The digital asset market is slowly recovering following the positive momentum of Bitcoin. The first cryptocurrency is trying to regain positions lost in the recent fall, although it will surely take a while.
Bitcoin was hit hard in the recent dump that began the day El Salvador officially recognized the creation of Satoshi Nakamoto as an official payment method, on par with the dollar. The price of the asset then fell significantly, dropping from $ 52,000 to $ 46,000 and even reaching the level of $ 43,000 at times. This drop triggered a large number of stop-losses and caused a series of position liquidations.
Whatever the cause of such a collapse, this is far from the first time Bitcoin has lost much of its value in the blink of an eye. As this time the fall did not turn into a crisis for the rest of the market, this event can be seen as a relief compensating for the overbought of the asset and thus making possible its further growth.
Even though the support level was not breached, it does not appear that the buyers have enough strength to continue the bullish movement. In this case, a further decline to the levels of $ 35,000- $ 40,000 is to be expected. The latter however fits perfectly into the figure of the triangle and does not contradict the fact that the output of this figure is supposed to occur by a large pump of the asset.
This bearish move is a great opportunity to dramatically increase your Bitcoin investments. It would be a good idea to invest half of the funds you have now and only use the remaining half if another fall occurs. You will thus be able to lower the average purchase price of the asset.
As mentioned in previous reviews, the current fluctuations of the first cryptocurrency fit perfectly into the triangle that is clearly visible on 1D and 1W timeframes. As shown in the chart above, Bitcoin is in the process of plotting the chart pattern called “the descending wedge” or “falling wedge” in English which results in an accumulation that occurs after the significant growth of the asset.
The price is currently in an accumulation phase within this “downward wedge”. During this process, the price of the asset decreases for a while and the local highs and lows decrease at the same time. Thus, a triangle is formed with a vertex pointing downwards. As the price reaches that high, the spread between the highs and lows narrows, which means the volatility decreases. In the end, the price fluctuations almost stop and the asset experiences a significant pump that goes beyond the limits of the triangle.
The current support level is the upper side of the triangle mentioned above. If the price drops below this level, it may drop to $ 35,000 before rebounding and returning to its all-time high.
It is also possible that the support level will not be crossed. In this case, Bitcoin will continue to rise, but it will take some time for traders to regain their confidence and reopen their positions.
Of course, everything that has just been mentioned applies especially to traders who engage in spot trading. If you are using leverage, the urgency for you is to find an optimal exit point because the rise and fall are now both possible. Both of these possibilities are likely to cause the price of Bitcoin to vary significantly, and your margin is unlikely to be sufficient to cover any losses and push back the liquidation point.
On the local timeframe, the Bitcoin trend is bearish. However, the asset is experiencing an accumulation of positions, which can lead to its return to values close to $ 50,000.
In general, the volatility (price dynamics) of any asset declines somewhat before significant fluctuations. This is exactly what is happening with Bitcoin right now, as well as some altcoins.
Among crypto enthusiasts, there is an opinion that the current situation is very similar to what took place in the market at the start of 2018, a few months before the start of the cryptocurrency winter. Although the market is cyclical, such statements are still premature. In addition to the ‘downward wedge’, the blue (upward) and purple (downward) price channels are also arguments for asset growth. They all fit into the triangle and can serve as support levels in cases where events follow the negative scenario.
The last cryptocurrency winter lasted two years. It is likely that his return will not be long. It should be noted that this is a completely normal phenomenon for the financial markets. As in 2018, many traders will leave the market forever. However, those more familiar with the behavior of digital assets will take advantage of the situation to build up their positions and then peacefully wait for the start of the next bull cycle.
On the Ethereum side, the bulls continue their battle against the bears. The day before, the asset saw a rise towards $ 3,800, but the strength of the buyers however subsequently wore off as the second largest cryptocurrency in terms of capitalization fell back to its support level. At the time of this writing, the latter is trading around $ 3,450 following a rebound that occurred at the start of this new day.
The first altcoin is looking to move back into one of the slightly higher price channels (shown graphically in blue and red). It is possible that Vitalik Buterin’s last message to the Ethereum community with the proposal to transfer the NFT ecosystem to L2 and thus stabilize the price of commissions on the network will slightly improve the situation by giving investors some optimism. .
In any case, even if Ethereum drops sharply, it will be just another opportunity to acquire this asset which cost $ 90 relatively recently. It is possible that on the next dump Ethereum will hit the $ 10,000 – $ 20,000 levels, as Bitcoin did at one point.
In addition to Ethereum, a long-term investor’s portfolio should also include Solana (SOL). It is very likely that this asset will soon occupy the third row of CoinMarketCap’s list and its value will rise to thousands of dollars in the future.
Index of fear and greed
While the market still remains fearful, the intensity of that fear has eased slightly, which is shown by the fear and greed index which has given way to greed. Even if the index remains in the fear zone, the momentum is encouraging.
Traders still can’t get over the latest collapse where some of them are now forced to hold unprofitable positions while others have lost all of their money.
Fear of missed profits and haste results in more losses than profits for an individual trader. Trying to get rich with just one transaction never got anyone to the top. There is an opinion that among all the players who engage in trading any type of financial asset, only 5% are successful. These are unlikely to be the people trying to break the bank by putting all of their savings in one asset with leverage.
Spot trading takes a lot longer, but you won’t lose all of your savings if you make a mistake. If you have enough patience, you can always wait for the price to rise and eventually close your position with a profit. You should know that the market is cyclical and it is not the hare, but the turtle that wins.
Top 10 altcoins
The ten most popular altcoins according to CoinMarketCap have started to recover after the recent Bitcoin crash. The exception is perhaps Solana (SOL) which has experienced an exceptional increase in recent days and whose price is falling today.
This is far from Solana’s first fall in a matter of days. Many traders surely see this drop as a good opportunity to invest in this asset which was recently trading around $ 215.
However, this “Ethereum killer” dynamic risks pushing it to the seventh row in the rankings, which is not critical, but still regrettable. Indeed, only yesterday Solana tried to push Tether (USDT) and Binance Coin (BNB) and take their positions.
Tezos (XTZ) becomes the best performing token this Friday among the 100 most traded cryptocurrencies according to CoinMarketCap. In the last day, this asset has returned its owners around 39% profit and it does not appear that Tezos plans to stop.
The asset is trading within a bullish trading channel and if it manages to consolidate above the resistance level shown in blue, it will certainly continue to grow.
According to CoinMarkerCap, Solana (SOL) already well known by the majority of traders, becomes the worst performing asset of the day. For now, this asset is trading 8% below its last high. This does not mean, however, that Solana should be forgotten. It is even possible that this is the best time to invest in this token and thus benefit from its next rise.
The cryptocurrency market is starting to recover. Bitcoin still remains at a crossroads, however, and it is quite possible that it will cause further drops in altcoins very soon.
At the same time, now is the perfect time to acquire new assets in your portfolio, although you should not forget about the risks. Don’t overlook stop-losses and keep all your savings in one asset.