and point out that they could experience capitulations if they lose critical areas of support.
The central theses
- Bitcoin and Ethereum are down more than 15% in the past four days.
- Bitcoin could fall to $28,060 if it breaks the $32,850 support level.
- Ethereum needs to hold above $2,500 to avoid a drop to $1,720 or below.
Bitcoin and Ethereum are still trending lower as fears over the global macroeconomic environment escalate. Losses could accelerate as both cryptocurrencies seem to break through important demand zones.
Bitcoin and Ethereum Face the danger
Around $110 billion was wiped out of the cryptocurrency market over the weekend, leaving both Bitcoin and Ethereum in a tight spot.
The number one cryptocurrency has plummeted 15.5% over the past four days, falling from a high of $39,850 to a low of $36,665 at the time of writing.
The downturn allowed Bitcoin to cut through a crucial area of support. As the selling pressure appears to be accelerating, Bitcoin could see more losses.
From a technical perspective, Bitcoin has broken the lower boundary of a parallel channel on its daily chart. Such market behavior anticipates a steep correctionwhich is as significant as the width of the pattern that predicts a target between $29,620 and $28,060.
Still, the January 25th low of $32,850 could serve as a support zone, so only a sustained break of this level would validate the bearish outlook.
Source: TradingViewEthereum has also seen a price drop of more than 15.5% over the past four days, losing over 500 points in market value. The second largest cryptocurrency after market capitalization is now holding above the crucial $2,500 support level. A sustained three-day close below this demand area can result in significant losses.
The formation of a symmetrical triangle on Ethereum’s three-day chart suggests that a break of the $2,500 support level could result in a 64.7% decline.
A breakthrough of the 78.6%Fibonacci-Retracement levels at $2,150 could be the first sign of confirmation on the bearish outlook. Then, Ethereum could oscillate around $1,720 before a capitulation near $900.
Source: TradingViewThe current technical conditions suggest that Bitcoin and Ethereum are destined for steep corrections. However, given the high volatility in the cryptocurrency market, the bearish thesis could be invalidated.
Bitcoin would need to reclaim $38,000 to make higher highs Ethereum would need to break the $3,270 resistance level to stage a bullish breakout.
Source: Crypto News Deutsch