Bitcoin and Ethereum could be bound for another downswing before resuming their respective uptrends.
Key Takeaways
- $500 billion has been erased from the total crypto market cap since Nov. 10.
- Bitcoin and Ethereum have dropped in tandem by more than 15% since then.
- Both assets could face further losses as they look for crucial support.
Bitcoin and Ethereum reached record highs on Nov. 10, but investors appeared to have been booking profits. A recent spike in selling pressure has pushed the top two cryptocurrencies down by more than 15% since then, with a significant portion of the losses incurred in the last 24 hours.
Bitcoin Faces Further Losses
Bitcoin and Ethereum look like they’re due for another correction.
The cryptocurrency market continues to bleed as more than $500 billion has been wiped out of the total market capitalization over the last week.
The correction has significantly reduced the bullish sentiment among market participants. Bitcoin recently lost a crucial support level and may face a steeper decline. The leading crypto asset breached the middle trendline of a parallel channel at $63,000, where it has been contained since July 20.
Every time Bitcoin has experienced similar price action since then, it has looked for support around the channel’s lower boundary at $54,000.
To avoid further losses, Bitcoin will need to reclaim the $63,000 level as support and print a daily candlestick close above $65,000. In this eventuality, BTC may gather the strength it needs to tap the channel’s upper edge at $75,000.
Otherwise, the upswing to $75,000 could only come after the $54,000 support level has been tested.
Ethereum Must Hold Above $4,000
Ethereum has also tapped a key price point after the steep decline it has experienced over the last week.
The second-largest cryptocurrency by market cap recently hit a low of $4,100 and rebounded sharply above $4,300. Still, ETH looks ready to print another swing low around the $4,000 level.
Sidelined traders may take the downswing to $4,000 as an opportunity to re-enter the market. The potential pullback would represent a retest of the breakout point from a cup and handle pattern. If this support level can hold, Ethereum could rise to meet the pattern’s target at $6,300.
It is worth noting that multiple on-chain metrics suggest that the cryptocurrency market is undergoing an accumulation phase. For this reason, it is likely that Bitcoin and Ethereum could rebound from their crucial support levels.
If their crucial price points are breached, Bitcoin could drop toward $51,000 or $46,000, and Ethereum to $3,000.