Bitcoin has entered a critical demand zone, and market participants are keenly observing whether altcoins such as SOL, XRP, KAS, and AAVE will follow suit. The leading cryptocurrency faced significant selling pressure this week, breaking below the crucial $60,000 level on August 4. This downturn is partly attributed to a broader market sell-off, with the Japanese stock market, Nikkei, plummeting by around 6% on August 2, and the Nasdaq Composite entering correction territory following a disappointing July jobs report.

Despite this recent decline, Bitcoin remains within a broad trading range. Predicting the breakout direction from this range is challenging, but Bitcoin whales appear optimistic. Addresses holding over 1,000 Bitcoin accumulated an additional 84,000 Bitcoin in July. Additionally, nearly 64,000 Bitcoin were withdrawn from whale exchange balances in the past month, the highest since 2015, according to Glassnode’s whale net position change metric.

Bitcoin’s decline has had a cascading effect on several altcoins, with buyers remaining cautious. However, as Bitcoin approaches the lower end of its range, it is anticipated that buyers will re-enter the market, potentially leading to a rebound in select altcoins. Let’s delve into the critical levels for Bitcoin and examine the top five cryptocurrencies that might spearhead a market recovery.

Bitcoin Price Analysis

Bitcoin has been under relentless selling pressure since breaking below its moving averages on August 2. The cryptocurrency’s price plummeted through the $60,000 support level on August 4. The 20-day exponential moving average (EMA) at $63,855 has started to decline, and the relative strength index (RSI) is approaching oversold territory, indicating that bears have gained control.

Any recovery attempt is likely to encounter substantial resistance at the 20-day EMA. If Bitcoin’s price declines sharply from this level, it could increase the likelihood of a breakdown below the critical support at $55,724. Conversely, a break and close above the 20-day EMA would suggest that the BTC/USDT pair may remain within its current range for a while longer.

On the 4-hour chart, Bitcoin’s failure to hold the $60,000 level indicates that even minor price increases are being sold into. The next support levels to watch are $55,724 and $53,485. Buyers are expected to defend this zone vigorously, as failing to do so could trigger a deeper correction. To signal that bears are losing their grip, bulls must push and sustain the price above the 20-EMA, potentially leading to a rise towards the 50-simple moving average (SMA).

Solana Price Analysis

Solana (SOL) has been trading within a broad range of $116 to $210 for several months, reflecting a pattern of buying on dips and selling on rallies. The bears have managed to pull the price below the moving averages, but the SOL/USDT pair is likely to find support in the $127 to $116 zone.

If the price rebounds from the current level or the support zone, it may face resistance at the 20-day EMA at $162. A sharp decline from this level could lead to a retest of the support zone. Conversely, a break and close above the 20-day EMA could pave the way for a rally towards $188.

On the 4-hour chart, SOL has experienced a sharp decline, pushing the price into oversold territory. The pair is expected to find support in the $135 to $121 zone. If this support holds, the price could rise to the 20-EMA. A break above this level could push the price towards $165. However, if the relief rally fails to cross the 20-EMA, it would indicate persistent selling pressure, potentially leading to a retest of the critical support at $121.

XRP Price Analysis

XRP’s failure to maintain its price above $0.64 attracted substantial selling, dragging the price down to the 50-day SMA at $0.52. If the price rebounds from the current level, bulls will attempt to drive the XRP/USDT pair above the 20-day EMA at $0.57. Successfully doing so could signal the start of a rally towards $0.64. However, if the price continues to decline and breaks below the 50-day SMA, the pair could drop to the $0.46 to $0.41 support zone, which is likely to attract strong buying interest.

On the 4-hour chart, the downsloping moving averages and the RSI near oversold territory suggest that bears have the upper hand. Minor support exists at $0.52, but bears will likely aim to sustain the momentum and push the price down to $0.46. To prevent further downside, bulls must quickly push the price above the 20-EMA, potentially leading to a recovery towards the 50-SMA, where bears may attempt to stall the upward movement.

Kaspa Price Analysis

Kaspa (KAS) experienced a sharp decline from $0.21 on August 1, but bulls are attempting to find support at the 50-day SMA at $0.17. Buyers need to push the price above the 20-day EMA at $0.18 to signal the start of a recovery. The KAS/USDT pair would then aim to overcome the hurdle at $0.19, potentially initiating a rally towards $0.24.

Alternatively, if the price continues to decline and breaks below the 50-day SMA at $0.17, it would indicate that bulls are exiting their positions, possibly leading to a deeper correction towards $0.16 and subsequently $0.14.

On the 4-hour chart, the pair attempted to bounce off $0.17, but bears sold near the $0.18 level. If the $0.17 support fails, the pair could drop to the uptrend line, which is expected to act as strong support. A rebound off the uptrend line would prompt bulls to make another attempt to push the pair above the 20-EMA. Conversely, a break below the uptrend line would signal the start of a deeper correction towards $0.14.

Aave Price Analysis

Aave (AAVE) surged above the $115 overhead resistance on August 1 but failed to sustain higher levels. The bulls attempted a relief rally from the 20-day EMA at $101 on August 4, but the long wick on the candlestick indicates selling at higher levels. If the price slips below the 20-day EMA, the next target is likely to be the 50-day SMA at $93.

This bearish outlook would be invalidated if the price turns up from the current level and breaks above $115, suggesting that sentiment remains positive and traders are buying on dips. The AAVE/USDT pair could then climb to $130.

On the 4-hour chart, bulls pushed the price above the moving averages but failed to sustain higher levels as bears sold aggressively, dragging the price back below the moving averages. Strong support exists in the $96 to $102 zone. If the price rebounds off this zone and sustains above the 20-EMA, it would indicate that the correction may be over. Conversely, a break below this zone could sink the pair to $85.

In conclusion, while Bitcoin’s descent into its demand zone has impacted several altcoins, key support levels are being closely monitored. A rebound in Bitcoin from its lower range could trigger a recovery in select altcoins like SOL, XRP, KAS, and AAVE. However, the market remains volatile, and traders must exercise caution and conduct thorough research before making investment decisions.