- Bitcoin is trading slightly lower on Monday after breaking above key resistance at $105,000, raising concerns about a potential bull trap.
- Ethereum is approaching critical support at the 200-day EMA near $2,438; a daily close below this level could trigger a deeper correction.
- XRP is holding around the 50-day EMA at $2.27, maintaining its position despite weakening momentum.
Bitcoin (BTC) is trading slightly lower on Monday after breaking above key resistance at $105,000 on Sunday, raising concerns about a potential bull trap. Meanwhile, Ethereum (ETH) and Ripple (XRP) are holding near crucial support levels; a decisive close below their support levels could trigger a deeper correction. Additionally, momentum indicators for these major cryptocurrencies show weakness as the broad crypto market enters a phase of consolidation and waning bullish strength.
Bitcoin Breakout or Fakeout?
Bitcoin’s price rallied 3.23%, breaking above its key resistance level at $105,000 on Sunday. However, as of Monday morning, it has failed to find support around this level and is trading around $104,624.
Momentum indicators on the daily chart show signs of weakness. The Relative Strength Index (RSI) sits at 65 and is pointing downwards after being rejected from its overbought levels of 70 on Sunday, indicating a fading bullish momentum. Additionally, the Moving Average Convergence Divergence (MACD) also showed a bearish crossover on Sunday, giving sell signals and indicating the start of a downtrend.
If BTC continues its pullback, it could extend the drop to retest the psychological support level at $100,000.
However, if BTC bounces and closes above $105,000, it could extend the rally towards the all-time high of $109,588 set on January 20.
Ethereum’s 200-day EMA Fight Could Decide Next Move
Ethereum’s price retested and found support around its 200-day Exponential Moving Average (EMA) at $2,438 on Sunday. However, as of Monday morning, it has dipped below this level, trading around $2,387.
If ETH continues its correction and closes below $2,438 on a daily basis, it could extend the drop to retest its next key support level at $2,000.
The RSI on the daily chart sits at 60 and is pointing downwards after being rejected from its overbought conditions last week, indicating a fading bullish momentum. The MACD indicator is also shifting to a bearish crossover on the daily chart. If the crossover occurs, it would confirm another sell signal.
On the other hand, if the 200-day EMA at $2,438 holds as support and ETH recovers, the rally could extend to retest its key psychological level at $3,000.
XRP Bulls Show Weakness in Momentum
XRP’s price bounced after retesting its 50-day EMA at $2.28 on Sunday and rose 3.18% the next day. As of Monday morning, it had declined, erasing most of its previous day’s gains and trading around $2.36.
If XRP breaks and closes below its 50-day EMA on a daily basis, it could extend the correction towards its next key support at $2.23.
The RSI on the daily chart sits at 52, pointing towards its neutral level of 50, indicating a fading bullish momentum. If the RSI moves below its neutral level of 50, it would lead to strong bearish momentum and a sharp drop in XRP prices. The MACD indicator is also shifting to a bearish crossover on the daily chart. If the crossover occurs, it would confirm another sell signal.
Conversely, if the 50-day EMA holds as support, XRP could trigger a rally to retest its resistance level at $2.72.
Bitcoin, altcoins, & stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any person, group, or entity, eliminating the need for third-party involvement during financial transactions.
Altcoins are any cryptocurrency other than Bitcoin, but some also consider Ethereum not to be an altcoin because it is from these two cryptocurrencies that the fork occurs. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any stablecoin is linked to a commodity or financial instrument, such as the US Dollar (USD), and its supply is regulated by an algorithm or demand. The main objective of stablecoins is to provide an entry and exit ramp for investors wishing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value, as cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio between the market capitalization of Bitcoin and the total market capitalization of all cryptocurrencies combined. It provides a clear picture of the interest that Bitcoin arouses among investors. A high BTC dominance usually occurs before and during an upward movement, in which investors resort to investing in relatively stable and high market capitalization cryptocurrencies such as Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in search of higher returns, which usually triggers an explosion of increases in altcoins.
