Crypto Update: Carnage Everywhere (But This is How Panic Bottoms are Formed)

The downtrend that has been dominant throughout January is likely entering its final phase today, as correlations are sky-high, all majors are crashing, and forced liquidations are accelerating the decline. Volatility surged higher as expected, and technical trading is still the name of the game, with no significant news behind today’s move, even if the mainstream media might find an excuse this time around as well.

Market dynamics that are rooted in the historic late-year run-up in the segment are mostly to be blamed for the current trends, but now the long-term charts are oversold the short-term momentum is also getting stretched, so a durable bottom is likely very close. That said, short-term traders, especially using leverage, should remain cautious of volatility, and proper position sizing and risk management are vital in the current environment for such strategies.

BTC breached the $8200 support level in early trading today, and now it’s likely headed for an optimal final low for the cycle near $7650 that we have been monitoring throughout the correction. Should the crash spike below $7650, further support zones are between $6800-$7000 and $5750-$6000.

BTC/USD, 4-Hour Chart Analysis

Ethereum gave up its short-term relative strength, as we expected, and the coin is still likely headed below the prior crash lows, being in an earlier phase of the correction than the rest of the majors. Below that $740-$750 zone, key levels are at $625, $575, and $500, and traders and investors alike should wait before entering positions in ETH.

ETH/USD, 4-Hour Chart Analysis

Altcoin Bloodbath

LTC/USD, 4-Hour Chart Analysis

With the total market cap of the coins falling almost to $350 billion, there is no real hiding place from the decline in the sector, and all of the majors are getting crushed. Litecoin is headed to $100, Ripple is near the $0.68 support, Dash is at $500, with 60+% losses now across the board top-to-bottom.

While it’s impossible to pick an exact bottom in such an environment, and panic selling and liquidations could still continue, long-term investors could add to their positions at the current levels.

Stay tuned for our detailed technical analysis later on today.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

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