The major tokens have experienced significant declines after a consolidation phase lasting more than a week and a half. Now they are at levels last seen in June and the lowest since the crypto bull market of H2 2020.
Are cryptocurrencies in trouble?
The cryptocurrency market set a local low at the end of August. Afterwards, it entered a phase of growth that restored optimism in many investors. BTC, ETH and BNB have since gained 30%, 100% and 66% respectively. However, the deteriorating macroeconomic environment, despite the optimism about Ethereum's Merge, seems to be pushing the quotes lower and lower.
BTC
Bitcoin stands out as having the largest market capitalization and receives a lot of attention from analysts and investors. At 20:00 GMT+3 yesterday, BTC broke through the critical level of probable support of $19530 and dove lower. It is hard to say what the next level of support might be, but it is most likely a long way down from the current price. The daily drop was about 4% yesterday.
Today, the declines continue and on the Conotoxia MT5 platform at 11 GMT+3, BTC is losing about 1%. The price is below the 100, 50, 20, and 10-day moving averages. A reading of popular indicators: MACD and the directional indicator (ADX) may indicate a continuation of the trend (MACD marks the next lower bars of the histogram and ADX draws an increasing difference between the +DI+ and +DI directional lines).
ETH
Ethereum is the second cryptocurrency by market capitalization. It has gained a whopping 100% of its value in the recent surge most likely triggered by a wave of news about the upcoming Merge (the transition from proof-of-work (POW) to proof-of-stake (POS) blockchain). According to the Ethereum Foundation Blog, the technology transition will save approximately 99.5% of energy and significantly cut the cost of money transfers.
On the Conotoxia MT5 platform at 11 GMT+3, ETH is losing around 3.8%. Technical analysis may indicate a slightly better situation for the token than BTC.
Today, ETH broke through the possible support level of $1530, but this has already happened to an even bigger degree a week and a half ago. The price also broke through most of the analysed moving averages today (100, 20 and 10-day), except for the 50-day moving average.
Through the strong rally in recent weeks, the token despite falling as much as 23.7% from its local peak is only slightly below the average (50 points) of the RSI indicator, which may indicate a lack of signal. The MACD is most likely pointing to a continuation of the declines (the MACD histogram marked another bearish bar today, interrupting the several-day upward trend). The directional indicator (ADX) does not seem to give a clear signal yet, but with the continuation of ETH's declines, it could happen any day now.
Rafał Tworkowski, Junior Market Analyst, Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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