Global equity markets experienced a significant sell-off, leading to sharp declines in Bitcoin and several major cryptocurrencies. On August 5, Bitcoin (BTC) fell below the critical $50,000 level as panic swept through traders following a crash in the Japanese stock market. Data from Coinglass reveals that $1.08 billion in leveraged positions were liquidated. The pressing question for traders now is whether this correction will deepen or if the market is primed for a relief rally.
Renowned analyst Rekt Capital suggested on X that Bitcoin’s “downside deviation” could persist for around two months. Some experts anticipate the correction could worsen, with FXPro senior market analyst Alex Kuptsikevich projecting that Bitcoin might drop to $42,000.
Bitcoin’s recent break below its large range often marks a false move, with markets quickly reversing to catch traders off guard. This could result in a short squeeze for Bitcoin in the coming days. Key resistance levels need to be conquered by the bulls to trap aggressive bears. Let’s delve into the charts to uncover these critical resistance points.
S&P 500 Index Analysis
The S&P 500 Index fell and closed below the 50-day simple moving average (5,448) on August 2, indicating a short-term trend shift. The index gapped down on August 5 but found buyers at lower levels. If the price rises above 5,265, the index could rally towards the moving averages, a crucial resistance level. A failure to break this resistance would signal bearish sentiment, potentially driving the index to the psychological level of 5,000.
US Dollar Index Analysis
The US Dollar Index (DXY) turned down from the 20-day exponential moving average (104.22) on August 2, falling below the channel’s support line. The index is currently seeking support at 102.35. Buyers need to push the price back to the channel’s breakdown level. A failure to do so would indicate resistance at this level, increasing the likelihood of a drop to 102 and then 101. To avoid further downside, buyers must sustain the price above the 20-day EMA.
Bitcoin Price Analysis
Bitcoin’s sideways movement resolved to the downside, breaking below the strong support of $55,724. This indicates that traders are exiting the market. However, the long tail on the candlestick suggests that selling pressure is waning at lower levels. Bulls will attempt to push the price back above $55,724, indicating market rejection of the breakdown. Success could lead to a short squeeze, propelling BTC/USDT towards the moving averages. Bears must defend the $55,724 level to maintain control, potentially driving the pair towards $49,000 and eventually $42,000.
Ether Price Analysis
Ether (ETH) dropped below the $2,850 support on August 4, completing a descending triangle pattern. The selling intensified on August 5, pulling the price towards the psychological support at $2,000. The long tail on the candlestick and oversold RSI levels suggest a potential relief rally. The ETH/USDT pair could rise to the breakdown level of $2,850. However, failure to reach this level would indicate weak buying interest, increasing the risk of a drop below $2,000.
BNB Price Analysis
BNB’s (BNB) range-bound movement between $495 and $635 broke to the downside on August 5, signaling bearish control. The long candlestick tail near $400 indicates aggressive buying. The oversold RSI suggests a short-term relief rally is possible. The BNB/USDT pair will attempt to rise above the $495 breakdown level. Success would indicate market rejection of the breakdown. However, failure to maintain above $460 would suggest bearish resistance, potentially pushing the pair to $400 and then $350.
Solana Price Analysis
Solana (SOL) has been oscillating between $116 and $210 for several months. The price rebounded off the solid support at $116, indicating bullish activity at lower levels. The SOL/USDT pair could reach the moving averages, a key resistance level. A failure to break this resistance would allow bears to push the pair below $116, potentially reaching $100 and then $80. An upside close above the moving averages would reduce selling pressure, extending the range-bound action.
XRP Price Analysis
XRP (XRP) fell below the 50-day SMA ($0.52) on August 5, suggesting a prolonged range-bound movement between $0.41 and $0.64. Traders typically buy dips near support and sell at resistance. Bulls are expected to defend the $0.46 to $0.41 zone vigorously. A break below this zone could lead to a fall to $0.35 and then $0.30. Conversely, a break above the 50-day SMA would indicate continued range-bound action, with the XRP/USDT pair climbing towards $0.64.
Dogecoin Price Analysis
Dogecoin (DOGE) plummeted below the $0.10 psychological support on August 5, indicating bearish control. The price rebounded from the $0.08 support, suggesting bullish attempts to halt the decline. The DOGE/USDT pair could rise to $0.10 and then to the moving averages. A strong rebound would suggest the downtrend is over, potentially leading to a range-bound period. However, failure to maintain above $0.10 would increase the risk of a drop to $0.06.
Toncoin Price Analysis
Toncoin (TON) completed a double top pattern after falling below $6.77 on July 25. The failure of bulls to reclaim this level intensified selling on August 2. The TON/USDT pair reached crucial support at $4.72 on August 5. Buyers initiated a relief rally, potentially reaching $5.50 and then $6.36. The oversold RSI supports a possible bounce. However, failure to break overhead resistance and a drop below $4.72 could intensify selling, pulling the pair towards $3.50.
Cardano Price Analysis
Cardano (ADA) fell below the crucial $0.32 support on August 5, but lower levels attracted buying, evident from the long candlestick tail. The sharp recent selling has pushed the RSI into oversold territory, indicating a potential relief rally. The recovery could reach the moving averages, where sellers are likely to reappear. A sharp decline from the moving averages could drive the ADA/USDT pair to $0.24. Bulls must push the pair above the downtrend line to signal a trend change.
This article offers no investment advice or recommendations. Every investment and trading decision carries risk. Readers should conduct their own research before making any decisions.
