The FTX collapse continues to stoke fears of a contagion in the cryptocurrency space as investors wait to hear about businesses that may face the heat. One of the marquee names to come under the circle of suspicion is the Grayscale Bitcoin Trust (GBTC), which has seen its discount to Bitcoin’s (BTC) price reach record levels of about 50%.
Traders hate uncertainty and shy away from investing during these periods. That could be one of the reasons for a lack of buying interest in Bitcoin even after the sharp fall in its price. The Stock-to-Flow (S2F) model, which had seen its popularity soar during the bull phase, is coming under increasing criticism after the deviation between Bitcoin’s price and its projected price hit levels never seen before.
Does this suggest that the pessimism has reached an extreme or is it just that the S2F model is flawed?
During a bear phase, the general trend is down but there are always pockets of strength that may offer trading opportunities to long-only investors. However, rallies during bear markets are short-lived, hence traders may consider booking profits near strong resistance levels.
Let’s look at the charts of five cryptocurrencies that may attempt a rally in the near term.
BTC/USDT
Bitcoin continues to trade inside the tight range between $16,229 and $17,190. Generally, periods of tight consolidation are followed by an increase in volatility.
The downsloping moving averages and the relative strength index (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 be threatened. A break and close below this support could signal the resumption of the downtrend. The next support on the downside is $12,200.
If bulls want to avoid a further decline, they will have to push and sustain the price above the breakdown level of $17,622. Such a move will suggest strong demand at lower levels. The pair could then climb to the psychological level of $20,000.
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 the buyers and sellers are undecided about the next directional move.
However, this uncertainty is unlikely to continue for long. If the price plummets below $16,229, the selling pressure could pick up momentum and the pair may drop to $15,588. If this support gives way, the pair may start the next leg of the downtrend.
On the contrary, 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 to $18,200 and later to $18,730.
TON/USDT
Toncoin (TON) has recovered sharply from its June low and managed to hold on to a large part of the gains. This suggests that traders are in no hurry 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 up and the RSI is in the positive territory, indicating a slight advantage to the bulls.
If the price rebounds off the 20-day exponential moving average ($1.65), the bulls will try to drive the price above the triangle. If they can pull it off, the pair could rally to $2.15 and thereafter climb toward the target objective of $2.87.
Alternatively, if the price slips below the 20-day EMA, the pair could drop to the 50-day simple moving average ($1.50) and then to the support line.
The pair is facing stiff resistance at $1.80. Repeated failure to sustain the price above this level may have tempted short-term traders to book profits. The bears are trying to capitalize on this situation and sink the price below the 50-SMA. If this support cracks, the pair could dive to $1.55.
Conversely, if the price rebounds off the current level, the bulls will again try to scale the wall at $1.80. The repeated retest of a resistance level tends to weaken it. A close above this resistance could open the doors for a possible rally to $2.
CHZ/USDT
Chiliz (CHZ) is attempting to form an inverse head and shoulders pattern, which will complete on a break and close above the neckline. If that happens, it may signal 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 neckline. If the price breaks below the 50-day SMA ($0.21), the CHZ/USDT pair could decline to $0.18 and subsequently to $0.14.
Alternatively, if the price bounces off the current level, buyers will again attempt to propel the pair above the neckline and gain control.
The flattening moving averages and the RSI just below the midpoint do…
cointelegraph.com