FTX collapse continues to fuel fears of contagion in the cryptocurrency space as investors wait to see which companies may weather the crisis. One of the most prominent names to have entered the circle of suspicion is Grayscale Bitcoin Trust (GBTC), which has seen its discount to the price of Bitcoin (BTC) reach record levels of close to 50%.
Traders hate uncertainty and shy away from investing during these periods. That could be one of the reasons for the lack of buying interest in Bitcoin, even after the sharp drop in its price. The Stock-to-Flow (S2F) model, which had seen its popularity skyrocket during the bullish phase, is coming under increasing criticism after the deviation between Bitcoin’s price and its projected price reached unprecedented levels.
Does this suggest that pessimism has reached an extreme, or is it simply that the S2F model is flawed?
During a bear phase, the general trend is down, but there are always pockets of strength that can offer trading opportunities for long-term investors. Nevertheless, rallies during bear markets are short-lived, so traders may consider taking profits near strong resistance levels.
Let’s look at the charts of five cryptocurrencies that may attempt a short-term rally.
Bitcoin continues to trade within a tight range between $16,229 and $17,190. Typically, periods of tight consolidation are followed by increased volatility.
The falling moving averages and the RSI in the negative zone indicate that the path of least resistance is to the downside. If the price breaks below $16.229, the Nov. 9 intraday low of $15.588 may come under threat. A break and close below this support could signal a resumption of the downtrend. The next support on the downside is $12,200.
If the bulls want to avoid a further decline, they will have to push and hold the price above the breakout level of $17.622. This move will suggest strong demand at the lower levels. The pair could then rally to the psychological $20,000 level.
The BTC/USDT pair has been trading near the moving averages, which have flattened out. This suggests that the pair has entered a state of equilibrium as both buyers and sellers are undecided on the next directional move.
However, this uncertainty is unlikely to continue for long. If the price falls below $16,229, the selling pressure could pick up momentum and the pair could drop as low as $15,588. If this support gives way, the pair could start the next leg of the downtrend.
Conversely, if the price rises and breaks above $17,190, it will suggest that the current tight range was used by the bulls to accumulate. The pair could then rally as high as $18,200 and then as high as $18,730.
Toncoin (TON) has rallied strongly from its June low and managed to hold on to much of the gains. This suggests that traders are in no rush to dump their positions at higher levels.
The TON/USDT pair has formed a symmetrical triangle, which usually acts as a continuation pattern. Both moving averages are gradually sloping higher and the RSI is in the positive territory, indicating a slight advantage for the bulls.
If the price bounces off the 20-day exponential moving average ($1.65), the bulls will try to push the price above the triangle.. If they do, the pair could rally to $2.15 and then rally towards the $2.87 target.
On the other hand, if the price slides below the 20-day EMA, the pair could drop to the 50-day SMA ($1.50) and then to the support line.
The pair is facing strong resistance at $1.80. Failure to sustain the price above this level may have tempted short-term traders to take profits.. The bears are trying to take advantage of this situation and sink the price below the 50 SMA. If this support breaks, the pair could drop as low as $1.55.
Conversely, if the price bounces from the current level, the bulls will try again to scale the $1.80 wall. Repeating a resistance level tends to weaken it. A close above this resistance could open the doors for a potential rally to $2.
Chiliz (CHZ) is attempting to form an inverse head and shoulders pattern, which will complete if it breaks out and closes above the neckline.. If this happens, it could be the sign of the start of a new uptrend.
The pattern target of the reversal formation is $0.54 but the bears are unlikely to give up easily. They are aggressively defending the neck line. If the price breaks below the 50-day SMA ($0.21), the CHZ/USDT pair could drop as low as $0.18 and then as low as $0.14.
On the other hand, if the price bounces from the current level, the buyers will try again to push the pair above the neckline and gain control.
The flattening of the moving averages and the RSI just below the midpoint do not give a clear advantage to either the bulls or the bears. Therefore, it is better to wait for the price to break before establishing new positions.
The pair turned down sharply from $0.27 and the bears have dragged the price below the moving averages. If the price sustains below the 50 SMA, the pair could drop as low as $0.20. This could put bassists in the driver’s seat.
On the other hand, if the price rises from the current level and breaks above the 20 EMA, it will suggest that traders are viewing dips as a buying opportunity. The pair could rally to $0.26 and later to $0.28. Buyers will have to push the price above this level to challenge the $0.30 resistance.
Although Quant (QNT) has corrected sharply in recent days, it is trying to grab support and bounce off the support line. This indicates that there is demand at lower levels.
The downsloping 20-day EMA ($128) indicates an advantage for the bears, but the RSI is trying to form a positive divergence. This suggests that the selling pressure could be easing.
Buyers will need to push and hold the price above the 20-day EMA to signal that the corrective phase may be over. The QNT/USDT pair could then rally to the 50-day SMA ($151) and then $180.
This positive view could be invalidated in the short term if the price continues lower and breaks below the uptrend line. The pair could then drop to $87 and then $79.
The pair’s recovery is facing selling near the downtrend line. This suggests that the bears are active at the higher levels. The bears have dragged the price below the moving averages and will try to extend the decline to $105 and then $94.
In order to invalidate this negative view, the bulls will have to kick and hold the price above the downtrend line. Then the pair could rally as high as $125, where the bears could mount a strong defense. If the buyers break through this barrier, the move higher could reach $136.
While most of the major cryptocurrencies have extended their downtrends in recent days, Trust Wallet Token (TWT) has moved in the opposite direction and has risen sharply.. This indicates outperformance in the short term.
The TWT/USDT pair shot up from $1.03 on Nov. 10 to $2.73 on Nov. 14, a 165% rally in a short time. That pushed the RSI deep into the overbought territory, which suggests a minor correction or consolidation in the short term, and that is what happened.
The pair is finding support near the $1.88 50% Fibonacci retracement level, but the bulls are struggling to push the price above $2.45. This suggests that the pair may consolidate between $1.81 and $2.45 for a few days.
Both moving averages are sloping up and the RSI remains in the positive territory, indicating that the bulls have the upper hand. If the buyers push the price above the $2.45 to $2.73 resistance zone, the pair could resume its uptrend. This positive view could invalidate a breakout and close below the 20-day EMA ($1.70).
The bears pulled the price below the 50 SMA but are struggling to keep the pair low. This suggests strong buying at the lower levels. If the buyers push the price above the 20-day EMA, the pair could rally to the downtrend line.
A break above this level could clear the way for a potential rally to $2.45. This remains the key hurdle for the bulls to overcome. If they manage to break it, the pair can retest $2.73.
On the downside, a drop below $1.92 could result in a drop to $1.81. This is an important level to watch because a break below it could tip the advantage in favor of the bears.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.