The United States equities markets saw their worst performance of 2023 as concerned investors dumped stocks on Feb. 21, fearing continued rate hikes by the U.S. Federal Reserve.
Although the cryptocurrency markets also gave back some of the gains, the fall was comparatively muted. UTXO Management senior analyst Dylan LeClair said that Bitcoin’s (BTC) correlation to the S&P 500 index has fallen to its lowest since late 2021.
After the sharp recovery from the lows, Glassnode data showed that only 21% of the coins sent by Long-Term Holders to exchanges at the start of this week moved at a loss. That is a huge improvement from mid-January, when 56% of LTH coins sent to exchanges were moved at a loss.
The decoupling of the crypto and the U.S. equities markets is a positive sign, but traders must remain cautious. If stocks turn sharply lower and a risk-off sentiment develops, then the crypto rally may find it difficult to continue its gains.
What are the important levels that could arrest the correction in Bitcoin and altcoins? Let’s study the charts of the top 10 cryptocurrencies to find out.
Bitcoin faced yet another rejection at $25,211 on Feb. 21, which may have tempted the short-term bulls to give up and book profits. That could pull the price to the first major support at the 20-day exponential moving average ($23,364).
In an uptrend, buyers try to protect the 20-day EMA and then the 50-day simple moving average ($21,772). If the price rebounds off the 20-day EMA, it will indicate that bulls are not waiting for a deeper correction to buy. That may enhance the prospects of a rally above $25,250.
On the contrary, if the price slips below the 20-day EMA, it will suggest that traders are rushing to the exit. That could result in a fall to the 50-day SMA. The BTC/USDT pair may again attempt a rebound off it but, on the way up, the 20-day EMA may pose a strong challenge.
The short-term trend could tilt in favor of the bears if the price closes below the crucial support at $21,480.
Although Ether (ETH) stayed above the $1,680 level since Feb. 17, the bulls could not clear the overhead hurdle at $1,743. That may have attracted selling from short-term traders.
The price turned down on Feb. 21 and dipped back below the breakout level of $1,680. Sellers will now try to build upon this advantage and yank the price below the 50-day SMA ($1,550).
If they manage to do that, the ETH/USDT pair could plunge to the immediate support at $1,461. The bulls are expected to defend this level with vigor because if this support gives way, the pair may slide to $1,352.
The bulls will stand a chance if they quickly push the price back above $1,680. Such a move will indicate aggressive buying on minor dips. A break above $1,743 could start the next leg of the up-move to $2,000.
Even after repeated attempts, the bulls could not propel BNB (BNB) above the overhead resistance of $318 in the past few days. This indicates that the bears are fiercely defending the $318 level.
The bears will try to increase their advantage by sinking the price below the 50-day SMA ($306). If they succeed, the BNB/USDT pair could dump toward the next major support at $280. If the price rebounds off this level, the pair may oscillate between $318 and $280 for a few days.
The flattish 20-day EMA and the RSI near the midpoint also indicate a range-bound action in the near term. The bulls will have to thrust the price above $318 to gain the upper hand.
XRP (XRP) continues to trade inside the descending channel pattern. The bears thwarted efforts by the bulls to push the price above the resistance line on Feb. 20.
The 20-day EMA ($0.39) has flattened out and the RSI is near the center, suggesting a balance between supply and demand. If the price breaks below the moving averages, the bears will try to tug the price to the crucial support at $0.36.
Alternatively, if the price turns up from the current level and breaks above the channel, it will suggest advantage to the bulls. The XRP/USDT pair may then attempt a rally to $0.43 where the bears are likely to mount a stiff resistance.
Cardano (ADA) has been trading in a tight range between the neckline of the inverse head and shoulders pattern and the immediate support at $0.38.
The 20-day EMA ($0.39) has flattened out and the RSI is near 50, indicating a status of equilibrium between the bulls and the bears. If the price turns up from the current level or the 50-day SMA ($0.36), the bulls will make another attempt to clear the overhead hurdle.
If they do that, the bullish setup will complete and the ADA/USDT pair may rally to $0.52 and then to $0.60. Conversely, a break below the 50-day SMA could pull the price to the strong support zone between $0.32 and $0.34.
The price action in Dogecoin (DOGE) has been sluggish for the past few days. This shows that both the bulls and the bears are cautious and are not waging large bets.
The flattish moving averages and the RSI just below the midpoint do not indicate an advantage to either party. This suggests that the DOGE/USDT pair may oscillate between $0.10 and $0.08 for a while longer.
On the upside, a break above $0.10 could put the $0.11 resistance at risk of breaking down. If that occurs, the pair may pick up momentum and soar toward $0.15. Conversely, a break below $0.08 could clear the path for a retest of the solid support at $0.07.
The long tail on the Feb. 20 candlestick shows that bulls purchased the dip in the hopes that Polygon (MATIC) would resume its uptrend, but that did not happen. The bears sold the recovery above $1.50 on Feb. 21, which started a pullback.
The bulls will have to guard the $1.30 level if they want to keep the uptrend intact. If the price rebounds off the current level, the MATIC/USDT pair may again attempt to rise toward the overhead resistance at $1.57. The buyers will have to overcome this obstacle to start the next leg of the uptrend.
Conversely, if the price breaks below the 20-day EMA, it will suggest that traders may be booking profits. That could open the gates for a decline toward the 50-day SMA ($1.11).
Related: How to trade bull and bear flag patterns?
Solana (SOL) rose above the resistance line on Feb. 20, but the bulls could not sustain the higher levels. This shows that bears continue to defend the resistance line.
If the price continues lower and breaks below the moving averages, the bears will try to solidify their position by dragging the SOL/USDT pair below the important support at $19.68. If they can pull it off, the pair may tumble to $15.
On the other hand, if the price turns up from the moving averages, the bulls will take another shot at clearing the resistance line. If the price closes above $28, the bears may give up and the pair could then accelerate toward $39.
Polkadot (DOT) closed above the neckline of the inverse H&S pattern on Feb. 19, but the bulls could not build upon this momentum.
The bears sold the breakout and pulled the price back below the neckline on Feb. 22. If the price fails to quickly rise back above the neckline, the bulls may bail out of their positions. That could start a deeper correction toward the $5.50 to $5.87 zone.
Instead, if the price turns up and rises above the neckline, it will indicate that the sentiment remains positive and traders are buying the dips. The DOT/USDT pair could pick up momentum after buyers overcome the barrier at $8. The pair may then soar to $9.50.
Shiba Inu (SHIB) has been stuck inside a large range between $0.000007 and $0.000018 for the past several months. The bulls tried to push the price to the resistance of the range, but the bears had other plans. They stopped the rally near $0.000016.
The bulls repeatedly purchased the dip to the 20-day EMA ($0.000013), but they could not kick the price above $0.000014. This indicates that traders lightened their positions on rallies. The price has once again slipped below the 20-day EMA and the bears will try to sink the SHIB/USDT pair to $0.000011.
The flattening 20-day EMA and the RSI near the midpoint suggest that the bullish momentum has weakened. If buyers want to take control, they will have to quickly push the price above $0.000014. If they do that, the pair may rally to $0.000016 and then to $0.000018.
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