The crypto markets and the U.S. equity markets sold off today on fears that the collapse of Chinese property giant Evergrande could not only hurt China but also have wider implications in other markets.
When the sentiment is bearish, traders dump positions that they perceive as risky in favor of safe-haven trades. This could be one of the reasons for the sharp fall in Bitcoin (BTC) and most major altcoins today.
Data from Bybt shows that Bitcoin held in Binance wallets has surged by 29,717 Bitcoin in the past 30 days. History suggests that an increase in the Bitcoin balance on Binance has resulted in a drop in Bitcoin’s price.
The Bitcoin balance on Binance rose from 99,700 BTC on April 20 to 347,590 BTC on June 26. During this period, Bitcoin’s price plunged from about $57,000 to roughly $30,000.
Now the question is, could the sell-off deepen, or will lower levels attract aggressive buying from traders? Let’s analyze the charts of the top-10 cryptocurrencies to find out.
Bitcoin’s selling exacerbated after bears pulled the price below the moving averages. The price action of the past few days has formed a head and shoulders pattern that will complete on a breakdown and close below the neckline.
The moving averages are on the verge of a bearish crossover and the relative strength index (RSI) has dropped below 41, indicating that bears are in control. If the price sustains below the neckline, the BTC/USDT pair could drop to $37,332.70 and then to the pattern target of $32,423.05.
Contrary to this assumption, if the price rebounds off the neckline, the bulls will again try to push the price toward $50,000. However, the bears are likely to defend the 20-day exponential moving average ($47,014) aggressively.
If the price turns down from this resistance, it will indicate that sentiment has turned negative and traders are selling on rallies. The first sign of strength will be a break and close above $48,843.20.
Ether (ETH) bounced off the support at $3,377.89 on Sept. 18 but the bulls could not sustain the price above the 20-day EMA ($3,402). This indicates that traders closed positions at higher levels.
If the price breaks and closes below $3,000 the ETH/USDT pair will complete a bearish head and shoulders pattern. The target objective of this setup is $1,972.12.
The 20-day EMA has started to turn down and the RSI is below 42, indicating that the path of least resistance is to the downside.
On the contrary, if bulls defend the $3,000 level aggressively, the pair could again rise toward the overhead resistance at $3,377.89. The bears are likely to defend this level but if bulls overcome this resistance, it will signal that the correction may be over.
The bulls defended the 50-day simple moving average ($2.31) on Sept. 18 but could not build on the rebound. Sustained selling pulled Cardano (ADA) below the 50-day SMA on Sept. 19.
The selling escalated today and the ADA/USDT pair plunged to the critical support at $1.94. The strong rebound off this level suggests that bulls are accumulating on dips.
If buyers sustain the bounce, the pair could gradually move up toward the overhead resistance at $2.47. The bears are likely to sell on relief rallies to the 20-day EMA ($2.45). If the price turns down from this resistance, the pair could again drop to $1.94.
A break and close above the 20-day EMA will be the first sign that the sellers may be losing their grip.
Binance Coin (BNB) broke below the 50-day SMA ($422) on Sept. 17 and subsequent attempts by the bulls to reclaim the level failed. This suggests that bears are selling on every minor rally.
The selling picked up momentum today and the BNB/USDT pair dropped close to the critical support at $340. This is an important level for the bulls to defend because a break below it could open the doors for a decline to $300 and then $250.
The moving averages have completed a bearish crossover and the RSI is in the negative zone, indicating that bears have the upper hand.
If the price rebounds off $340, the pair could rise to the 20-day EMA. This level is likely to act as a stiff resistance. The bulls will have to push and sustain the price above $422.80 to indicate that the correction may be over.
XRP had been trading near the breakout level at $1.07 for the past few days but the failure of the bulls to push the price above the 20-day EMA ($1.09) showed that bears were selling on rallies.
The selling intensified after the bears pulled and closed the price below the 50-day SMA ($1.08) on Sept. 19. The moving averages are on the verge of a bearish crossover and the RSI has dropped into the negative zone, indicating that bears are in command.
If the price sustains below $0.95, the XRP/USDT pair could drop to $0.75. Any relief rally from the current level is likely to face stiff resistance at the 20-day EMA. A breakout and close above $1.13 will signal that bulls are attempting a comeback.
The long tail on the Sept. 17 candlestick shows that bulls aggressively bought the dip below the 20-day EMA ($148). That was followed by a strong bounce of Sept. 18 but the bulls could not sustain Solana (SOL) above the first resistance at $170.
This may have attracted profit-booking from bulls and shorting from aggressive bears. The 20-day EMA has flattened out and the RSI is close to the midpoint, indicating that bulls are losing their grip.
If the price sustains below the 20-day EMA, the SOL/USDT pair could drop to the 61.8% Fibonacci retracement level at $123.42. A break and close below this support will suggest that the uptrend could be over.
The bulls will have to push and sustain the price above $171.47 to signal the end of the corrective phase.
Polkadot’s (DOT) rebound off the 20-day EMA ($32.12) on Sept. 18 was followed by an inside-day candlestick pattern on Sept. 19. This showed indecision among the bulls and the bears.
This uncertainty resolved to the downside today with a break below the 20-day EMA. The selling picked up momentum and dropped to the critical support at the 50-day SMA ($27.29). This is an important support for the bulls because they had successfully defended it on Sept. 7.
If the DOT/USDT pair rebounds off the current level, the bears are likely to sell on rallies to the 20-day EMA. If the price turns down from this level, it will suggest that the sentiment has turned negative and that will increase the prospects of a break below the 50-day SMA. This negative view will invalidate if the price turns up and rises above $34.
Dogecoin’s (DOGE) tight range trading of the past few days resolved to the downside today as bears pulled the price to the strong support at $0.21.
The falling 20-day EMA ($0.25) and the RSI near the oversold territory indicate that bears are in control. If they can sink and sustain the price below the $0.21 support, the DOGE/USDT pair could slide to $0.15.
If the price rebounds off the current level, the bulls will again try to push the pair above the 20-day EMA. If they manage to do that, the pair could rise to the downtrend line. Alternatively, if the price turns down from the 20-day EMA, it will increase the prospects of a break below $0.21.
The bulls attempted a recovery on Sept. 18 but could not push Uniswap (UNI) above the 20-day EMA ($25.09). This showed that bears are aggressively defending the 20-day EMA.
The UNI/USDT pair continued lower and the bears pulled the price below the critical support at $21 today. If the price sustains below this support, the pair could witness panic selling and decline to the next support at $18.
The downsloping 20-day EMA and the RSI in the negative zone indicate an advantage to bears. This negative view will invalidate if the price turns up from the current level and rises above the downtrend line. Such a move will indicate strong accumulation at lower levels.
The long wick on the Sept. 18 and Sept. 19 candlestick showed that traders were booking profits at higher levels. The selling intensified today and Avalanche (AVAX) dropped to the 20-day EMA ($55.16).
The strong rebound off the 20-day EMA suggests that sentiment remains positive and traders are accumulating on dips. If the price sustains above $60.04, the bulls will again attempt to push the AVAX/USDT pair toward the all-time high at $76.27.
On the contrary, if the price turns down from the current level and breaks below the 20-day EMA, the bearish momentum could pick up as traders may rush to the exit. That could pull the price down to $48 and then to the 50-day SMA ($38.56) where buyers may step in to arrest the decline.
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.
Ray Schuetz received a Masters Degree in computer science from The University of Texas (Austin). Ray has been working as a full-time blockchain consultant for the past 3 years. In his spare time, Ray enjoys writing for EthereumCryptocurrency.com and other crypto news publications.