FTX’s collapse continues to fuel fears of contagion in the cryptocurrency space as investors wait to hear about companies that are likely to weather the heat. One of the big names to enter the circle of suspicion is the Grayscale Bitcoin Trust (GBTC), which has seen its reduction compared to Bitcoin (BTC) the price reaching record levels of around 50%.
Traders hate uncertainty and are hesitant to invest during these times. This could be one of the reasons for the lack of interest in Bitcoin, even after its price dropped sharply. The Stock-to-Flow (S2F) model, which had skyrocketed in popularity during the bull run, is coming under increasing criticism after the gap between bitcoin price and its projected price reach levels never seen before.
Does this suggest that pessimism has reached an extreme or is the S2F model simply flawed?
During a bear market, the general trend is down, but there are always pockets of strength that can provide trading opportunities for long-only investors. However, rallies during bear markets are short-lived, which is why traders may consider booking profits near high resistance levels.
Let’s look at the charts of five cryptocurrencies that could attempt a short-term rally.
Bitcoin continues to trade in the narrow range between $16,229 and $17,190. Typically, periods of tight consolidation are followed by increased volatility.
The descending moving averages and the Relative Strength Index (RSI) in the negative zone indicate that the path of least resistance is on the downside. If the price breaks below $16,229, the November 9 intraday low of $15,588 could be at risk. A breakout and close below this support could signal the resumption of the downtrend. The next downside support is $12,200.
If the bulls want to avoid further decline, they will need to push and hold the price above the $17,622 breakdown level. Such a move will suggest strong demand at lower levels. The pair could then climb to the psychological level of $20,000.
The BTC/USDT pair traded near the moving averages, which flattened out. This suggests that the pair has entered a balanced state as buyers and sellers are undecided on the next directional move.
However, this uncertainty should not last long. If the price drops below $16,229, the selling pressure could accelerate and the pair could drop to $15,588. If this support breaks, the pair may begin the next leg of the downtrend.
On the contrary, if the price rises above $17,190, it will suggest that the current tight range has been used by the bulls to accumulate. The pair could then rally to $18,200 and later to $18,730.
Toncoin (TON) rallied strongly from its June low and managed to hold onto much of the gains. This suggests that traders are in no rush to liquidate 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 bounces off the 20-day exponential moving average ($1.65), the bulls will try to push the price above the triangle. If they succeed, the pair could climb to $2.15 and then climb towards the target objective of $2.87.
Alternatively, if the price slips below the 20-day EMA, the pair could drop to the 50-day simple moving average ($1.50) and then to the support line.
The pair is facing strong resistance at $1.80. The repeated failure to hold the price above this level may have tempted short-term traders to book profits. The bears are trying to capitalize on this situation and push the price down below the 50-SMA. If this support cracks, the pair could plunge to $1.55.
Conversely, if the price rebounds from the current level, the bulls will again attempt to breach the wall at $1.80. Repeated retesting of a resistance level tends to weaken it. A close above this resistance could open the doors for a possible rally to $2.
Chiliz (CHZ) attempts to form an inverted head and shoulders pattern, which will end on a break and close above the neckline. If this happens, it may signal the start of a new uptrend.
The pattern target of the reversal formation 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 could decline to $0.18 and then to $0.14.
Alternatively, if the price rebounds off the current level, the buyers will again attempt to propel the pair above the neck line and take control.
Flattening moving averages and the RSI just below the midpoint do not give a clear advantage to either bulls or bears. Therefore, it is better to wait for the price to explode before establishing new positions.
The pair fell sharply from $0.27 and the bears pulled the price below the moving averages. If the price holds below the 50-SMA, the pair could drop to $0.20. This could put the bears in the driver’s seat.
On the other hand, if the price rises from the current level and breaks above the 20-EMA, it will suggest that traders view the dips as a buying opportunity. The pair could then rise to $0.26 and later to $0.28. The buyers will need to drive the price above this level to challenge the resistance at $0.30.
Although Quant (ND) has corrected strongly in the past few days, it is trying to take support and bounce off the support line. This indicates demand at lower levels.
The 20-day downward sloping EMA ($128) indicates an advantage for the bears, but the RSI is trying to form a positive divergence. This suggests that the selling pressure may be easing.
The buyers will need to propel and hold the price above the 20-day EMA to signal that the corrective phase may be over. The QNT/USDT pair could then reach the 50-day SMA ($151) and then to $180.
This positive view could be invalidated in the short term if the price continues to decline and breaks below the uptrend line. The pair could then fall to $87 and later to $79.
The rally in the pair faces a selloff near the downtrend line. This suggests that the bears are active at higher levels. The bears have pulled the price below the moving averages and will attempt to extend the decline to $105 and then to $94.
To invalidate this negative view, the bulls will need to re-start and hold the price above the downtrend line. The pair could then rise to $125 where the bears could mount a strong defense. If the buyers overcome this hurdle, the upside can reach $136.
While most of the major cryptocurrencies extended their downward trend in recent days, Trust Wallet Token (TWT) moved in the opposite direction and rose sharply. This indicates short-term outperformance.
The TWT/USDT pair rose from $1.03 on November 10 to $2.73 on November 14, a 165% rally in a short time. This pushed the RSI deep into overbought territory, suggesting a minor near-term correction or consolidation and that’s what happened.
The pair finds support near the 50% Fibonacci retracement level of $1.88, but the bulls are struggling to push the price above $2.45. This suggests that the pair could consolidate between $1.81 and $2.45 for a few days.
Both moving averages are up and the RSI remains in positive territory, indicating that the bulls have the advantage. If the buyers push the price above the $2.45-$2.73 resistance zone, the pair could resume its uptrend. This positive view could invalidate a break and close below the 20-day EMA ($1.70).
The bears have pulled the price below the 50-SMA but they are struggling to hold the pair down. This suggests strong buying at lower levels. If the buyers push the price above the 20-EMA, the pair could reach the downtrend line.
A break above this level could pave the way for an eventual rally to $2.45. This remains the main hurdle for bulls to overcome. If they manage to break it, the pair can retest $2.73.
On the downside, a drop below $1.92 could result in a decline to $1.81. This is an important level to watch as a break below could tip 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 move involves risk, you should conduct your own research when making a decision.