The entire cryptocurrency market had a very volatile day last Thursday following the Consumer Price Index (CPI) release. The numbers came in higher than expected, meaning that inflation is increasing faster than expected. The report initially sent the crypto market down aggressively before reversing to the upside. Nevertheless, most major currencies finished the week flat or with small losses.
As a follow-up to last week’s article, this piece will go over the cryptocurrencies to watch this week: Bitcoin (BTC-USD), Ethereum (ETH-USD), Ripple (XRP-USD), and Litecoin (LTC-USD).
Bitcoin (BTC-USD)
Bitcoin has been trading flat over the last seven days. As mentioned in last week’s market breakdown, the major support area at $18,500 is still holding strong. Following the release of the CPI numbers, the number one cryptocurrency by market cap touched the low at $18,200 before reversing higher.
As of now, Bitcoin is trading at $19,500. If buyers continue to remain strong, the next resistance level will sit at $20,500. As can be seen on the chart, this resistance level also correlated with the descending daily trend line. A break above this line can kickstart a new bullish leg further to the upside. However, if the sellers regain control of the market this week and manage to break below $18,500, the next support area will be much further, at around $15,000.
It is worth mentioning that last Monday, Bitcoin’s mining difficulty hit a new all-time high after rising by 14%. The mining difficulty increase may indicate a strong and growing network.
Ethereum (ETH-USD)
Ethereum’s supply turned deflationary last weekend, meaning that more ETH is currently being burned (removed from circulation) than created. Still, even though this is good news for Ethereum, its price couldn’t really go any higher last week. In a similar way to Bitcoin and most of the crypto market, Ethereum sold off after the CPI numbers, falling to ~$1,155 before reversing higher. As of now, the cryptocurrency is back inside the bear flag mentioned in last week’s breakdown. A break above the flag formation can shoot Ethereum to the next resistance level, at around $1,450.
Ripple (XRP-USD)
Last week, Brad Garlinghouse, Ripple’s CEO, said in an interview that a decision from the court in the ongoing legal case against the SEC will probably be finalized in the first half of next year.
This came as somewhat of a disappointment to traders who expected an earlier end to the case. After a few strong weeks for Ripple, where the price kept increasing, the sellers regained control over the chart in the past week, sending the price down more than 8%.
However, despite the price trying to break below the support area at $0.44, buyers came in again to protect this level. In the event of a break below that support, the next level to watch for is at around $0.38. However, if bullish momentum continues this week in the markets and XRP breaks above the strong resistance at $0.50, the next area to watch is around $0.75.
Litecoin (LTC-USD)
At writing, Litecoin is trading just above the $50 support area. This area has been holding strong since July and once again couldn’t break even after the CPI report. This shows the ongoing strength of buyers at this level.
In the event of a break above the descending trendline seen on the chart, the next resistance level sits at around $57. However, in a bearish scenario, the next support level is at around $42.
Conclusion: Markets Enter Oversold Territory
As some may know, there is a very strong correlation right now between the equity markets and cryptocurrency markets, as they are both considered to be high-risk assets.
Both markets are currently oversold, and a correction to the upside is due, in my opinion.
As the trading week has just begun, we are already starting to see signs of buyers coming into the market, and traders may want to consider any opportunity this week to buy the dips, placing a tight stop loss below them. Long-term investors may collect small portions of their favorite tokens at great discounts. After the next FED meeting at the beginning of November, we will get a much clearer picture of what is to come.