Bitcoin (BTC) and most major altcoins continue to witness a bloodbath on Jan. 21 and the result of the most recent downturn has been a $200 billion reduction in market capitalization.
A new report by Huobi Research, in collaboration with Blockchain Association Singapore, forecast Bitcoin to enter a bear market in 2022. The liquidity tightening measures undertaken by the U.S. Federal Reserve and other central banks across the world and the regulatory action by authorities could play spoilsport and keep crypto prices under check.
Daily cryptocurrency market performance. Source: Coin360
The calls for a bear market have not shaken up the resolve of MicroStrategy CEO Michael Saylor who is determined to hold on to the company’s Bitcoin holdings. Saylor said in a recent interview with Bloomberg that the firm’s strategy is to acquire and hold Bitcoin and not sell.
Could Bitcoin and most major altcoins start a relief rally from their strong support levels? Let’s study the charts of the top-10 cryptocurrencies to find out.
Bitcoin attempted a recovery on Jan. 20 when bulls pushed the price to the 20-day exponential moving average ($43,041). However, the bears had other plans as they sold this rise and pushed the price lower as seen by the long wick on the day’s candlestick.
BTC/USDT daily chart. Source: TradingView
The selling continued today and the BTC/USDT pair has broken below the strong support at $39,600. There is a minor support at $37,332.70. The bulls are likely to defend this support zone with all their might.
The oversold level on the relative strength index (RSI) also points to a possible consolidation or a rebound. If the subsequent relief rally rises above the 50-day simple moving average (SMA), it will indicate that the downtrend may be over.
Conversely, if the price plummets below the support zone, the bearish momentum could pick up and the pair may slide to $30,000.
Ether’s (ETH) long wick on the Jan. 20 candlestick indicates that the trend remains negative and traders are selling on relief rallies to strong resistance levels.
ETH/USDT daily chart. Source: TradingView
The selling has continued today and bears have pulled the price below the immediate support at $2,928.83. This opens up the doors for a possible drop to $2,652 where buyers are anticipated to mount a strong defense.
If the price bounces off $2,652, the bulls will again try to push the ETH/USDT pair above the 20-day EMA and the resistance line of the channel. If that happens, the pair could signal a change in trend.
Conversely, if bears sink and sustain the price below $2,652, the selling could accelerate and the pair may drop to $2,000.
Binance Coin (BNB) turned down from the 20-day EMA ($474) on Jan. 20, indicating that bears are defending this resistance aggressively. The sellers will now try to pull the price below the Jan. 10 intraday low at $405.60.
BNB/USDT daily chart. Source: TradingView
The downsloping moving averages and the RSI in the negative territory indicate advantage to bears. If the price sustains below $405.60 and the descending channel, the selling could intensify and the pair may drop to $325.
Conversely, if the price rebounds off $405.60 or the support line of the channel, the bulls will again attempt to push the BNB/USDT pair above the 20-day EMA and the resistance line of the channel. If they do that, it will signal a possible change in trend.
Cardano (ADA) broke and closed below the moving averages on Jan. 20. The long wick on the day’s candlestick showed that bears continue to sell on rallies.
ADA/USDT daily chart. Source: TradingView
If bears sustain the price below the moving averages, the ADA/USDT pair could drop to the critical support at $1. This is an important support to watch out for because it has not been breached on a closing basis for about ten months.
If the price turns up from the current level and breaks above the moving averages, it will indicate that traders are accumulating on dips. The buyers will have to push and sustain the pair above the descending channel to signal a possible change in trend.
Solana (SOL) formed an outside day candlestick pattern on Jan. 20. Traders sold aggressively at higher levels and pulled the price below the immediate support at $130.
SOL/USDT daily chart. Source: TradingView
The SOL/USDT pair has dropped to the strong support at $116. If this level also fails to provide support, the decline could extend to the support line of the descending channel. The downsloping moving averages and the RSI in the oversold zone, suggest the path of least resistance is to the downside.
Alternatively, if the price turns up from $116, the bulls will again try to overcome the barrier at the 20-day EMA ($146). If they manage to do that, the pair could rise to the resistance line. A break and close above the channel could signal a change in trend.
Ripple (XRP) broke and closed below the $0.75 support on Jan. 19. The bulls tried to reclaim the level on Jan. 20 but the long wick on the candlestick shows that bears continue to sell on rallies.
XRP/USDT daily chart. Source: TradingView
The XRP/USDT pair has broken below the support at $0.69. If bears sustain the lower levels, the pair could extend its decline to $0.60. The downsloping moving averages and the RSI near the oversold territory indicate that sellers are in control.
This negative view will invalidate if the price turns up from the current level and breaks above the moving averages. Such a move could suggest accumulation at lower levels. The pair could then start its up-move toward $1.
Terra’s LUNA token once again turned down from the downtrend line on Jan. 20, indicating that bears continue to defend this level with vigor.
LUNA/USDT daily chart. Source: TradingView
Although the 20-day ($79) is flattish, the RSI has slipped below 46, indicating that bears have a slight advantage. If the price sustains below $73.95, the LUNA/USDT pair could start its decline toward the critical support at $62.46.
Contrary to this assumption, if the price rebounds off the current level, the bulls will again try to push the pair above the downtrend line. If they succeed, it will indicate that the correction may be over. The pair could rally to $93.81.
Related: 3 wildest theories explaining $500B crypto market crash
Polkadot (DOT) has dipped below the critical support at $22.66, which is an important level to keep an eye on because it has not been breached on a closing basis since mid-August of last year.
DOT/USDT daily chart. Source: TradingView
If the price rebounds off the current level, the bulls will again attempt to clear the overhead hurdle at the moving averages. A break and close above the 50-day SMA ($27.08) will be the first indication that the selling pressure may be reducing. The bulls will have to push and sustain the price above $32.78 to signal a possible change in trend.
Conversely, if the DOT/USDT pair sustains below $22.66, it will suggest that supply exceeds demand and traders are rushing to the exit. The pair could then drop to the next support at $16.81.
Avalanche (AVAX) turned down from close to the 20-day EMA ($90) on Jan. 20 and broke below the strong support at $75.50 today.
AVAX/USDT daily chart. Source: TradingView
The downsloping moving averages and the RSI in the negative zone indicate that bears are in command. A close below $75.50 will complete a descending triangle pattern, signaling that a top may be in place. The AVAX/USDT pair could then start its decline toward $50.
However, the bulls are unlikely to surrender without putting up a strong fight. If the price rebounds off the current level, the pair could recover to the 20-day EMA and later to the downtrend line. The bulls will have to clear this hurdle to signal a possible end to the corrective phase.
The bulls tried to push Dogecoin (DOGE) back above the moving averages on Jan. 20 but failed. This suggests that sentiment remains negative and bears are selling near resistance levels.
DOGE/USDT daily chart. Source: TradingView
The DOGE/USDT pair could now gradually drop toward the strong support at $0.13 where the buyers may step in to arrest the decline.
If the price rebounds off this level and rises above the moving averages, it will suggest that the range-bound action may continue for a few more days.
The critical level to watch on the upside is $0.19 and $0.13 on the downside. The next trending move could start after the price breaks out of either level. Until then, volatile random moves inside the range may continue.
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.