Crude oil prices plunged about 30% on Monday to the lowest levels seen since Feb. 2016. This triggered a sell-off in global equity markets, which were already reeling under the pressure of a likely global slowdown due to the coronavirus outbreak. At its lowest level, the crude oil traders were nursing losses of about 55% year-to-date. Similarly, the US markets have plummeted about 15% year-to-date.
Although Bitcoin (BTC) has dropped about 26% from its highs, it is still up about 7% year-to-date. This shows that it is outperforming both equity and oil markets. While it is difficult to pinpoint a specific reason for the fall in Bitcoin, chances are that equity and commodity traders were facing margin calls and they had to liquidate their crypto holdings to fulfill their margin requirements.
Daily cryptocurrency market performance. Source: Coin360
As prices start to fall, the traders who have been sitting on the sidelines delay their purchases waiting for a bottom to form. This results in a further fall due to a lack of demand. Along with other possible reasons, this could also be one of the reasons for the sharp fall in the crypto markets.
Let’s study the charts of the major cryptocurrencies to spot the critical levels where buyers might step in.
BTC/USD
On Mar. 6 and 7, Bitcoin (BTC) could not close (UTC time) above the 20-day EMA and failure to climb above the 20-day EMA attracted selling by the bears.
BTC USD daily chart. Source: Tradingview
The downside momentum picked up after the bears plunged the BTC/USD pair below the 200-day SMA at $8,670 and the next support at $8,400. This shows liquidation by the traders who had purchased the recent dip.
Currently, the bulls are attempting to defend the support at $7,856.76 and the support line of the descending channel. A bounce off the support can carry the price to $8,400, which will now act as a stiff resistance.
If the price turns down from $8,400, the bears will make another attempt to sink the pair to the next support zone of $7,000-$6,435. The 20-day EMA is sloping down and the RSI is near the oversold territory, which suggests that bears have the advantage.
The first sign of strength will be a break above the 200-day SMA and the resistance line of the descending channel. If the price sustains above the channel, we might suggest long positions once again. Until then, we suggest traders remain on the sidelines.
ETH/USD
Ether (ETH) closed (UTC time) above the overhead resistance of $235.70 on Mar. 6, which triggered our buy recommendation given in an earlier analysis. However, this turned out to be a bull trap because the price quickly turned around from $251.781 on Mar. 7.
ETH USD daily chart. Source: Tradingview
The ETH/USD pair plunged on Mar. 8, which broke the support at $209.95 and triggered our suggested stop loss at $208. Currently, the bulls are attempting to defend the support at $197.75. A bounce off this level can carry the price to $209.95 and above it to the 20-day EMA at $229.
However, if the bulls fail to defend the support at $197.75, a drop to the 200-day SMA at $179 is likely. The downsloping 20-day EMA and the RSI in the negative zone suggest that bears have the upper hand. We will wait for a new buy setup to form before proposing a trade in it once again.
XRP/USD
XRP turned down from close to the 20-day EMA on Mar. 7. The sharp selling on Mar. 8 has dragged the price below the critical support at $0.22250. The 20-day EMA is sloping down and the RSI is close to the oversold zone, which suggests that bears are in command.
XRP USD daily chart. Source: Tradingview
Currently, the bulls are attempting to defend the psychological support at $0.20. If successful, a relief rally to $0.22250 is likely. We expect the bears to defend this level aggressively.
If the price turns down from $0.22250, the bears will attempt to resume the downtrend and drag the price to $0.17468. Our bearish view will be invalidated if the XRP/USD pair breaks and sustains above the 20-day EMA.
BCH/USD
Bitcoin Cash (BCH) turned down from the 20-day EMA on Mar. 7. This shows selling by the bears at overhead resistance levels. The altcoin broke below the support at $306.78 and the 200-day SMA at $282 on Mar. 8, which is a huge negative.
BCH USD daily chart. Source: Tradingview
Currently, the bulls are attempting to defend the support at $270.15. If successful, the BCH/USD pair might pullback to $306.78 and above it to $360.
However, if the price slips and sustains below $270.15, it will be a huge negative. The next level to watch on the downside would be the psychological support at $200. We will wait for the pair to sustain a bounce off $270.15 before turning positive.
BSV/USD
Repeated failures of the bulls to push Bitcoin SV (BSV) above the 20-day EMA attracted selling. The altcoin turned around on Mar. 7 and broke below the most recent low of $204.310 on Mar. 8. This is a huge negative.
BSV USD daily chart. Source: Tradingview
If the bears can sustain the price below the psychological support at $200, the BSV/USD pair might drop to the 200-day SMA at $159 and below it to $120.
The pair is currently trading inside a descending channel. The first sign of strength will be a break above the 20-day EMA at $246, which is just above the channel. However, as the pair has been a huge underperformer for the past few days, we will wait for a new buy setup to form before turning positive on it.
LTC/USD
The bears are aggressively defending the 20-day EMA. The sharp selling on Mar. 8 has plunged Litecoin (LTC) below the 200-day SMA, which is a huge negative. Currently, the bulls are attempting to defend the critical support at $50.
LTC USD daily chart. Source: Tradingview
If this support cracks, the LTC/USD pair can plunge to $40 and below it to $35.8582. The 20-day EMA is sloping down and the RSI is close to the oversold zone, which suggests that bears have the upper hand.
However, if the bulls can defend the support at $50, the pair might again move up to $66.1486 and remain range-bound between these two levels. We will wait for a new buy setup to form before recommending a trade in it.
EOS/USD
EOS turned down sharply from the 20-day EMA on Mar. 7 and plunged below the 200-day SMA on Mar. 8. The failure of the bulls to defend the 200-day SMA at $3.35 is a huge negative as it shows a lack of buyers even at that level.
EOS USD daily chart. Source: Tradingview
Currently, the bulls are attempting to defend the psychological support at $3 but the failure to achieve a strong rebound could attract further selling. If the EOS/USD pair slides below $3, a drop to $2.4001 is possible. The downsloping 20-day EMA and the RSI close to the oversold zone show that bears have the upper hand.
Alternatively, if the pair rebounds off $3, the bulls will attempt to push the price back above the 200-day SMA. If successful, a relief rally to the 20-day EMA and above it to $4 is possible. We will wait for a new buy setup to form before proposing a trade in it.
BNB/USD
The bulls could not propel Binance Coin (BNB) above the overhead resistance at $21.80. That attracted selling, which plunged the altcoin below the 20-day EMA at $20 and the 200-day SMA at $18.50.
BNB USD daily chart. Source: Tradingview
There is a minor support at $16, below which the decline can extend to the next support at $14. The downsloping 20-day EMA and the RSI close to the oversold zone indicate that bears are in command.
However, if the BNB pair bounces off the current support at $16, it can move up to the 200-day SMA and above it to the 20-day EMA. We do not find any buy setup at the current levels, hence, we suggest traders remain on the sidelines.
XTZ/USD
Though Tezos (XTZ) sustained above $3.011 for three days, the bulls could not build up on the breakout. This shows a lack of buyers at higher levels. The altcoin reversed direction on Mar. 7 and has plummeted below the support at $2.5263.
XTZ USD daily chart. Source: Tradingview
This triggered the stop loss suggested in our previous analysis. Currently, the bulls are attempting to defend the support at $2.28451360, which is the 61.8% Fibonacci retracement level of the most recent rally. Below this level, the decline can extend to the support line of the descending channel at $2.
Our bearish view will be invalidated if the bulls can push the XTZ/USD pair above the channel. Such a move will increase the possibility of a resumption of the uptrend.
LINK/USD
Chainlink (LINK) broke below the 20-day EMA and the trendline support. However, the bulls stepped in to defend the trendline, which is a bullish sign. If the altcoin bounces off the trendline, the bulls will again attempt to carry the price to the recent highs at $4.9762.
LINK USD daily chart. Source: Tradingview
Conversely, if the bears sink and sustain the LINK/USD pair below the trendline, a drop to $3.3113 is possible. A breakdown below this support will complete a double top pattern, which will be a huge negative.
The 20-day EMA is flattening out and the RSI is just below the midpoint, which suggests a range-bound action for a few days. We will wait for a defined range to form before recommending a trade in it.
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.