BTC and many altcoins are rapidly approaching the “capitulation phase”, which is typically followed by the market finding a price bottom.
Global equity markets extended their decline on May 9, with the S&P 500 falling to a new 52-week low. Bitcoin (BTC) fell to a new year-to-date low with most major altcoins extending their decline as they tracked weakness in stock markets.
Data from blockchain analytics firm Glassnode shows that Bitcoin inflows to centralized exchanges have surged to over 1.7 million coins, the highest level since February. ANDThis suggests that the whales may be dumping their holdings as they anticipate a prolonged downtrend.
Several analysts expect the crypto markets to enter a capitulation phase that usually marks a price bottom or floor. Analyst Dylan LeClair highlighted that previous market bottoms during bear markets occurred when Bitcoin fell to its true price (on-chain average cost basis). The metric is currently at $24,300.
Could bitcoin and altcoins enter a capitulation phase or is it time for crypto markets to surprise many with a strong rally? Let’s study the charts of the top 10 cryptocurrencies to find out.
BTC/USDT
Bitcoin broke below the ascending channel on May 5 and has continued lower, indicating that the bears are in no mood to give up their advantage. The price has broken below the critical support at $32.917, but the bears may face a strong challenge from the bulls at lower levels.
If the price rebounds from the current level, the relief rally could reach the 20-day EMA ($37.670). This is an important level to watch out for, as if the price turns down from the 20-day EMA, it will suggest that the sentiment remains negative and traders are selling on the rallies.
Then the bears will make another attempt to push the BTC/USDT pair to the critical support of $28.805. This level is likely to again attract buying from the bulls.
To the upside, the breakout and close above the 20 day EMA will be the first indication that the selling pressure may be easing. That could pave the way for a possible rally towards the 50-day simple moving average (SMA) ($41.279).
ETH/USDT
Ether (ETH) broke below the uptrend line on May 7. This move invalidated the developing ascending triangle pattern. A breakout of a bullish pattern is usually a bearish signal as it stops several bulls who may have bought in anticipation of a pattern breakout.
The strong selling has pushed the price below the immediate support at $2,445. This opens the door for a possible drop to the critical support zone between $2,300 and $2,159. The bulls are likely to defend this area with all their might because a break below could sink the ETH/USDT pair to $1,700.
If the price bounces out of the support zone, the bulls will try to push the pair above the 20-day EMA ($2,790). If they are successful, it will suggest that the bears may be losing control. The pair could then rally to the 50-day SMA ($3,043).
BNB/USDT
BNB has witnessed sustained selling over the past few days. The bears pushed the price below the strong support at $350 and are now challenging the critical $320 level.
A breakout and close below $320 would be very negative, as this level has not been broken since August 2021. There is minor support at $300, but if this level fails to stop the decline, the BNB/USDT pair could plummet to $250.
Alternatively, if the price bounces off $320, the bulls will try to push the pair above $350 and challenge the 20-day EMA ($383). Buyers will have to get over this hurdle to signal that the decline may be over. The pair could then rally to the 50-day SMA ($409).
XRP/USDT
Ripple (XRP) turned down from the 20-day EMA ($0.63) on May 5 and dipped below $0.62. The buyers tried to push the price above $0.62 on May 6, but the bears held their ground.
The XRP/USDT pair continued its decline and broke below the support at $0.55. This clears the way for a retest of the psychological support at $0.50. Buyers are expected to defend this level vigorously because a break and close below it could start a downtrend that could sink the pair to $0.42.
Conversely, if the price bounces off the $0.50 support, the bulls will once again try to push and sustain the pair above the 20-day EMA. If they are successful, it will suggest that selling pressure may be easing.
SOL/USDT
The failure of the bulls to push Solana (SOL) above the 20-day EMA on May 5 may have attracted strong selling by the bears. The price continued its downward movement and has slipped below the strong support at $75.
If the price sustains below $75, it will suggest the start of the next leg of the downtrend. The SOL/USDT pair could first drop to $66 and then to $58. If the price bounces off this zone, the buyers will try to push and hold the pair above $75. If they manage to do that, it will suggest that the downtrend could be finishing
Conversely, if the rally stops at $75, it will suggest that the bears have turned the level into resistance. If that happens, the bears will try to resume the decline.
ADA/USDT
Cardano (ADA) broke above the 20-day EMA ($0.81) on May 4, but the bulls were unable to sustain the higher levels. The price turned down on May 5 and broke below the strong support of $0.74 on May 8.
This suggests the resumption of the downtrend. The ADA/USDT pair could now drop to $0.64, which could act as support. If the price bounces off this level, the bulls will once again try to push the pair above the 20-day EMA. If they are successful, it will suggest that the break below $0.74 may have been a bear trap.
Conversely, if the relief breakout stops at $0.74 or the 20-day EMA, it will suggest that the bears are active higher. Sellers will then try to sink the pair to the psychological support at $0.50.
MOON/USDT
Terra’s LUNA token turned down the downtrend line on May 5 and dipped below the strong support of $75 on May 7. This completed the bearish head and shoulders pattern, suggesting the start of a new downtrend.
The long tail on the 7th and 8th May candles suggests that the bulls bought at lower levels, but the failure to initiate a rally shows that the bears are in no mood to let go of their advantage.. The pattern target of this top formation is $50. This level is likely to attract heavy buying by the bulls.
If the price bounces off $50, the bulls will try to push the LUNA/USDT pair towards the breakout level at $75. If the price turns below this level, the pair can form a range between $50 and $75.
DOGE/USDT
Dogecoin (DOGE) turned down from the 20-day EMA ($0.13) on May 7, which indicates that the bears are continuing to sell on the rallies. The selling gathered momentum on May 9, and the bears have pushed the price below the strong support at $0.12.
The downsloping 20-day EMA and the RSI in the negative territory indicate an advantage for the sellers. If the bears sustain the price below $0.12, the DOGE/USDT pair could slide to the psychological support at $0.10.
If the price bounces off $0.10, the buyers will try to push the pair above $0.12 and challenge the 20-day EMA. A breakout and close above the 20-day EMA could be the first indication that the pair may remain stuck between $0.10 and $0.17 for some time.
Contrary to this assumption, if the bears sink the pair below $0.10, the selling could intensify and the drop could extend to $0.06.
AVAX/USDT
Avalanche (AVAX) turned down from the 20-day EMA ($63) on May 5 and broke below the critical support at $51.. If the bears sustain the price below $51, it will indicate a resumption of the downtrend.
There is minor support at $47 and then $43. If the price breaks up from either support, the buyers will try to push the AVAX/USDT pair above $51. If successful, the pair could rally to the EMA. of 20 days, which is an important level to take into account.
If the bulls push the price above the 20-day EMA, it will suggest that the bears might be losing control. Afterwards, the pair could attempt a rally to the 50-day SMA ($77).
Alternatively, if the rally fails at the 20-day EMA, it will suggest that sentiment remains negative and traders are selling on rallies. The bears will again try to resume the downtrend.
DOT/USDT
The $14-$16 Polkadot (DOT) narrow range trade resolved lower on May 7, indicating that the bears have overpowered the buyers.
The DOT/USDT pair could now drop to the crucial $10 support, where the bulls are expected to mount a strong defense. Although the 20-day EMA to the downside ($15.54) indicates an advantage for the bears, the RSI in the oversold territory suggests that a recovery may be just around the corner.
If the price bounces off $10, the bulls will try to push the pair above the 20-day EMA. If they manage to do so, it will be the first sign that selling pressure may be easing.
Alternatively, if the price turns down from the 20 day EMA it will suggest that the bears continue to sell on the rallies. The bears will once again try to sink the pair below the strong support at $10. If they do that, the pair could slide to $7.16.
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Market data is provided by the HitBTC exchange.