It’s been crypto’s worst week since mid-June amid the fallout of FTX’s insolvency and the resulting contagion that is now spreading through the industry. BTC has dumped mercilessly to a new market low of $15.8k, falling through all support levels as fear moved to extreme levels.
As the dust settles and traders lick their wounds, let’s look at the charts and see what indicators are saying.
On BTC’s first plunge down, it bottomed as the RSI hit extreme oversold levels. There is also a clear double-bottom pattern on the chart above. However, BTC’s RSI has been trending upward even though the price is sideways – meaning room is clearing for BTC to dip further. Local support is at the double bottom, priced at $15.8k. Resistance is now around the $17k mark.
It’s a similar story on nearly all timeframes for BTC. Bearish price action and oversold momentum indicators. Here the RSI is up slightly but is still near oversold, and Stochastic is at the bottom of its range. This means that some sideways consolidation at this new price level is likely.
BTC is trading at its lowest level in over two years. Currently, resistance on the weekly is the prior low of $17.6k hit in June. The RSI is sitting near oversold, but Stochastic is on its way down – indicating either further downside or a long period of consolidation at this price level. Lower supports are at $13-14k where BTC hit resistance in June of 2019 (more than three years ago).
Ethereum Price Analysis
ETH rejected off its daily 200SMA last week – leading to a bearish sell-off. After bouncing with an oversold RSI, ETH has been consolidating in the same zone that it was throughout most of October ($1200-1300). ETH is showing strength relative to BTC, which is at its lowest point in years.
ETH’s RSI has been flat, and Stochastic is trending down – a symptom of sideways consolidation. We can see that ETH just closed a candle beneath its weekly 200SMA. This will be an important resistance for ETH to recover- priced at $1330. In this chart, we can see that ETH is trading well above its summer lows of around $850 – further indicating its strength relative to the rest of the market.
ETH’s relative strength can be attributed to its radical shift in emissions. In the 60 days since the merge, ETH’s total supply has actually decreased by over 5700 ETH. While this may not sound like much, the old emission model would have added over 700k new ETH in the same time period. This is over $1B worth of ETH that has not hit the market in the last 60 days – a massive decrease in selling pressure.
BNB Price Analysis
It’s been an even more turbulent week for BNB, as CZ is near the heart of the crypto drama. BNB traded as high as $360 and has declined back to its October consolidation zone around $270 – also showing relative strength in the market. Its RSI is nearing oversold and Stochastic is near the bottom of its range – indicating that it has bottomed out in the short-term. Support is at $270, and resistance is at the 50SMA ($290).
There is some bearish divergence on BNB’s weekly chart as it rejected off the 50SMA last week. This level remains a major resistance zone at $345. Both of BNB’s weekly momentum indicators are neutral as it continues to grind sideways. Support is at its summer low around $180.
Market Sentiment
Sentiment has swung back to “Extreme Fear” but a level of 24 does not capture the extremely fearful sentiment on crypto social media. With investors acting as if crypto has died completely thanks to SBF, scaling into positions at these levels seems like a good r:r.
Conclusion
It’s been a shocking week, and the insolvency/bankruptcy of FTX is perhaps the most difficult for the industry since Mt. Gox. It is impossible to say for sure if the bottom is in, but BTC is trading near levels that would historically indicate the end of the bear market is close. It could go as low as $13-14k, but those supports seem strong and holders’ resolve is also strong. The biggest unknown right now is how deep the FTX contagion goes – however, CZ’s message that Binance will help projects in a liquidity crunch brings a glimmer of hope. Trade extremely cautiously during this time.
NFA. DYOR.
