The Daily Cryptomenon
7th October 2020
Your daily Cryptocurrency Market Analysis News brought to you by the CryptoAltum Cryptomenon Team.
This analysis was written at 9:00 am GMT +3, on 07.10.2020
A severe bout of bearishness has hit the Cryptocurrency market. In our previous article we explained how the minor bullish pressure that the market was experiencing was going to run out sooner or later. It turned out to be much much sooner that we had expected. The bearish pressure saw Cryptocurrencies fall back below certain supports that were supposed to hold off all kinds of downward pressure; they have failed. With that said, let’s find out what today holds for the Cryptocurrencies on October 7th, 2020.
Cryptocurrency Recap
Bears regain their hold on the Cryptocurrency market as our Cryptocurrency trio - Bitcoin, Ethereum, and Ripple - find themselves on the backfoot unable to hold the assault from the Bears for too long. Bitcoin had shown some bullish pressure as we’ve discussed earlier, but it ultimately couldn’t break above the important resistance at $10,800, a level that caused the Cryptocurrency to fall back reaching the $10,520 before stabilizing around that level. Ethereum seems to be in the boat with Bitcoin because we could see the second-largest Cryptocurrency fall after the first and failed to sustain a break above the 100-SMA which was supposed to act as a support. This fall led ETH below $340 and tested the support strength of $330 before currently testing the $340 as a resistance. While Bitcoin and Ethereum’s downward moves were a bit unexpected, Ripple’s move downward move was. The third-largest Cryptocurrency fell as it hit the resistance level at $0.2600, which also put up overbought signals on the RSI forcing the Cryptocurrency to correct lower, reaching the $0.2400 before stabilizing.
Bitcoin (check out the chart below you’ll find that Bitcoin is the purple line) fell quite dramatically hitting the $10,800 and fell from around the 6.00% performance to reach the 3.92% performance on a month-to-month basis*. Ethereum (red line) experienced a much deeper move as far as corrections go as it fell back into negative territory reaching a performance of -2.68% on a month-to-month basis. Ripple’s (turquoise line) did suffer a bit after the move higher and the subsequent correction, but it still prints in the green with a performance of 2.51% on a month-to-month basis.
*Please note that we mention month/on/month we mean the same day, one month ago. For example, 1st September till the 1st October.
What’s the strategy you’re going to use when it comes to these cryptos? Has the positive momentum completely evaporated and the Bears are in control? Or this is a mere correction in comparison to the overall upward trend? Whatever you choose to believe, you can react to it all on CryptoAltum.
Bitcoin Vulnerable to Move Below $10,500
Bitcoin failed to clear the key $10,800 resistance and started a fresh decline against the US Dollar. The Cryptocurrency traded as high as $10,803 before the Bulls lost control. As a result, there was a bearish reaction below the $10,750 and $10,700 levels. The decline gained pace after this week’s important ascending channel was breached with support near $10,700 on the hourly chart of the BTC/USD pair.
Bitcoin traded below the 50% Fib retracement level of the upward move from the $10,387 swing low to $10,803 swing high. The price is now trading well below the $10,650 support and the 100 hourly simple moving average.
If Bitcoin starts an upside correction, it could face resistance near the $10,650 level and the 100 hourly simple moving average. A proper close above the $10,650 and $10,680 levels might start a fresh increase. The next major resistance is near the $10,800 level, above which the Bulls might aim for a break above $10,950.
Ethereum’s Expected Move Higher
Like Bitcoin, Ethereum was pushing higher from last week’s lows, at least until the past few hours. In the span of about 4 hours earlier today, the leading Cryptocurrency dropped from $355 or so to $332, marking a small yet notable drop. This weakness and continued inability to surmount the resistances at $365-375 in the near term is sparking fears of a deeper drop.
Despite this weakness in Ether, social media trends purportedly indicate that now is a good buying opportunity. One of our CryptoAltum Analysts noticed that social media mentions of Ethereum are reaching six-month lows. This comes as the DeFi space has rapidly slowed down as ETH’s price has dropped. While this may seem bearish, our Analyst believes that this indicates that now may be a good time to enter an Ethereum position.
Other data indicates that ETH traders are currently overwhelmingly bearish on the coin. Data shows that the funding rates of the ETH future market on Binance is currently negative, which only takes place from 3-5% of the time. Counterintuitively, this may suggest that Ethereum may soon move higher. Negative funding rates in consolidation are indicative of a market that has the potential to move higher.
Ripple Gets Rejected But Bullishness Continues
XRP was outperforming the crypto market in the past few days, especially after the most recent bullish breakout of the daily descending parallel channel. Unfortunately, the breakout turned out to be a fakeout, and the price got rejected.
The rejection from the upper boundary of the daily descending parallel channel and the 50-SMA is significant. Currently, XRP is re-testing the 100-SMA. However, this rejection is notable and will most likely drop the digital asset even below the 100-SMA at $0.234.
Despite all the negative factors, XRP Bulls still have a chance to come back. The 4-hour chart has established a healthy support level in the form of the 100-SMA. A successful defense of this level could prompt XRP to re-test the 50-SMA and the upper boundary of the descending parallel channel. Both buyers and sellers need to focus on the 100-SMA and the 50-SMA. If $0.2380 breaks, XRP can easily slip towards $0.23. On the other hand, if it holds, we could see a re-test of $0.254 where the 50-SMA stands on the daily chart.
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