Posted January 11, 2022
By Ray Blanco
Crypto Crash? Bitcoin Bounce!
Cryptocurrencies across the board struggled to find their footing this past weekend.
Bitcoin fell below $40,000 and ethereum fell below $3,000 in a mini flash-crash Monday afternoon. Although both coins only spent a brief moment below those heavy psychological numbers, both have had trouble climbing back to all-time highs.
But it’s important to watch where we go from here…
Just back in September, bitcoin was flirting with that $40,000 support level before rallying to all-time highs. And this action is similar to the pullback from May 2021, where bitcoin continued to bounce around right above $30,000 until its fall rally.
And ethereum’s price action isn’t much different. Ethereum has danced around its $3,000 support before, only to rally to new highs shortly after.
So now, both cryptos find themselves in familiar situations.
In bitcoin's case, it's about 40% off from its November highs, and its chart is close to triggering a death cross, which is when the shorter-term 50-day moving average crosses below the longer-term 200-day moving average.
However, crypto bulls and bears alike continue to debate whether or not traditional technical analysis patterns apply to cryptocurrencies as they do for stocks.
Not to mention that bitcoin is notoriously volatile, and previous moving-average crossovers have led to neck-breaking fake-outs.
In February 2020, bitcoin flashed a golden cross right before prices fell as much as 56%. And then a death cross happened in March 2020, just two weeks after bitcoin prices bottomed.
If a death cross in bitcoin does prove to be a successful trading signal, a reasonable support level floats around $37,400. A move to that price level would put bitcoin to a downside of about 10% from current levels.
Of course, all of this is circumstantial, and both bitcoin and ethereum are showing solid strength today.
Bitcoin is up by almost 4% to $42,930 as I write this. Ethereum is fairing even better, up by almost 7% to $3,236.
So, don’t count the two major cryptocurrencies out just yet. I think there is plenty more action in store.
To a bright future,
Chief Technology Expert, Technology Profits Daily