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Bitcoin & Ethereum Price Analysis - Is the Worst Over After BTC Hits 17-Month Low and ETH Hits 10-Month Low?

coincodex.com 12 May 2022 17:48, UTC
Reading time: ~4 m

Key highlights:

  • Bitcoin is down 28% this week as it hit fresh 17-month lows today when sinking to $25,400. It has since recovered just beneath $28,000 at the time of writing
  • Ethereum is down a steeper 35% over the same period as it dropped to a fresh 10-month low today after hitting $1,700

This week, the market has seen an extraordinary wipeout as Bitcoin drops 28% and Ethereum by 35%, bringing both of the top two ranked cryptocurrency projects to fresh multi-month lows. Bitcoin is now trading at a level that has not been seen since December 2020, and Ethereum is at levels unseen since July 2021. 

Although macro fundamental drivers such as rising interest rates affect the market, it seems that investors in crypto were further spooked with the recent de-pegging of UST and the collapse of the entire Terra ecosystem. 

The breakdown of one of the top stablecoins sent shockwaves through the industry as fearful doubts continue to be cast on other stablecoins such as USDT and USDC.

Let us look at these top two coins and see how much further the capitulation could take us.

Bitcoin price analysis

Daily chart

4-hour chart

What has been going on?

Taking a look at the daily chart above, we can instantly see that the bearish pressure is not even nearly over just yet. Yesterday, BTC broke beneath support at $29,850 (downside 1.272 Fib Extension - orange) and continued to plummet until the low was met at $27,750 (January 2021 lows). The market bounced from these lows to close the daily candle at $29,000.

Today, the bearish pressure continued to drive BTC much lower, causing it to reach as low as $25,485 (short-term downside 1.414 Fib Extension - blue). The market has since rebounded from today’s low but seems to be struggling to overcome resistance at $28,226 (previous support). 

The 4-hour chart provides a much clearer picture of the short-term price capitulation over the past week. We can see the market traded lower inside a descending price channel as the bears continue to push BTC lower. 

The spike lower toward today’s low was short-lived, and the 15-minute chart shows a clean rebound from the support at $25,885, which will be the next crucial support to hold moving forward. 

Lastly, there are finally some signs of hidden bullish divergence as the RSI is making higher lows while price action is making lower lows. This is the first hint of divergence throughout the price crash over the entire month.

Bitcoin price short-term prediction: Bearish

The recent market capitulation has certainly left Bitcoin bearish in the short term. To be considered neutral again, the coin would need to break back above $35,000 -  strong January support. To be considered bullish, it would have to continue further above the May highs at $40,000.

Looking ahead, the first resistance is located at $28,225. This is followed by resistance at $28,650 (June 2021 low), $29,350 (July 2021 low), and $30,000. Beyond $30,000, additional resistance is expected at $31,000, $32,270, and $32,950.

Where is the support toward the downside?

On the other side, the first level of strong support lies at $27,750 (January 2021 lows). This is followed by support at $27,000. Beneath this, additional support is then to be expected at the lower angle of the short-term descending price channel on the 4HR chart.

Beneath the price channel, added support lies at $25,885 (downside 1.618 Fib Extension), $25,485 (short-term downside 1.414 Fib Extension - blue), and $25,000. 

If the bears continue to drive BTC beneath $25,000, further support is then to be expected at $24,235 (December 2020 resistance), $24,000, and $23,380 (downside 1.618 Fib Extension - blue).

Ethereum price analysis

Daily chart

What has been going on?

Ethereum is also feeling the effect of the recent market capitulation and is now down by a precipitous 35% over the week. The coin started the month at $2,800 but failed to overcome resistance at the 50-day MA level, resulting in it rolling over and falling back beneath $2,800.

ETH continued to slide throughout the month to meet support at $2,205 (downside 1.618 Fib Extension - orange) on Monday. This support was held on Tuesday, but the bears eventually penetrated through it yesterday to reach as low as $2,000.

Today, ETH continued further beneath $2,000 to reach as low as $1,700. It has since recovered slightly as the bulls battle to keep it above the support at $1,880 - provided by a short term downside 1.414 Fib Extension level (green).

Ethereum price short-term prediction: Bearish

The recent fresh 10-month low closing price has officially turned ETH bearish. In fact, the break beneath $2,800 was the first indicator of a bearish trend forming. To turn neutral, Ethereum would need to break back above $2,800.

To turn bullish, Ethereum would need to break the early-May resistance at around $2,570.

On the way up, the first resistance is now expected at $1,900 and $2,000. This is followed by resistance at $2,200, $2,325, $2,400, and $2,500.

Where is the support toward the downside?

On the other side, the first strong support now lies directly at $1,880 (downside 1.414 Fib Extension - green). This is followed by support at $1,800, $1,700, $1,652 (June 2021 lows), and $1,600.

If the sellers continue to drive ETH lower, additional support is to be expected at $1,510 (March 2021 lows), $1,400 (downside 1.272 Fib Extension), and $1,277.

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