Weak stock markets continue to weigh on crypto prices and technical analysis suggests that BTC is at risk of falling below its recent low of $25,500.
On May 17, US Federal Reserve Chairman Jerome Powell told the Wall Street Journal that 50 basis point rate hikes would continue until inflation is under control. Powell’s emphasis on aggressive policy suggests monetary conditions are likely to remain tight in 2022, which could limit upside potential for risk assets.
On-chain market intelligence firm Glassnode said that historically, Bitcoin (BTC) has bottomed out when the price falls below the realized price. However, except for the 2019 to 2020 bear market, during previous bear cycles, the price of Bitcoin remained below the real price between 114 and 299 days. This suggests that if macro situations are not favorable, a quick recovery is unlikely.
While the current crash in the US stock and Bitcoin markets bears shows similarities to the March 2020 crash, the recovery may not follow the same trajectory because market conditions are different. In 2020, the Fed supported the markets with unprecedented stimulus, but in 2022 the focus will remain on reducing inflation and monetary tightening.
Could Bitcoin and altcoins resume their downtrend or will lower levels attract buying? Following is an analysis of the top three cryptocurrencies to find answers.
BTC/USDT
Bitcoin’s recovery failed to break above the 38.2% Fibonacci retracement level at $31,721, which suggests that the trend remains negative and traders are selling on minor rallies.
The BTC/USDT pair could drop to the immediate support at $28,630. If the price bounces off this level, the pair could consolidate between $28,630 and $31,721 for some time.
A breakout and close above the 20-day EMA ($32,979) will be the first sign of a possible trend change. Afterward, the pair could rally to the 61.8% retracement level at $34,823.
On the other hand, if the price breaks below $28,630, the bears will try to consolidate their position by pulling the pair below $26,700. If that happens, the negative momentum could increase and the pair could slide to $25,000 and then $21,800.
ETH/USDT
The failure of Ether (ETH) to break above the overhead resistance of $2,159 may have tempted short-term traders to book profits. That pushed the price below $1,940, but the bulls are trying to defend the level.
If the price bounces hard off $1,940, the ETH/USDT pair could rally back to $2,159. The bulls will need to push and hold the price above $2,159 to clear the way for a rally to the 20-day EMA. ($2,353). A breakout and close above this resistance will suggest that the markets have rejected the lower levels.
Conversely, if the bears sustain the price below $1,940, the pair could drop to the crucial support at $1,700. This is an important level to watch out for because a break below it could result in panic selling. The pair could then drop to $1,500 and then $1,300.
BNB/USDT
The bulls have not been able to push BNB above the overhead resistance at $320. This suggests that the bears have not given up and continue to sell higher.
If the price breaks below $290, the BNB/USDT pair could drop to $265. This level is likely to act as strong support, but if the bears pull the price below it, the next stop could be the critical level of $211. The bears will have to break this level to signal the start of the next leg of the downtrend.
Alternatively, if the price bounces off $265, it will suggest that the bulls are trying to bottom out. That could keep the pair stuck between $320 and $265 for a few days. A breakout and close above $320 could suggest that the pair may have bottomed out.
By Audy Castaneda
