Cryptocurrency and stock markets sold off in the US on September 20 due to concerns that the collapse of Chinese real estate giant Evergrande could not only hurt China but also have bigger consequences for other markets.
When the mood is bearish, traders release trades that they see as risky in favor of safe trades. This may be one of the reasons for the sharp drop in Bitcoin (BTC) and most major currencies ever on September 20th.
Daily market indices for cryptocurrency. Source: Coin360
Bybt data shows that the number of bitcoins stored in Binance wallets has grown by 29,717 bitcoins in the last 30 days. History shows that the increase in the Bitcoin balance on Binance led to a decrease in the price of Bitcoin.
The Bitcoin balance on Binance increased from 99,700 BTC on April 20 to 347,590 BTC on June 26. During this period, the bitcoin price fell from $57,000 to about $30,000.
The question now is, can sales get deeper or will lower levels attract strong purchases from traders? Let’s analyze the charts of the top 10 cryptocurrencies to find out.
BTC / USDT
Bitcoin sales surged after bears pushed the price below the moving average. The price effect in recent days has formed a head and shoulder pattern that is completed on the breakout and closing below the neck.
BTC/USDT daily chart. Source: TradingView
The moving averages are on the verge of a bearish cross, and the Relative Strength Index (RSI) has dropped below 41, indicating that the bears are under control. If the price stays below the neck, BTC/USDT could drop to $37332.70 and then to a target of $32423.05.
Contrary to this assumption, if the price bounces off the neck, the bulls will once again attempt to push the price towards $50,000. However, the bears are likely to vigorously defend the 20-day exponential moving average (EMA) ($47,014).
If the price deviates from this resistance, it will indicate that the mood is turning negative and traders are selling conventions. The first sign of strength will be a breakout and a close above $48843.20.
ETH / USDT
Ether (ETH) rejected support at $3,377.89 on September 18, but the bulls failed to sustain the price above the 20-day moving average ($3,402). This indicates that traders have closed positions at higher levels.
ETH/USDT daily chart. Source: TradingView
If the price drops below $3000, ETH/USDT will complete a bearish head and shoulders pattern. The target for this setup is $1,972.12.
The 20-day EMA started declining and the RSI was below 42, indicating that the path of least resistance is declining.
Conversely, if the bulls vigorously defend the $3000 level, the pair could rise again against the overhead resistance at $3,377.89. Bears are likely to defend this level, but if the bulls overcome this resistance, it will be a sign that the correction may be over.
ADA / USDT
On September 18, the bulls defended the 50-day Single Moving Average (SMA) ($2.31), but failed to develop a rebound. Strong sales pushed Cardano (ADA) through the 50-day simple moving average on September 19.
ADA/USDT daily chart. Source: TradingView
Sales intensified on September 20, and the ADA/USDT pair fell to a critical support level at $1.94. A strong setback from this level indicates that the bulls are gathering in deflationary periods.
If the buyers continue to bounce, the pair may gradually rally against the upper resistance at $2.47. Bears are likely to sell against the 20-day moving average ($2.45). If the price moves away from this resistance, the pair may decline to $1.94.
The breakout and close on the 20-day moving average will be the first sign that the sellers may lose control.
BNB / USDT
On September 17, Binance coin (BNB) broke out of the 50-day simple moving average ($422) and subsequent attempts by the bulls to reclaim this level failed. This indicates that the bears are selling every slight rally.
BNB/USDT daily chart. Source: TradingView
Sales gained steam on September 20 and BNB/USDT dropped near the critical support at $340. This is an important level to protect the bulls as a break below it could open the door to a drop to $300 and then $250.
The moving averages have completed a bearish cross, and the RSI is in negative territory, indicating the advantage of the bears.
If the price jumps from $340, the pair may rise to the 20-day moving average. This level is likely to act as a strong resistance. The bulls should push and hold the price above $422.80 to signal that the correction may be over.