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.
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.
BTC price, daily candles
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).
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.
ETH price, daily candles
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)
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