FTX’s collapse continues to raise fears of contagion in the cryptocurrency space as investors wait to hear about businesses that could face heat. One of the marquee names that will come under suspicion is Grayscale Bitcoin Trust (GBTC), which has seen the price of Bitcoin (BTC) drop nearly 50% to record levels.
Traders hate uncertainty and avoid investing during these periods. This may be one of the reasons why there is no interest in Bitcoin even after its price has plummeted. The Stock-to-Flow (S2F) model, which saw its popularity rise during the bull phase, is under increasing criticism following an unprecedented deviation between Bitcoin’s price and predicted price hit levels.
Does this indicate that pessimism has gone too far, or is there simply a flaw in the S2F model?
During a bearish phase, the overall trend is down, but there are always pockets of strength that can only offer trading opportunities to long-term investors. However, rallies during bear markets tend to be short-lived, so traders can consider taking profits near strong resistance levels.
Let’s look at the charts of five cryptocurrencies that may attempt a near-term rally.
Bitcoin continues to trade in a tight range between $16,229 and $17,190. In general, periods of intense consolidation are accompanied by increased volatility.
Descending moving averages and the relative strength index (RSI) in the negative zone indicate that the path of least resistance is to the downside. If the price falls below $16,229, an intraday low of $15,588 could be threatened on November 9. A break and close below this support could signal a resumption of the downtrend. The next support on the downside is $12,200.
If the bulls want to avoid further decline, the price will need to push and hold above the breakout level of $17,622. Such a move would suggest strong demand at lower levels. The pair could then rise to the psychological level of $20,000.
The BTC/USDT pair is trading near flattening moving averages. This indicates that the pair is in equilibrium as both buyers and sellers are undecided about the next directional move.
However, this uncertainty is unlikely to last for long. If the price falls below $16,229, the selling pressure may gain momentum and the pair may fall to $15,588. If this support gives way, the pair may begin the next leg of the downtrend.
Conversely, if the price rises and breaks above $17,190, it will indicate that the current tight range is being used by the bulls to rally. The pair could then rise to $18,200 and further to $18,730.
Toncoin (TON) recovered sharply from the June lows and managed to hold on to a large portion of the gains. This suggests that traders are in no rush to unload their positions at higher levels.
The TON/USDT pair has formed a symmetrical triangle, which usually acts as a continuation pattern. Both moving averages are gradually rising and the RSI is in positive territory, indicating a slight advantage for the bulls.
If the price breaks back from the 20-day exponential moving average ($1.65), the bulls will try to push the price above the triangle. If they can lift it, the pair could rise to $2.15 and then climb towards the $2.87 target.
Alternatively, if the price breaks below the 20-day EMA, the pair may fall to the 50-day simple moving average ($1.50) and then to the support line.
The pair faces stiff resistance at $1.80. Repeated failure to hold the price above this level could prompt short-term traders to take profits. Bears are trying to take advantage of this situation and push the price below the 50-SMA. If this support is cracked, the pair could drop to $1.55.
Conversely, if the price rises above the current level, the bulls will again try to raise the wall to $1.80. Repeated testing of a resistance level tends to weaken it. A close above this resistance could open the door to a possible rally to $2.
Chiliz (CHZ) tries to create an inverse head and shoulders pattern, which will complete on the break and close above the neckline. If this happens, it could signal the start of a new uptrend.
A reversal formation target is $0.54, but the bears are unlikely to give up easily. They aggressively defend the neckline. If the price breaks below the 50-day SMA ($0.21), the CHZ/USDT pair may decline to $0.18 and subsequently to $0.14.
Alternatively, if the price breaks below the current level, buyers will again try to push the pair above the neckline and gain control.
Flattening moving averages and an RSI slightly below the midpoint do not clearly favor either the bulls or the bears. Therefore, it is better to wait for the price to rise before creating new positions.
The pair fell sharply below $0.27 and the bears dragged the price below the moving averages. If the price stays below the 50-SMA, the pair may fall to $0.20. This could put the bears in the driver’s seat.
On the other hand, if the price breaks above the current level and rises above the 20-EMA, it will indicate that traders are viewing the dips as a buying opportunity. The pair could then rise to $0.26 and then to $0.28. Buyers will need to push the price above this level to challenge the resistance at $0.30.
Related: FTX funds are on the move as thief converts thousands of ETH to Bitcoin
Although Quant (QNT) has corrected sharply over the past few days, it is trying to find support and break out of the support line. This indicates that demand is low.
A bearish 20-day EMA ($128) shows upside, but the RSI is trying to create a positive divergence. This suggests that selling pressure may be easing.
Buyers will need to push and hold the price above the 20-day EMA to signal the end of the correction phase. The QNT/USDT pair may then rise to the 50-day SMA ($151) and further to $180.
If the price continues lower and falls below the bullish line, this bullish view may lose credibility in the near term. The pair could then drop to $87 and then $79.
A recovery in the pair faces selling near the downtrend line. This indicates that bears are more active. The bears have pulled the price below the moving averages and will try to extend the decline to $105 and then to $94.
To reverse this negative feedback, the bulls will need to push the price above the downtrend line and hold. The pair could then rise to $125, where the bears could mount a strong defense. If buyers break this barrier, the upside could reach $136.
While most major cryptocurrencies have extended their downtrend over the past few days, Trust Wallet Token (TWT) has gone in the opposite direction and has risen sharply. This indicates high performance in the near term.
The TWT/USDT pair rose from $1.03 on November 10 to $2.73 on November 14, a 165% increase in a short period of time. This pushed the RSI into overbought territory, suggesting a minor correction or consolidation in the near term, and that was it.
The pair finds support near the 50% Fibonacci retracement level of $1.88, but the bulls are struggling to lift the price above $2.45. This suggests that the pair may consolidate between $1.81 and $2.45 for several days.
Both moving averages are rising and the RSI remains in positive territory, indicating that the bulls have the upper hand. If buyers push the price above the $2.45-2.73 resistance zone, the pair may continue its uptrend. This bullish view could be invalidated on the break and close below the 20-day EMA ($1.70).
Bears have pulled the price below the 50-SMA, but are struggling to hold the pair lower. This indicates strong buying at lower levels. If buyers push the price above the 20-EMA, the pair may rise to the lower trend line.
A break above this level could clear the way for a possible rally to $2.45. This remains a major hurdle for the bulls to overcome. If they can break it, the pair could retest $2.73.
On the downside, a break below $1.92 could result in a drop to $1.81. This is an important level to watch out for, as a break below it could swing the advantage in favor of the bears.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading action involves risk, you should do your own research when making a decision.