On Feb. 9, United States Securities and Exchange Commission (SEC) chair Gary Gensler explained why the regulator had cracked down on Kraken cryptocurrency exchange, forcing it to stop its crypto staking program for U.S. clients. This news may have rattled crypto investors and they sold aggressively. Bitcoin (BTC) crashed about 5% on Feb. 9 and several altcoins also followed suit.
The fresh round of selling has traders wondering whether the bear market has resumed or if the dip should be interpreted as a buying opportunity. This question may be troubling to investors, but for now the correction looks to be a normal corrective phase where cryptocurrencies give back some of the gains made in January. However, it would be prudent to wait for the correction to end and a bottom to be confirmed before considering fresh purchases.
Former BitMEX CEO Arthur Hayes said in a Feb. 7 blog post that Bitcoin may continue its bull run in the first half of the year but may face challenges in the latter half. Along with Bitcoin and Ether, Hayes is also bullish on altcoins but he said the trick is to get the timing right.
What are the important support levels to watch out for Bitcoin and altcoins in the near term? Let’s study the charts of the top-10 cryptocurrencies to find out.
The $22,800 support cracked on Feb. 9 and Bitcoin plunged to the strong support near $21,480. A lack of a strong bounce off this level suggests that the correction may deepen further.
Below $21,480, the selling could accelerate and the BTC/USDT pair could fall to the moving averages. The relative strength index (RSI) has slipped into the negative territory, indicating that bears are trying to gain the upper hand in the near term.
The moving averages have completed a golden cross but the bulls need to flip the 200-day simple moving average ($19,722) into support if they want to remain in the game.
A strong rebound off the zone between $21,480 and the 200-day SMA will suggest that bulls are trying to form a higher low. The pair could then gradually move back toward $24,255. The bulls will have to surmount the $25,211 resistance to suggest that the downtrend is over.
The bears did not allow Ether (ETH) to sustain above the $1,680 level which may have tempted short-term bulls to book profits.
The moving averages have completed a golden cross, indicating a potential trend change but the bears are unlikely to give up without a fight. The sellers will try to pull the price below the moving averages and trap the aggressive bulls. If they can pull it off, the selling could intensify and a collapse to $1,200 is possible.
Instead, if the price turns up from the moving averages, it will indicate that bulls are trying to flip the 200-day SMA ($1,442) into support. The bulls will then make another attempt to thrust the price above $1,680 and gain control. The ETH/USDT pair could then start its northward march toward $2,000.
BNB (BNB) nose-dived back below the breakout level of $318 on Feb. 9, which shows aggressive selling at higher levels. This clears the path for a possible dump to the 200-day SMA ($287).
The bulls are likely to defend the moving averages with vigor. If the price rebounds off this support with force, the BNB/USDT pair could form an inverse head and shoulders pattern, which will complete on a break and close above the neckline. This bullish reversal setup has a target objective of $440.
On the other hand, if the price breaks below the moving averages, the selling could intensify and the pair may tumble to $240.
After staying above the 200-day SMA ($0.39) for several days, XRP (XRP) plummeted below the support on Feb. 9. This suggests that bears are trying to take charge.
The 50-day SMA ($0.38) had acted as a strong support on Jan. 18 and the bulls are again trying to protect the level. If the price jumps up from the current level and rises above the 200-day SMA, it will hint at strong demand at lower levels. The buyers will then aim to overcome the barrier at $0.43 and start an up-move toward $0.51.
Conversely, if the 50-day SMA gives way, it will signal that bears are back in the driver’s seat. The XRP/USDT pair could then drop to $0.33.
The 200-day SMA ($0.39) acted as a strong obstacle for Cardano (ADA). Though the bulls pushed the price above the resistance on several occasions, they failed to build upon the strength.
The price turned down and slipped below the support at $0.38 on Feb. 9. Sellers will try to pull the price to the 50-day SMA ($0.33), which is likely to act as a strong support. If the price rebounds off the 50-day SMA with strength, it will suggest that bulls are attempting to form a higher low.
On the upside, buyers will have to overcome the zone between the 200-day SMA and $0.42 to hint at a potential trend change. That could increase the possibility of a rally above $0.44.
Dogecoin (DOGE) plunged below the $0.09 support on Feb. 9 and reached the 50-day SMA ($0.08). This dip has pulled the RSI into the negative territory, indicating that the momentum has shifted in favor of the bears.
The bulls will have to defend the zone between the moving averages with all their might because if they fail to do that, the DOGE/USDT pair could drop to the important support near $0.07. If the price rebounds off this level, the pair may consolidate between $0.07 and $0.10 for a few days.
If the price rebounds off the current level with strength, it will indicate that the bulls are striving to flip the 200-day SMA ($0.08) into support. If they do that, the pair could start its journey back toward $0.10.
Buyers pushed Polygon (MATIC) above the $1.30 overhead resistance on Feb. 8 and 9 but could not sustain the breakout. This shows that bears sold the rise above $1.30.
However, a positive sign is that the bulls have not ceded much ground to the bears. This suggests that shallow dips are attracting buyers. This enhances the prospects of a rally above $1.30. If that happens, the MATIC/USDT pair could surge to $1.45 and then to $1.70.
Contrarily, if the price once again turns down from the overhead resistance, it will suggest that bears continue to fiercely guard the $1.30 level. The bears will have to sink the price below $1.16 to make way for a retest of $1.05.
Litecoin (LTC) turned down from $102.50 on Feb. 8. This shows that the failure to break above the resistance may have tempted short-term traders to book profits.
The bulls will try to arrest the decline at the immediate support of $88 while the bears will attempt to pull the LTC/USDT pair to the 50-day SMA ($84). A deeper decline will indicate that the momentum has weakened and that could delay the resumption of the uptrend.
If bulls want to resume the uptrend, they will have to quickly push the price back above $98. That will signal a positive sentiment, indicating that traders are buying on dips. The bulls will then again attempt to overcome the barrier at $102.50 and start the next leg of the uptrend toward $115.
The failure of the bulls to propel Polkadot (DOT) above $7.25 may have attracted selling by short-term traders and that has pulled the price to the 200-day SMA ($6.33).
Buyers will try to arrest the decline in the zone between the moving averages and make this a higher low. If they succeed, it will suggest that the DOT/USDT pair has started a bottoming formation. A break and close above $7.25 could attract further buying and open the doors for a possible rally to $10.
On the contrary, if the price plummets below the 50-day SMA ($5.59), it will suggest that bears are back in control.
Avalanche (AVAX) turned down from the overhead resistance at $22 and reached the 200-day SMA ($17.88). Buyers are expected to defend the zone between the moving averages.
If the price rebounds off the current level, the bulls will make one more attempt to push the price above $22. If they manage to do that, the AVAX/USDT pair is likely to pick up momentum and rally to $30.
Another possibility is that the price rebounds off the moving averages but fails to climb above $22. That could result in a consolidation for a few days. The bears will have to sink the price below the 50-day SMA to gain the upper hand.