The cryptocurrency market has moved further down in the last few days, and this has a lot of people talking about sub-$6,000 scenarios. Just as the hopeless optimism that this run-up created gave us confidence that this was just a relief rally, the despondent sentiment in the market leads me to believe that the bottom is closing in.
To be fair, it has been a rough few months for bagholders and traders. This correction has actually been a really healthy move, and this is perhaps the first instance of such prolonged sideways price action during a bull market. Market maturity has grown a lot, and this shows that liquidity in crypto is real.
Moving on to the market, the basic premise now is to look for levels where BTC and the rest of the market can bottom. Instead of trying to forecast where it bottoms, look for signals that it has bottomed or the bull run has re-commenced. There is no point trying to spot the bottom or top; you can never know.
What you can do is look at information and learn to read certain signals. 99% of what you need is in pure price action, so let’s dig right in.
While everyone is looking for a new bottom, there is a considerable chance that it turns around for the second leg of a relief rally to around $9,400. If BTC successfully overcomes the liquidity zone it is currently stuck in, it could stage a major rally that would additionally serve as a very effective bull trap.
On the flip side, it is possible for BTC to go below $7,500 (or even lower). This possibility definitely cannot be ruled out. However, the retail sentiment is a great counter indicator and the sudden overload of bearish takes is concerning.
As a long-term investor, the main priority is a long-term outlook. That said, we see the last higher high at the $12,000-$12,500 range (the green region in the chart). A weekly close above this would confirm for sure that the resurgence has begun. Until that is taken out, we will still maintain that maximum capitulation has not occurred.
Once again, as everyone calls for ETH to bottom, we believe if it can hold the range it is currently using as support, it can actually make a strong move up to $210-213. Breaking this region wouldn’t be all that catastrophic as there is another strong region of support below it. But if the $150-160 range breaks, ETH could go the $120s.
Our bullish outlook entirely hinges on whether ETH can maintain that region and use it as a support. If this doesn’t hold, we are almost sure we will see a new low for ETH, and that this low will be the final leg down in this corrective phase.
According to the Fibonacci retracement, XRP has successfully hit its 23.6% level before bouncing off it and pushing past it again. The coincidence between the bottom of a strong liquidity zone and the 23.6 shouldn’t be underplayed. Taking out this region will be met by almost immediate resistance at the $.30-.32 levels.
The lower high – which wicked out around $.33 – will serve as a strong level for me. I do not believe XRP will surpass this in the near future. Capitulation looks like its coming, and the exuberant sell volume from just a few weeks ago makes that slightly clearer.
XRP escrow dumps interfere with natural market activity, so the dynamics of the coin are really skewed. Overall, this is the hardest crypto to forecast.