Turmoil in China, concerns about the global economy, and BlockFi’s bankruptcy filing are weighing on crypto markets this week.
China has witnessed a rise in Covid cases, which has led to strict lockdown restrictions in various parts of the country. This triggered widespread protests in China and may have dragged global stock markets lower.
In addition to the turmoil in China, Already bearish cryptocurrency markets are reeling under pressure from the Chapter 11 bankruptcy filing by BlockFi and its affiliates. Bitcoin (BTC) is down 21% in November, on track for its worst November performance since 2018.
The sharp drop in the price of Bitcoin has drastically reduced the number of wallets holding more than a million dollars worth of Bitcoin. On November 8, 2021 there were 112,898 millionaire wallets, but Glassnode data shows that as of November 25, only 23,245 wallets hold a Bitcoin balance of $1 million or more.
Could S&P 500 (SPX) Index Weakness Take Bitcoin Below $16,000? Let’s study the graphs to find out.
SPX
The S&P 500 index rally has approached the downtrend line. The bears are likely to defend this level as they have done on two previous occasions.
The sellers will have to sink the price below the 20-day exponential moving average (3.922) to tilt the short-term advantage in their favor.. Afterwards, the index could fall to the 50-day SMA (3,794) and later to 3,700.
On the contrary, If the price turns down from the current level or above resistance, but bounces off the 20 day EMA, it will suggest that traders continue to buy on dips.. That could improve the prospects for a break above the downtrend line. If this happens, the index could go as high as 4,300. This move will suggest that the downtrend is over.
DXY
The US Dollar Index (DXY) dipped from 108 on November 21, indicating that sentiment has turned bearish and traders may be taking advantage of rallies to lighten long positions and set up short positions.
The falling 20-day EMA (108) and the RSI in negative territory indicate that the bears are in control. If the bears manage to push the price below 105, the selling could intensify and the index could drop as low as 103.50 and then 102.
On the other hand, if the bounce from $105 holds, the rally could reach towards the 20-day EMA. If the bounce is rejected again at this level, the probability of a break below 105 increases.
To the upside, buyers will have to break through the 108 resistance for a strong rally to take place. The index could then rally to the uptrend line, where it could face stiff resistance from bears.
BTC/USDT
Bitcoin’s relief rally failed to even reach the 20-day EMA ($16,972), indicating that traders are hesitant to buy at higher levels.. The sellers will now try to push the price to the crucial support of $15.476.
The BTC/USDT pair is forming a descending triangle pattern, which will complete if it breaks out and closes below $15.476. This negative setup has a target at $13,330.
The falling moving averages indicate an advantage for the bears, but the bullish divergence on the RSI suggests that the bearish momentum may be weakening.
If the price rises and breaks above the downtrend line, it could invalidate the negative setup. This would open the doors for a possible rally towards the overhead resistance of $17.622. Buyers will have to kick the price above this level to signal that the downtrend might be ending.
ETH/USDT
Ether (ETH) reached the 20-day EMA ($1,233) on Nov. 26, but the bulls were unable to push the price above it. This suggests that the bears continue to defend the 20 day EMA strongly.
The sellers may try to push the price to the support line of the descending channel pattern, which is near the psychological critical level of $1,000.
The buyers are likely to defend this level with all their might, but they will have to clear the upper hurdle at the 20 day EMA to start a sustained rally. The ETH/USDT pair could then rally to the 50-day SMA ($1,337) and the resistance line thereafter.
On the downside, a breakout and close below the channel could accelerate the selling and sink the pair to the June low of $881.
BNB/USDT
The BNB (BNB) rally turned down from $318 on Nov. 26 and fell back below the breakout level of $300 on Nov. 28.
The bears will try to consolidate their position by pulling the price below the moving averages. If they get it, they will suggest that the break above $300 may have been a bull trap. The BNB/USDT pair could drop as low as $275 and then as low as $258.
If the price turns away from the moving averages, it will suggest that the lower levels are attracting buyers. Next, the pair could rally back to $318. If the bulls push the price above this resistance, the pair could rally to $338.
XRP/USDT
XRP (XRP) rallied above the overhead resistance of $0.41 on Nov. 25, but the bulls were unable to hold the higher levels, as seen on the long wick of the day’s candle.
This may have attracted selling from the bears who pulled the price below the 20-day EMA ($0.39) on Nov. 28. The price has fallen to the breakout level of the symmetrical triangle.
This is an important level to watch because a break below will suggest that the XRP/USDT pair can extend its stay within the $0.30 to $0.41 range for a few more days.. The flattening of the 20 day EMA and the RSI near 45 suggest that the bullish momentum has weakened in the short term.
Buyers will have to push and hold the price above $0.41 to signal the start of a new move higher.
ADA/USDT
Cardano’s relief rally ((ADA) failed to even reach the 20-day EMA ($0.33), indicating a lack of demand at higher levels.
The bears will try to push their advantage and resume the downtrend by taking the ADA/USDT pair below the support near $0.30. If they do, the pair could drop to the support line where buyers could step in and stop the decline.
This bearish view could be invalidated in the near term if the price bounces off the support near $0.30 and breaks above the 20-day EMA. The pair could then attempt a rally towards the downtrend line, indicating that the bears may be losing their grip.
DOGE/USDT
Dogecoin (DOGE) spiked above the psychological $0.10 level on Nov. 27, but the bulls were unable to hold the higher levels. Profit booking pushed the price back into the range on November 28.
The 20-day EMA ($0.09) is gradually turning up and the RSI is in the positive territory, indicating that the buyers have a slight edge. If the price turns from the 20-day EMA, the bulls will try to resume the move higher by pushing the DOGE/USDT pair above $0.11. If they manage to do that, the rally could reach the 61.8% Fibonacci retracement level of $0.12.
Conversely, if the price turns down and breaks below the moving averages, it will suggest that the break above the range may have been a bull trap. Afterwards, the pair could drop to the support at $0.07.
MATIC/USDT
The buyers are struggling to push Polygon (MATIC) above the 20-day EMA ($0.88). This suggests that the bears are viewing the relief rallies as a selling opportunity.
The MATIC/USDT pair could fall back to the uptrend line. This level has acted as strong support four times before, so the bulls will once again try to defend it aggressively. If the price bounces off the uptrend line, the pair could rally to the 50-day SMA ($0.90).
If this level is broken, the bulls will return to the charge. The pair could go as high as $0.97. Conversely, if the price breaks below the uptrend line, the pair could drop to the important support at $0.69.
DOT/USDT
Polkadot (DOT) is in a strong downtrend. Attempts by the bulls to initiate a recovery fizzled out at $5.53 on Nov. 24. This suggests that sentiment remains negative and traders are selling rallies.
The bears have pushed the price closer to the crucial support of $5. This is an important level for the bulls to defend because if they don’t, the DOT/USDT pair could resume the downtrend. The pair could drop as low as $4.06.
Secondly, if the price rises from the current level or bounces from $5, it will suggest a demand at lower levels. The buyers will again try to push the price above the 20-day EMA ($5.57) and extend the relief rally. The pair could then rally as high as $6.50.
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.