage to do that, the selling could intensify and the DOGE/USDT pair may slide to $0.10 and then to $0.07.
Contrary to this assumption, if the price rebounds off $0.15, the pair may again rise to $0.21 and remain range-bound for a few days. A breakout and close above the 20-day EMA ($0.21) will be the first sign that buyers are attempting to make a comeback.
DOT/USDT
Polkadot (DOT) plunged below the critical support at $13 on July 16. The bulls attempted to push the price back above the level on July 17 and 18 but failed. This shows that the previous support has flipped to resistance.
DOT/USDT daily chart. Source: TradingView
The selling has resumed today and the DOT/USDT pair could drop to psychological support at $10. This level may attract buying from the bulls and they will again try to push the price back above $13.
A breakout and close above the 20-day EMA ($14.48) will be the first indication that the selling pressure may be reducing. Alternatively, if bears sink the price below $10, the selling may continue and the pair could slide to the next support at $7.80.
UNI/USDT
The bulls attempted to push Uniswap (UNI) back above $16.93 on July 18 but the long wick on the day’s candlestick suggests that bears defended the level aggressively.
UNI/USDT daily chart. Source: TradingView
Renewed selling today has started the downward journey of the UNI/USDT pair toward the next support at $15. If this support also fails to hold, the decline could extend to the critical level at $13.
The bulls have defended this level twice before, hence the price may rebound off $13. A strong rebound will suggest aggressive buying at the level. The bulls will then make one more attempt to push the price above the moving averages.
On the contrary, if the price breaks below $13, the next leg of the downtrend could begin. The pair could then drop to $10 and later to $7.
Related: Robinhood warns a crypto drop is coming amid IPO filing
BCH/USDT
The bulls attempted to arrest the decline in Bitcoin Cash (BCH) on July 17 and 18 but the failure to achieve a strong rebound indicates a lack of aggressive buying. The bears renewed their selling today and have pulled the price below the immediate support at $428.
BCH/USDT daily chart. Source: TradingView
If bears sustain the price below $428, the pair could continue its slide and hit the critical support at $370. The buyers may attempt to defend this support and a strong rebound will indicate accumulation at lower levels. A break above the 20-day EMA ($475) will be the first sign of strength.
Alternatively, a weak bounce off $370 will suggest that buyers are still not convinced that the pair has bottomed out. That could increase the possibility of a break below $370. If that happens, the LTC/USDT pair could drop to $330.
LTC/USDT
Litecoin’s (LTC) failure to rebound off the $118 support in the past few days indicates a lack of demand from the bulls. The bears have taken advantage of the situation and pulled the price below $118 today.
LTC/USDT daily chart. Source: TradingView
A breakdown and close below $118 will complete the descending triangle pattern. The bulls may attempt to stall the decline at the psychological level at $100 but if they fail, the decline could extend to the next support at $70.
Contrary to this assumption, if the price recovers and rises back above $118, it will suggest buying at lower levels. The bulls will then again attempt to push the price above the 20-day EMA ($130). If they succeed, it will signal the start of a relief rally to the 50-day SMA ($148).
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Market data is provided by HitBTC exchange.
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