Altcoins fell back to key lower support levels after Bitcoin price fell below $ 56,000, but will traders see the drop as a buying opportunity?
According to CoinShares, institutional inflow in crypto products reached $ 4.5 billion in the first quarter, which is 11% higher than the inflow seen in the fourth quarter of 2020. This shows that institutional interest is on the rise, but the quarter-to-quarter growth was 240% recorded in the fourth quarter of 2020.
As the price of Bitcoin rises, more funds are needed to maintain the levels. Therefore, if institutional inflows do not recover in the coming days, Bitcoin (BTC) and other altcoins could experience a major correction.
Daily performance of the cryptocurrency market. Source: Coin360
The upcoming correction could test the resolve of institutional investors and while these investors have deep pockets, some may have jumped into cryptocurrencies just for quick speculative gains. There is always the possibility that investors could dump their positions if Bitcoin initiates a correction.
While this may accelerate the decline, lower levels are likely to attract investors who may have missed the bus earlier. If this assumption is true, volatility across the market may remain high for the next several days.
Let’s analyze the charts of the top 10 cryptocurrencies to see if it also projects a possible correction.
BTC / USDT
The failure of Bitcoin to cross the stiff overhead resistance zone at $ 60,000 to $ 61,825.84 appears to have attracted short-term momentum traders’ profit booking. This has brought the price down below the 20-day exponential moving average ($ 56,863) today.
BTC / USDT daily chart. Source: TradingView
If the price sustains below the 20-day EMA, the bears may feel an open and are likely to challenge the critical support at the 50-day simple moving average ($ 54,333). If this support breaks and the bears manage to hold the price below the 50-day SMA, the selling could intensify.
The next support on the downside is $ 50,460. If this level also gives way, the BTC / USDT pair could drop to $ 43,006.77. The flattening moving averages and the relative strength index (RSI) dipping below 52 suggest that the bulls may be losing control.
Contrary to this assumption, if the price bounces off the 50-day SMA, the bulls will make one more attempt to push the pair to a new all-time high. If they are successful, the pair could start its journey towards the next target at $ 69,540 and then $ 79,566.
ETH / USDT
Ether (ETH) hit a new all-time high on April 2, but was unable to take off and continue its ascent. This showed hesitation among the bulls and while they managed to push the price to a new all-time high of $ 2,150 on April 6, the rally has since stalled.
ETH / USDT daily chart. Source: TradingView
That may have frustrated momentum traders who appear to have abandoned their positions today, resulting in a drop to the 20-day EMA ($ 1,904). If the ETH / USDT pair bounces strongly from the 20-day EMA, it will indicate demand at lower levels.
Then the bulls will make one more attempt to push the price above $ 2,150. If successful, the pair could begin its journey towards the next target at $ 2,618.14.
This positive view will be invalidated if the bears sink and hold the price below the 20-day EMA. Such a move will suggest a possible change in sentiment and that could drag the price to the trend line.
BNB / USDT
Binance Coin (BNB) is in a strong uptrend. The bears tried to push the price below the breakout level at $ 348.69 today, but the long tail on the candle shows that the bulls bought this decline aggressively.
BNB / USDT daily chart. Source: TradingView
The rising moving averages and the RSI near the overbought zone suggest that the bulls are firmly in command. If buyers can invest $ 348.69 in support, then the BNB / USDT pair could start the next leg of the uptrend that could take it to $ 500 and then $ 530.
On the other hand, if the price falls below $ 348.69, it will suggest that the higher levels are attracting the profit reserve of traders. The bullish momentum may weaken if the bears sink the price below the 20-day EMA ($ 314).
XRP / USDT
The XRP breakout above $ 0.65 on April 5 completed a reverse head and shoulders pattern, which was targeted at $ 1.11. The altcoin hit this target on April 6 when it hit an intraday high of $ 1.11.
XRP / USDT daily chart. Source: TradingView
Traders following technical analysis appear to have booked profits close to the target target, causing a sharp pullback today.
The bulls are attempting to stop the correction near the 50% Fib retracement level at $ 0.84, as seen from the long tail of the candle. If buyers can sustain the rebound, it will suggest build-up to lower levels and keep the prospects for a break above $ 1.11 alive.
On the other hand, if the XRP / USDT pair breaks below $ 0.84, the correction could deepen to the 61.8% Fib retracement level at $ 0.77. Such a deep correction can delay the start of the next leg of the uptrend.
ADA / USDT
Cardano (ADA) attempted a bullish move on April 6, but the long wick in the day’s candle suggests a lack of demand at higher levels. The bears have latched onto the opportunity today and are attempting to lower the price to $ 1.03.
ADA / USDT daily chart. Source: TradingView
The bulls are likely to aggressively defend the $ 1.03 support. If the price bounces off this level strongly, the bulls will try to push the price above the moving averages. If they can do that, the ADA / USDT pair could stay in range for a few more days.
The 10-day flat EMA ($ 1.18) and the RSI near the midpoint suggest a balance between supply and demand.
This neutral view will be invalidated if the support at $ 1.03 breaks. In such a case, the pair could start its journey towards the support at $ 0.80 and then $ 0.70.
DOT / USDT
The failure of the bulls to push the price above the all-time high at $ 146.80 on April 5-6 could have attracted short-term traders profit booking. That may have pushed Polkadot (DOT) back below the breakout level at $ 42.28 today.
DOT / USDT daily chart. Source: TradingView
The bulls are currently trying to defend the 20-day EMA ($ 38). If they can achieve a strong bounce from this support, it will suggest build-up at lower levels. Buyers can make one more attempt to break the all-time high. If they are successful, the DOT / USDT pair could rise to $ 53.50.
Conversely, a weak bounce will suggest weakness and a lack of urgency among traders to buy aggressively. That will open up the possibilities for the bears to lower the price below the moving averages. If that happens, the pair could fall to $ 26.50.
UNI / USDT
Uniswap (UNI) tried to rise above the $ 32.50 resistance but failed. This shows a lack of buyers at the higher levels. The bears are now attempting to sink the pair below the $ 27.97 to $ 25.50 support zone.
UNI / USDT daily chart. Source: TradingView
If they are successful, the UNI / USDT pair could start its journey towards the next support at $ 22 and then $ 18.
However, the 20-day flat EMA ($ 29.59) and the RSI near the midpoint suggest a balance between supply and demand. If the bulls can defend the support zone, the pair is likely to extend its action within the range for a few more days.
LTC / USDT
Litecoin (LTC) broke above the resistance line of the symmetrical triangle on April 5 and followed it with another upward move on April 6 that brought the price to stiff resistance at $ 246.96.
LTC / USDT daily chart. Source: TradingView
The failure of the bulls to clear the $ 246.96 hurdle may have attracted profit booking from short-term traders and selling from aggressive bears. That brought the price down to the triangle breakout level today.
If the LTC / USDT pair rebounds aggressively off this level, it will suggest that the bulls are building on dips. Buyers will make one more attempt to scale the wall at $ 246.96. If they manage to do that, the pair could start their journey at $ 307.42.
On the contrary, if the bears sink the price below the moving averages, the pair could fall to the support line of the triangle.
LINK / USDT
Chainlink (LINK) broke the $ 32 resistance on April 5 and followed it with another upward move on April 6, but the bulls were unable to challenge the all-time high of $ 36.93. This suggests that the bears have not given up and are active at higher levels.
LINK / USDT daily chart. Source: TradingView
The LINK / USDT pair has fallen back below the $ 32 level today. The bulls are attempting to defend the 20-day EMA ($ 29.85). If they manage to do that and cause the price to climb back above $ 32 in the next few days, it will suggest a build up at lower levels.
The bulls may once again try to push the price above $ 36.93. Conversely, if the bears sink the price below the moving averages, it will suggest that the recent break above $ 32 was a bull trap. The pair could then drop to $ 24.
THETA / USDT
After trading in a tight range for the past few days, THETA rallied today and attempted to break the overhead resistance of $ 14 to $ 14.96. However, the bears thwarted this attempt as seen from the long wick on today’s chandelier.
THETA / USDT daily chart. Source: TradingView
If they are successful, the THETA / USDT pair could start the next stage of the uptrend which has a target target at $ 17.65 and then $ 22.50. The 20-day EMA ($ 11.13) has started to appear once again and the RSI has risen above 68, suggesting that the momentum favors the bulls.
However, bears are unlikely to give up easily. They will try to stop the uptrend in the upper resistance zone. If they manage to do so, the pair could extend their stay within the range for a few more days.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade movement involves risk. You should do your own research when making a decision.
Market data is provided by the HitBTC exchange.