Bitcoin and altcoins plummeted on August 19, prompting tech traders to forecast a possible fall to new yearly lows.
Bitcoin (BTC) and most of the major altcoins experienced a sharp sell-off on August 19, but there appears to be no specific reason for the sudden drop. The sharp drop has resulted in over $551 million worth of liquidations in the past 24 hours, according to Coinglass.
Apart from the V-bottom, other formations usually take time to complete as buyers and sellers try to gain the upper hand. This tends to result in a lot of random volatile moves which can be an opportunity for short term traders, but long term investors should avoid getting caught up in the noise.
Daily dynamics of the cryptocurrency market. Source: Coin360
Glassnode data shows that investors who bought bitcoin in or before 2017 only do so by holding their positions. The percentage of Bitcoin supply that has been dormant for at least five years hit a new all-time high of 24.351% on August 18, suggesting that holders are not ready to panic or sell for little gain.
Will Bitcoin and most altcoins be able to challenge their June lows, or will the bulls buy the current dip? Let’s examine the charts of the top 10 cryptocurrencies to find out.
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The main trend of Bitcoin is down, but the bulls are trying to bottom. The price has been growing within the ascending channel for the last few days. The inability of the bulls to push the price above the channel resistance line may have prompted short-term traders to take profits. This dragged the price below the moving averages.
BTC/USDT daily chart. Source: Trading View
The BTC/USDT pair drops to the channel support line and when the price is trading inside the rising channel, traders usually try to buy dips to the support line and sell near the resistance line.
Therefore, there is a high probability of a rebound from the support line. When this happens, buyers will try to push the pair above the moving averages. A break and close above the 20-day exponential moving average (EMA) ($23,265) could open the doors for a potential rally towards the resistance line.
This bullish view could be invalidated if the price breaks below the channel and holds. Such a move could open the doors to a potential drop to $18,626.
Ether (ETH) fell below the 20-day EMA ($1,771) on August 19, the first sign that the recovery may be losing momentum. The key downside level to keep an eye on is $1,700 as it acted as strong support during the Aug 6-10 period.
Daily ETH/USDT chart. Source: Trading View
If the price recovers with strength from $1,700, this would indicate that the bulls are trying to turn this level into support. The ETH/USDT pair could then rise to $1960 and then to $2030. A break above this level could signal a resumption of the uptrend. Then the pair may rise to the downtrend line.
Contrary to this assumption, it is assumed that if the price breaks and remains below $1,700, traders who may have been buying at lower levels will aggressively exit their positions. This could push the pair towards the 50-day Simple Moving Average (SMA) ($1,519).
BNB fell below the 20-day EMA ($304) on August 17, suggesting that short-term traders may take profits. The fall continued, and on August 19, the price dropped to the 50-day SMA ($272). This is an important level that bulls must defend if they want to keep the recovery going.
BNB/USDT daily chart. Source: Trading View
If the price reverses from current levels and rises above the 20-day EMA, BNB/USDT could rise towards upper resistance at $338. It could form an inverted head and shoulders pattern, ending with a breakout to close above $338.
Conversely, if the price drops below the 50-day SMA, the pair could drop to $240. This move suggests that the pair could be stuck in a wide range between $183 and $338 for a while.
The bulls did it on