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Bitcoin Bends, Crypto Market Unscrews: Beware of Bearish Momentum Return?

Since last Sunday, the crypto market has taken on a very different dynamic than what we have seen in recent weeks. Indeed, after the arrival of the US technical resistance indices and the bullish continuation of the DXY, the market moved lower, returning to the old price levels. The question is whether we will continue this decline or if it is just a stoppage before we go to new price tops. In this crypto spot of the weekend, let’s see together what could happen.

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The cryptocurrency market is cleaning up recent efforts

Total Cryptocurrency Market Price (1D)

After breaking through the red zone where the market struggled, the top was found at the low of May 27 at $1.147 billion. However, the crypto market failed to hold above the technical junction which is MA100, EMA 13/25 as well as former resistance. Falling sharply, the market returned to the resistance seen in June and July. Simple retesting? Or, a small bounce before going lower?

It is clear that if the market is to continue its bullish momentum, it is desirable to witness the rejoining of the technical levels we have just mentioned. This would show strong buyers. THERE IS on the contraryif it declines at these levels, it will lead us to a simple observation: the momentum is bearish, it will be necessary to favor short positions.

Altcoins have been hit hard

The market capitalization price of cryptocurrencies excluding Bitcoin and Ethereum
Cryptocurrency market cap price excluding Bitcoin and Ethereum (1D)

As we know, altcoins are very sensitive to the movement of Bitcoin and Ethereum, the latter is even more interesting given its recent performance. Last week I warned about the importance of POC in relation to the red zone. After managing to get rid of it, the market could continue to rise. However, since she was dangerously close to him, he lost this level that was in conjunction with MA100. Since they failed to recover the EMA13 and 25 which are good short-term trend tools, this confirmed the bearish bias in the market.

Altcoins are back to around 395 billion, an interesting technical area to pick up. This would allow for a bullish pressure attempt towards the 25 EMA (gray line) and then the 200 EMA if possible. However, a price rejection to current levels will likely mean a continuation of the bearish momentum for altcoins. In this context, it will probably be necessary to expect a return of the price to Value Area Low.

Bitcoin is trying to regain strength against cryptocurrencies

Bitcoin Domination Course (1D)
Dominant Bitcoin Price on Daily Scale (1D)

Right now, bitcoin’s dominance is incredible. On the contrary, it shows the lack of strength of the asset for several weeks. It is currently pausing in the decline, sideways between local support and resistance in conjunction with EMA 13. By re-entering this red zone, the fight for the bullish leg would probably not be over. Indeed, EMA 25 will continue. This is at the interface with the horizontal level that we have identified for several weeks.

If it manages to raise this set of technical levels again, we can probably envision a return to the blue pivot zone with a return to the 200 EMA (black dots). However, if bitcoin continues to be weak registering new lows and highs lower than the previous one, it will strengthen my hypothesis of bitcoin dominance returning to the green zone. At 40%, this area is not negligible and is likely to serve as a support.

Ethereum Starting to Lose Against Bitcoin?

Ethereum Price vs. Bitcoin (H4)

As of last week, the situation has evolved since Ethereum failed to hold the red zone that was previously resistance. So the challenge is clear: get back to this level as soon as possible. However, he ended the bullish momentum he was in. EMA 13 and 25 are now resistance and MA100 is lost. From now on, let’s see if Ethereum reacts to the EMA200 against bitcoin, which could be a sign of recovery in the short term. If Ethereum breaks down from its recent low by losing the 200 EMA as well, it will likely signal a price return to its support at 0.07 Bitcoin.

Decentralized finance in a moment of weakness?

DeFi Index Perpetual Futures price on a daily scale
DeFi Index Perpetual Futures daily price (1D)

Today, let’s analyze the DeFi index available on FTX. By bringing together a set of funds from this sector, it gives a certain approach to its dynamics, although it is not exhaustive. Recently, DeFi has encountered resistance and has been rejected for the umpteenth time (red zone). Losing the confluence of the 13 and 25 EMAs, as well as the MA100, the price broke its uptrend. Is the reversal to the downside confirmed?

This would require a retest of these same moving averages as well as a loss of the area the DeFi index is currently in. In this case, the price is likely to go back to $2458 and then to $1966. These are the two levels at which buyers will have to react if necessary to prevent a further price drop.

Here we are at the end of this weekend’s crypto spot. Now you understand the dynamics that happened this week and the changes that happened. We’re seeing altcoins hit resistance, Ethereum is starting to unwind, and bitcoin is regaining some strength. Of course, it will take more to sideline Ethereum, especially since the narrative of The Merge’s arrival is likely to bring volatility to the market.

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