A devastating sell-off ravaged the cryptocurrency market overnight with Bitcoin tumbling dramatically beneath $17,000 despite being within striking distance of a new all-time high yesterday.
The correction also dealt a bitter blow to altcoins like Ethereum, XRP and Bitcoin Cash, with double-digital declines being printed across the board.
In the short term, Bitcoin needs to ensure it continues to trade above the $16,500 level of support to avoid confirmation of a bearish trend reversal.
Establishing support at $16,500 would in fact reinforce the bullish narrative that has been curated over the past two months, as a fresh wave of buy pressure in this region could well push the world’s largest cryptocurrency to a new all-time high before the end of the year.
However, Bitcoin is an incredibly volatile asset by nature and now that liquidity is thin across all order books, continuation to the downside seems likely in the short term.
The signs were clearly there last night. Everything looked toppy, uptrend broken, too much over confidence.$ETH is currently testing September's high of $488, what an effortless and impressive retracement it has been. https://t.co/tDelwC8ubY pic.twitter.com/57athOcnh0
— Oliver Knight (@OKnightCrypto) November 26, 2020
Ethereum, meanwhile, is currently trading at around $500 as it desperately attempts to cling on to levels of support.
The $488 level will be key as this was the top of a bullish phase in the market back in late August.
Breaking below it would cause a cascade of long position liquidations and subsequent sells, with downside targets emerging at $445 and $342.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.