Global equity markets extended their decline on May 9 and the S&P 500 fell to a new 52-week low. Bitcoin (BTC) dropped to a new year-to-date low and most major altcoins extended their decline as they tracked the weakness in the stock markets.
Data from blockchain analytics firm Glassnode shows that Bitcoin inflows to centralized exchanges have risen to more than 1.7 million coins, the highest since February. This suggests that whales may be dumping their holdings as they anticipate an extended downtrend.
Several analysts expect the crypto markets to enter a capitulation phase which generally marks a bottom. Analyst Dylan LeClair highlighted that previous market bottoms during bear markets happened when Bitcoin dropped to its realized price (average on-chain cost basis). The metric is currently at $24,300.
Could Bitcoin and altcoins enter a capitulation phase or is it time for the crypto markets to surprise many by staging a strong recovery? Let’s study the charts of the top-10 cryptocurrencies to find out.
Bitcoin plummeted below the ascending channel on May 5 and has continued lower, indicating that bears are in no mood to let go of their advantage. The price has dipped below the critical support at $32,917 but the bears may face a strong challenge from the bulls at lower levels.
If the price rebounds off the current level, the relief rally could reach the 20-day exponential moving average ($37,670). This is an important level to watch out for because if the price turns down from the 20-day EMA, it will suggest that the sentiment remains negative and traders are selling on rallies.
The bears will then make another attempt to pull the BTC/USDT pair to the critical support at $28,805. This level is again likely to attract buying by the bulls.
On the upside, a break and close above the 20-day EMA will be the first indication that the selling pressure may be reducing. That could clear the path for a possible rally to the 50-day simple moving average ($41,279).
Ether (ETH) broke below the uptrend line on May 7. This move invalidated the developing ascending triangle pattern. The breakdown of a bullish pattern is usually a bearish sign as stops of several bulls who may have purchased in anticipation of a breakout from the pattern being triggered.
Strong selling has pulled the price below the immediate support at $2,445. This opens the door for a possible drop to the critical support zone between $2,300 and $2,159. The bulls are likely to defend this zone with all their might because a break below it could sink the ETH/USDT pair to $1,700.
If the price rebounds off the support zone, the bulls will make an attempt to push the pair above the 20-day EMA ($2,790). If they succeed, it will suggest that the bears may be losing their grip. The pair could then rally to the 50-day SMA ($3,043).
Binance Coin (BNB) has witnessed sustained selling for the past few days. The bears pulled the price below the strong support at $350 and are now challenging the critical level at $320.
A break and close below $320 would be a huge negative as this level has not been breached since August 2021. There is a minor support at $300 but if this level fails to arrest the decline, the BNB/USDT pair could plummet to $250.
Alternatively, if the price rebounds off $320, the bulls will try to push the pair above $350 and challenge the 20-day EMA ($383). The buyers will have to clear this hurdle to signal that the decline could be over. The pair could then rise to the 50-day SMA ($409).
Ripple (XRP) turned down from the 20-day EMA ($0.63) on May 5 and dipped below $0.62. The buyers attempted to push the price back above $0.62 on May 6 but the bears held their ground.
The XRP/USDT pair continued its decline and has broken below the support at $0.55. This clears the path for a retest of the psychological support at $0.50. The buyers are expected to defend this level with vigor because a break and close below it could start a downtrend that could sink the pair to $0.42.
Conversely, if the price rebounds off the $0.50 support, the bulls will again attempt to drive and sustain the pair above the 20-day EMA. If they succeed, it will suggest that the selling pressure could be reducing.
The failure of the bulls to push Solana (SOL) above the 20-day EMA on May 5 may have attracted strong selling by the bears. The price continued its downward move and has slipped below the strong support at $75.
If the price sustains below $75, it will suggest the start of the next leg of the downtrend. The SOL/USDT pair could first decline to $66 and next to $58. If the price rebounds off this zone, the buyers will try to push and sustain the pair back above $75. If they manage to do that, it will suggest that the downtrend could be ending.
On the contrary, if the recovery stalls at $75, it will suggest that bears have flipped the level into resistance. If that happens, the bears will attempt to resume the decline.
Cardano (ADA) rose above the 20-day EMA ($0.81) on May 4 but the bulls could not sustain the higher levels. The price turned down on May 5 and broke below the strong support at $0.74 on May 8.
This suggests the resumption of the downtrend. The ADA/USDT pair could now decline to $0.64 which could act as a support. If the price rebounds off this level, the bulls will again try to push the pair above the 20-day EMA. If they succeed, it will suggest that the break below $0.74 may have been a bear trap.
On the contrary, if the relief rally stalls at $0.74 or the 20-day EMA, it will suggest that bears are active at higher levels. The sellers will then attempt to sink the pair to the psychological support at $0.50.
Terra’s LUNA token turned down from the downtrend line on May 5 and plunged below the strong support at $75 on May 7. This completed the bearish head and shoulders pattern, suggesting the start of a new downtrend.
The long tail on the May 7 and May 8 candlestick suggests that bulls purchased at lower levels but the failure to start a recovery shows that bears are in no mood to let go of their advantage. The pattern target of this topping formation is $50. This level is likely to attract strong buying by the bulls.
If the price rebounds off $50, the bulls will attempt to push the LUNA/USDT pair toward the breakdown level at $75. If the price turns down from this level, the pair may form a range between $50 and $75.
Dogecoin (DOGE) turned down from the 20-day EMA ($0.13) on May 7 indicating that bears continue to sell on rallies. The selling picked up momentum today and the bears have pulled the price below the strong support at $0.12.
The downsloping 20-day EMA and the relative strength index (RSI) in the negative territory indicate advantage to sellers. If bears sustain the price below $0.12, the DOGE/USDT pair could slide to the psychological support at $0.10.
If the price rebounds off $0.10, the buyers will try to push the pair above $0.12 and challenge the 20-day EMA. A break and close above the 20-day EMA could be the first indication that the pair may remain stuck between $0.10 and $0.17 for some time.
Contrary to this assumption, if bears sink the pair below $0.10, the selling could intensify and the decline could extend to $0.06.
Avalanche (AVAX) turned down from the 20-day EMA ($63) on May 5 and has plunged below the critical support at $51. If bears sustain the price below $51, it will indicate the resumption of the downtrend.
There is a minor support at $47 and then at $43. If the price turns up from either support, the buyers will try to push the AVAX/USDT pair back above $51. If they succeed, the pair could recover to the 20-day EMA, which is an important level to keep an eye on.
If bulls push the price above the 20-day EMA, it will suggest that the bears could be losing their grip. The pair could then attempt a rally to the 50-day SMA ($77).
Alternatively, if the recovery falters at the 20-day EMA, it will suggest that the sentiment remains negative and traders are selling on rallies. The bears will then again try to resume the downtrend.
Polkadot’s (DOT) tight range trading between $14 and $16 resolved to the downside on May 7, indicating that the bears have overpowered the buyers.
The DOT/USDT pair could now drop to the crucial support at $10 where the bulls are expected to mount a strong defense. Although the downsloping 20-day EMA ($15.54) signals advantage to bears, the RSI in the oversold territory suggests a recovery may be around the corner.
If the price rebounds off $10, the bulls will attempt to push the pair above the 20-day EMA. If they manage to do that, it will be the first sign that the selling pressure may be reducing.
Alternatively, if the price turns down from the 20-day EMA, it will suggest that bears continue to sell on rallies. The bears will then again attempt to sink the pair below the strong support at $10. If they do that, the pair could slide to $7.16.
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.