Bitcoin and most altcoins could remain volatile in the short term due to the Fed’s decision, warranting traders’ caution.
Investors around the world await the outcome of the Federal Open Market Committee meeting on May 4. Although markets expect a 50 basis point rate hike and an announcement from the Fed to start reducing its balance sheet from June, it is difficult to predict how markets will react to this stimulus.
Billionaire investor Paul Tudor Jones, in an interview with CNBC, said the US was entering “uncharted territory” as rates rose as the Financial Conditions Index tightened. Tudor Jones warned investors that “it’s going to be a very, very negative situation” for both stocks and bonds. He added that the current environment for financial assets is the worst.
Due to the uncertainty, some investors seem to be reducing their exposure to cryptocurrencies. That led to weekly outflows of $132.7 million from Bitcoin (BTC) funds last week, the largest since June of last year, according to a CoinShares report.
Could Bitcoin and altcoins enter a period of capitulation or will investors buy after the Fed event is over? Let’s study the charts of the top 10 cryptocurrencies to identify the critical levels to watch both on the upside and downside.
BTC/USDT
The bulls have successfully defended the support line of the ascending channel for the past four days, which is a positive sign. If the buyers push the price above the 20-day EMA ($39.553), it will suggest that the bears may be losing control.
The BTC/USDT pair could rally to the 50-day simple moving average (SMA) ($41.922). This level can again act as resistance, but if the bulls break through this barrier, the pair could rally towards the 200-day SMA ($46.924).
Contrary to this assumption, if the price turns down from the 20-day EMA or the 50-day SMA, it will suggest that the bears continue to sell on the rallies. Afterwards, the pair could retest the support line of the channel.
A breakout and close below the channel could open the doors for a further drop to $34,300 and then $32,917.
ETH/USDT
Ether (ETH) attempted to break above the 20-day EMA ($2,920) on May 2 but failed. A minor positive is that the bulls did not give up much ground and are again trying to get over the upper hurdle.
If the buyers push the price above the 20-day EMA, the ETH/USDT pair could rally to the 50-day SMA ($3,069). The bulls will have to push and hold the price above this level to signal a change in the short-term trend. The pair could then rally to the 200-day SMA ($3,441). A breakout and close above this level could signal the start of a new uptrend.
On the other hand, If the price turns down from the 20-day EMA, it will suggest that the bears are unwilling to give up their advantage. That could improve the prospects for a break below the uptrend line. If that happens, the pair could plummet to $2,450.
BNB/USDT
BNB has been trading below the $391 support for the past four days, but the bears were unable to take advantage of this advantage and sink the price to $350. This indicates a lack of sellers at lower levels.
The bulls are attempting to push the price above the $391 resistance. If they do so, the BNB/USDT pair could rally to the 50-day SMA ($412). A breakout and close above this resistance could signal an upside for buyers. The pair could then rally to the 200-day SMA ($468).
This positive view could be invalidated in the short term if the price breaks down from the overhead resistance and drops below $375. That will signal renewed selling and may send the pair down to $350.
SOL/USDT
Solana (SOL) is finding buying support near $82 but the bulls have not been successful in pushing the price above the 20-day EMA ($96). This suggests that demand runs out at higher levels.
If the price fails to break above the 20-day EMA, the bears will try to sink the SOL/USDT pair below the strong support at $75. This is an important level to watch because if the support breaks, the pair could resume the downtrend. The next support on the downside is $66.
Contrary to this assumption, if the bulls push the price above the 20-day EMA, it will suggest that the selling pressure may be easing. The pair could then rally to $111 and then extend its stay within the wide range between $75 and $143.
XRP/USDT
Ripple (XRP) has been stuck inside a wide range between $0.55 and $0.91 for the past few days. The price rebounded from $0.56 on Apr 30, and the bulls are attempting to break out of the $0.62 hurdle.
If the price sustains above $0.62, the rally could reach the 20-day EMA ($0.67). This level can once again act as a strong resistance. If the price turns down from the 20-day EMA, the bears will try to sink the XRP/USDT pair to the critical support at $0.55. A break and close below this support could take the pair to the psychological level of $0.50.
Contrary to this assumption, If the bulls push the price above the 20-day EMA, the pair could rally to the 50-day SMA ($0.75). Such a move will suggest that the pair may spend more time inside the wide range.
MOON/USDT
Terra’s LUNA token rallied to the 20-day EMA ($87) on Wednesday, but the long wick on the daily candle suggests that the bears continue to sell on the rallies.
The sellers will now try to push the price into the strong support zone between $75 and the 200-day SMA ($71). If this zone gives way, the LUNA/USDT pair will complete a bearish head and shoulders pattern, signaling a possible trend reversal. The pair could then start its downward journey towards $50.
Alternatively, if the bulls push and hold the price above the downtrend line, it will suggest that the short-term corrective phase may be over. The pair could rally to the psychological resistance at $100. A breakout and close above this level could clear the way for a potential retest of the all-time high of $119.
ADA/USDT
Although Cardano (ADA) was trading near the critical level of $0.74 for the past few days, the bears were unable to break the support. This suggests that the bulls defended the support aggressively.
The ADA/USDT pair could now rally to the 20-day EMA ($0.86), where the bears can once again mount a strong resistance. If the price turns down from the 20-day EMA, the sellers will once again try to push the pair below $0.74. If they manage to do that, the pair could start the next leg of the move down to $0.68.
Conversely, if the bulls push the price above the 20-day EMA, the pair could try to rally to the overhead resistance of $1. A breakout and close above this level could suggest that the bulls are back on track. the game.
DOGE/USDT
Dogecoin (DOGE) has been trading below the moving averages for the past few days, but the bears have not been able to challenge the support at $0.12. This suggests a lack of sellers at lower levels.
The bulls will now try to push the price above the 20-day EMA ($0.13). If they manage to do that, the DOGE/USDT pair could rally to $0.15 and then attempt a rally to the stiff overhead resistance at $0.17. This is an important level for bears to defend because a breakout and close above it could signal the start of a new uptrend.
Conversely, if the price turns down from the 20-day EMA, the bears will see their chances and try to sink the pair below $0.12. If that happens, the pair could slide towards the psychological support at $0.10.
AVAX/USDT
Avalanche (AVAX) is trading in a wide range between $51 and $99. The bulls bought the dip to $55 on Apr. 30 but have been unable to push the price above the breakout level of $65.
If the price turns below $65, it will suggest that the sentiment remains negative and the bears are selling on the rallies. The bears will then make one more attempt to pull the AVAX/USDT pair below the strong support at $51. If successful, the pair could start the next leg of the downtrend, which could result in a drop to $32. .
This negative view could be invalidated in the short term if the bulls push and sustain the price above the 20-day EMA ($68). The pair could then rally to the 50-day SMA ($80).
DOT/USDT
Polkadot (DOT) is range bound in a downtrend. The bulls are defending the support at $14 while the bears are selling on rallies to $16. This narrow range trading is unlikely to continue for long.
If the buyers push the price above $16, the DOT/USDT pair will try to break above the 20-day EMA ($16.86). If this happens, the bears would be losing control. The pair could rally to the overhead resistance of $19, where the bears could once again try to stall the recovery.
On the other hand, if the price turns down from the overhead resistance, the pair could spend more time inside the range. The bears will have to sink and sustain the price below the support at $14 to signal a resumption of the downtrend.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. All investment and commercial movement involves risk. You should do your own research when making a decision.
Market data is provided by the HitBTC exchange.