- Bitcoin is likely to break down to $23,000 if descending triangle support shatters.
- Ethereum remains in the hands of the bulls as investors choose to hold long term.
- Ripple remains motionless above $0.25; recovery to $0.3 becomes a pipe dream.
The cryptocurrency market is relatively quiet, especially with most of the cryptocurrencies in consolidation. Bitcoin affirmed the support at $30,000 before bouncing upwards. Ethereum is on the verge of breakout back to the record highs after testing the support at $1,200.
Chainlink has been the darling of the cryptocurrency space in January, rising significantly above $20 and hitting a new all-time high at $25. Its rally seems unstoppable and could elevate LINK to $30, as predicted earlier.
Dogecoin is flying the bullish flag above the cryptocurrency horizon, following a whopping 40% upswing in 24 hours to exchange hands at $0.99. Elrond is also up 22%, adding credibility to the notion that altcoins will rally as long as Bitcoin does not go crazy on the downside.
Bitcoin bulls defend critical support, but for how long?
Bitcoin spiraled back to sub $30,000 after losing the support discussed on Wednesday at $31,000. A recovery ensued, with BTC stepping past $31,000. Action toward $32,000 (next critical target) appears to have lost steam. Thus, the pioneer cryptocurrency is struggling to stay above $31,000.
The 4-hour chart illustrates the formation of a descending triangle. This pattern is considered bearish and can culminate in an extended downswing.
The triangle is formed by a series of lower peaks connected using a trendline, while a horizontal line connects the troughs. Usually, a breakdown is expected as the price slices below the lateral line. Triangles have exact breakdown targets, measured from the highest to the lowest point of the pattern.
If Bitcoin loses the critical support at $30,000, we can expect a 24% spiral to lower levels around $23,000. BTC’s short-term outlook is bearish, as reinforced by the Relative Strength Index.
BTC/USD 4-hour chart
The massive downswing will be avoided altogether if Bitcoin settles above $32,000. Moreover, stepping above the 50 Simple Moving Average would confirm to the bulls and investors that recovery to $40,000 is in the cards.
Ethereum poised for the move to $1,500
Ethereum plunged to the support at $1,200 but has since recovered toward $1,300. As covered earlier, on-chain metrics have remained extremely bullish despite the correction from the record high.
The 4-hour chart shows that Ether must rise above the 50 SMA to confirm the breakout above a descending wedge, explained on January 28. Some resistance is expected at $1,300, but $1,500 will be the next pit stop if ETH makes its way through.
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ETH/USD 4-hour chart
On the downside, if the hurdle at the 50 SMA remains unshaken, Ethereum could correct to seek balance, perhaps at the 100 SMA. The bearish leg might extend to $1,200, but if push comes to shove, we can expect a breakdown to $1,000.
Ripple is nowhere near a breakout
Ripple has relatively been in consolidation the whole of January. Trading above $0.3 was unsustainable, mostly after XRP caved upon hitting 200 SMA resistance.
Overhead pressure continues to intensify under the confluence level at the 200 SMA and 100 SMA. Support at $0.25 is critical to the ongoing stability. However, XRP keeps losing momentum despite the consistent push for a breakout above $0.3.
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XRP/USD 4-hour chart
The Moving Average Convergence Divergence (MACD) confirms that sideways action will last longer. This indicator has a bearish bias suggesting the recovery is an uphill battle, at least for now.
It is worth mentioning that the anchor at $0.25 must be guarded at all costs to ensure that losses to $0.2 are averted. If a breakdown ensues, the buyer congestion at $0.24 will absorb some of the selling pressure.