On May 17 United States Federal Reserve Chairman Jerome Powell told the Wall Street Journal that the 50-basis-point rate hikes would continue until inflation is under control. Powell’s emphasis on a hawkish policy suggests that monetary conditions are likely to remain tight in 2022, which could limit the upside in risky assets.
On-chain market intelligence firm Glassnode said that historically, Bitcoin (BTC) has bottomed out when the price breaks below the realized price. However, baring the 2019 to 2020 bear market, during previous bear cycles, Bitcoin’s price stayed below the realized price for anywhere between 114 to 299 days. This suggests that if macro situations are not favorable, a quick recovery is unlikely.
While the current decline in US equity markets and Bitcoin has similarities with the crash in March 2020, the recovery may not follow the same trajectory because market conditions are different. In 2020, the Fed supported the markets with unprecedented stimulus, but in 2022 the focus will remain on reducing inflation and monetary tightening.
Could Bitcoin and altcoins resume their downtrend or will lower levels attract buying? Let’s study the charts of the top-10 cryptocurrencies to find out.
BTC/USDT
Bitcoin’s recovery failed to rise above the 38.2% Fibonacci retracement level at $31,721 suggesting that the trend remains negative and traders are selling on minor rallies.
The BTC/USDT pair could drop to the immediate support at $28,630. If the price rebounds off this level, the pair could consolidate between $28,630 and $31,721 for some time.
A break and close above the 20-day exponential moving average ($32,979) will be the first sign of a potential change in trend. The pair could then rally to the 61.8% retracement level at $34,823.
On the other hand, if the price slips below $28,630, the bears will try to cement their position by pulling the pair below $26,700. If that happens, the negative momentum could pick up and the pair may slide to $25,000 and thereafter to $21,800.
ETH/USDT
Ether’s (ETH) failure to rise above the overhead resistance at $2,159 may have tempted short-term traders to book profits. That pulled the price below $1,940 but the bulls are attempting to defend the level.
If the price rebounds off $1,940 with strength, the ETH/USDT pair could again rise to $2,159. The bulls will have to push and sustain the price above $2,159 to clear the path for a rally to the 20-day EMA ($2,353). A break and close above this resistance will suggest that the markets have rejected the lower levels.
Conversely, if bears sustain the price below $1,940, the pair could decline to the crucial support at $1,700. This is an important level to keep an eye on because a break below it could result in panic selling. The pair could then slump to $1,500 and later to $1,300.
BNB/USDT
The bulls have not been able to push Binance Coin (BNB) above the overhead resistance at $320. This suggests that bears have not given up and they continue to sell at higher levels.
If the price slips below $290, the BNB/USDT pair could drop to $265. This level is likely to act as a strong support but if bears pull the price below it, the next stop could be the critical level at $211. The bears will have to break this level to signal the start of the next leg of the downtrend.
Alternatively, if the price rebounds off $265, it will suggest that bulls are attempting to form a bottom. That could keep the pair stuck between $320 and $265 for a few days. A break and close above $320 could suggest that the pair may have bottomed out.
XRP/USDT
Ripple’s (XRP) recovery failed to sustain above $0.45 indicating a lack of demand at higher levels. The bears will now attempt to pull the price below the immediate support zone at $0.40 to $0.38.
If they do that the XRP/USDT pair could drop to $0.33. This is an important level to keep an eye on because a break and close below it could signal the resumption of the downtrend. The XRP/UDST pair could then plunge to the next support at $0.24.
On the other hand, if the price rises from $0.38 or $0.33, the bulls will again try to push the pair above $0.45. If they succeed, the pair could rise to the stiff overhead resistance zone at $0.50 to $0.55. The bulls will have to clear this hurdle to suggest that the downtrend may be over.
ADA/USDT
Cardano (ADA) has been stuck in a tight range between $0.61 and $0.51 for the past few days. This suggests a tough battle between the bulls and the bears.
If the price slips below $0.51, the ADA/USDT pair could slide to the support zone between $0.46 and $0.40. The bulls may mount a strong defense in this zone. If the price rebounds off this zone, the buyers will again try to push the pair above the 20-day EMA. If…
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