The bearish trend in the cryptocurrency market has proven its strength once more, as following an interim period of consolidation, most of the top cryptos broke below key support levels today.
It’s not that surprising considering the overall global markets seem to be on a particularly steep bearish downtrend as well.
While there are a few positive signs that could give hope of a more bullish period in the long term, like the relative stability of Bitcoin, the continued drag of prominent coins like Ethereum (ETH) and Ripple (XRP) seems to be damaging the entire market.
The long-term downtrend remains clearly dominant in the market, and with today’s breakdown, a new short-term downswing is also likely underway. Traders and investors should avoid entering new positions, as the market could now start testing lower support levels.
Just by looking at the yearly chart of Bitcoin, we can conclude that, at the time of writing, it seems the resistance level for price is, yet again, the 20-day EMA, followed by support at around $3,300.
While Bitcoin broke below short-term support near $3,400, falling together with the broader market, it remains well above the next short-term support zone found at $3,250, and the key long-term zone near $3,000 is still in no danger here. This relative stability could help the whole market in avoiding another dip to new bear market lows, but the coming weeks will be crucial for BTC and the rest of the major cryptos as well.
Although fundamentals remain the same, due to the current market downtrend and the fact the much-anticipated Constantinople update was delayed, ETH has broken key support levels over the course of the day.
ETH is still considerably above its respective bear market low, but XRP got very close to hitting a new low today, as after the moves below the $112 and $0.30 support levels, bulls failed to step in and buy the dip this time around. With the two coins heading lower, investors should pay special attention to them in the coming days. Ethereum’s price moving towards the $95-$100 range now looks imminent.
That’s the last line of defense for bulls ahead of the bear market low close to $80, and for now, a move below the key support zone seems likely. Ethereum’s current resistance level is now below its 20-day EMA, meaning a steeper move down is quite likely to happen.
China’s growth is back in muddy waters after Caterpillar reported its biggest earnings miss in a decade. Sales to the Asia/Pacific region declined by 4% annually in Q4 2018, and in doing so, the industrial equipment manufacturer cited a sharp slowdown in Chinese demand.
“Sales in Asia/Pacific declined due to lower demand in China, partially offset by higher demand in a few other countries in the region,” the company said in a press release.
“Unfavorable currency impacts also contributed to the sales decline.”
Accompanying the downtrend, Nvidia, a chip manufacturer, lowered its fourth quarter earnings guidance on Monday, citing weak demand for its new RTX graphics cards as well as worsening economic conditions, particularly in China.
It’s important to remember Nvidia tried to corner the GPU mining market with the brand new RTX card. However, due to the plunge in cryptocurrency prices, particularly in ETH, miners backed away from incurring additional hardware costs – lowering Nvidia’s sales expectations for RTX cards.
At the time of writing, China’s economy is coming off its weakest year of growth since 1990, a trend that is expected to continue as Beijing shifts away from export dependence towards consumption and services. An escalating trade war with the United States has also been pointed to as a potential factor in the country’s declining performance.
China’s announced full-year GDP growth amounted to above 6%.