The central theses
- The total capitalization of the cryptocurrency market suffered a slump after Bitcoin fell yesterday.
- The sudden sell-off was felt in almost every cryptocurrency on the market.
- Bitcoin and Ethereum continue to hold above support and offer an ambiguous outlook.
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Bitcoin and Ethereum, along with most of the altcoins in the market, have suffered significant losses in the past 24 hours. However, both assets are holding above a critical support barrier that could save them from falling further.
The crypto markets are bleeding
The two leading cryptocurrencies are sitting on the support despite the recent slump.
More than $ 300 billion has been made extinguished of the total cryptocurrency market capitalization over the past 24 hours. The sudden crash generated nearly $ 3.5 billion in liquidations worth both long and short positions across the board.
Almost every digital asset in the blockchain space has suffered from the sell-off. Even the USDT and USDC stablecoins fell roughly 0.54% briefly, which drove investors into the fear.
Few altcoins have traded green today, including Algorand, Near Protocol, and IOST.
Bitcoin shakes out weak hands
The leading cryptocurrency was one of the many digital assets that couldn’t hold up. Bitcoin lost over 10,000 points in a matter of hours, rising from a high of $ 52,900 to a low of $ 42,600.
Although prices have bounced back above $ 46,000, the outlook remains uncertain.
Bitcoin’s daily chart shows that it is sitting on a support cluster that ranges from $ 45,800 to $ 42,500. The 200- and 50-day moving averages and the Fibonacci retracement levels of 50% and 61.8% are within this price range. This significant support barrier could prevent prices from falling further given the magnitude of the recent downturn.
As long as the demand wall holds at $ 45,800 to $ 42,500, Bitcoin can trade sideways until its next big price move. A candle close above the $ 51,000 resistance level could signal the resumption of the uptrend, while a sustained decline below $ 42,500 could result in a correction towards $ 36,500.
Ethereum held by key support
Similar to Bitcoin, Ethereum experienced a 23.3% nosedive, capped by the 50-day moving average of $ 3,000.
The downward momentum was anticipated by the Tom DeMark (TD) Sequential Indicator, which was a sell-signal on the daily chart. The bearish pattern indicates one to four daily candlestick retracement before the uptrend resumes.
The ETH can have even more space based on the TD setup. Still, between $ 3,000 and $ 2,700, the wall of demand may have the strength to keep prices from falling further. Bears would be looking for a crucial daily candlestick close below this support level, aiming for $ 2,300 or even $ 1,700.
On the flip side, Ethereum would need to regain $ 3,750 in support to signal the continuation of the uptrend. At this level, the second largest cryptocurrency by market cap could potentially attract more buyers for the final boost to its mid-May all-time high of $ 4,380 or a new milestone of $ 5,000.
Given the uncertainty the recent sell-off has created, investors will have to wait for a sustained close above the resistance to avoid further risk. With both Bitcoin and Ethereum on the cusp of mainstream adoption, investors can benefit from having capital available in the event of an outbreak or slump.
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