The Nasdaq, S&P500 and Dow all corrected sharply on Sep. 3 and opened today with additional downside, suggesting that traders are rushing to the exit. Bitcoin (BTC) and several other major altcoins have also witnessed a strong bout of profit booking that has pulled down the total crypto market capitalization from $394 billion on Sep. 2 to about $339 billion today.
Even gold, which is a traditional safe haven asset, has not been spared and lost ground in the past two days. This shows that traders are booking profits in every asset class that has run-up in the past few weeks.
Retail traders may view the current fall as a buying opportunity because over the last few months the fundamentals of Bitcoin and cryptocurrencies have improved remarkably. Even market data suggests that several large investors could be waiting to accumulate at lower levels.
However, in a falling market, the prudent strategy should be to wait for the price to stabilize and confirm a bottom before attempting to buy. Before buying, it’s crucial to determine where the critical support levels are that might attract bottom fishing from the aggressive bulls.
Bitcoin plunged below the $11,000 and $10,400 support on Sep. 3 and hit an intraday low of $9,958. This fall completed a bearish head and shoulders pattern, which has a minimum target objective of $9,540.
Currently, the bulls are attempting to defend the $10,000 support but the weak bounce suggests that buyers do not think a bottom has been found yet.
The 20-day exponential moving average ($11,331) has turned down and the relative strength index has dipped into the negative territory, which suggests that the bears have an upper hand.
If the bears sustain the price below $10,000, the next support is at the breakout level of the large symmetrical triangle, which is close to $9,500 but if this support also cracks, the decline could extend to $9,000 and then to $8,000.
This bearish view will be invalidated if the BTC/USD pair rebounds off the current levels and rises above $11,000.
Although the bulls defended the $415.634 support on Sep. 2, they could not build upon it and push the price higher. The aggressive selling on Sep. 3 broke below the 20-day EMA ($405) and pulled Ether (ETH) down to the next support at $366.
The bulls are currently attempting to defend the 50-day simple moving average ($368), which is just above the critical support at $366.
Any relief rally from the current level will face stiff resistance at the 20-day EMA. If the ETH/USD pair turns down from this resistance and breaks below $366, a deeper correction to $288 is possible.
However, if the bulls can push the price above the 20-day EMA, the pair could remain range-bound for a few days.
XRP broke below the 50-day SMA ($0.265) on Sep. 3 and plummeted to the $0.235688 support. The price has dipped below both moving averages and the 20-day EMA ($0.275) is sloping down, which suggests that the bears are in command.
Currently, the bulls are attempting to defend the $0.235688 support but any relief rally is likely to face stiff resistance at the 20-day EMA. If the XRP/USD pair turns down from this level and breaks below $0.235688, a deeper correction to $0.19 is possible.
This bearish view will be invalidated if the pair rebounds off the current levels and rises above both moving averages. Such a move will suggest that the bulls accumulated at lower levels instead of panicking.
Chainlink (LINK) plummeted below the $12.89 support on Sep. 3 and formed a lower low, which broke the uptrend. Currently, the altcoin is trading inside a descending channel and the bulls are attempting to defend the $11 level.
The 20-day EMA ($14.49) has started to turn down and the RSI has dipped into the negative territory, which suggests that the advantage has tilted in favor of the bears. The relief rally is likely to face resistance at $12.89 and again at the 20-day EMA.
If the LINK/USD pair turns down from either resistance, the bears will try to resume the correction by breaking below the descending channel. If they succeed, a drop to $8.908 is possible.
The first sign of strength would be a break above the 20-day EMA and a rally above the descending channel will suggest that the bulls are back in the game.
Bitcoin Cash (BCH) nosedived on Sep. 3 and hit an intraday low of $201.51, which is a huge negative. The 20-day EMA ($270) is turning down and the RSI has slipped into the negative zone, which suggests that the bears are in command.
Currently, the bulls are attempting to defend the critical $200 support but they are likely to face stiff resistance at $245 and again at the 20-day EMA.
If the price turns down from either level, the bears will again try to sink the BCH/USD pair below $200. If they succeed, a deeper correction to $150 is possible.
However, if the bulls defend the $200 support, the pair could remain range-bound for a few days.
Polkadot (DOT) has catapulted into the top ten cryptocurrencies by market capitalization, due to its stellar rally of the past few days. The altcoin rallied from $2 on Aug. 18 to a high of $6.8619 on Sep. 1 where traders started booking profits.
The current correction had pulled down the DOT/USD pair to $4.50, which is just above the 50% Fibonacci retracement level of $4.431. If the pair sustains the current rebound, then a rally to $5.7 and above it to $6.8619 is possible.
Conversely, if the relief rally fails to find buyers at higher levels, then the next support on the downside is the 61.8% Fibonacci retracement level of $3.8572.
Litecoin (LTC) broke below the 50-day SMA ($55) and the $51 support on Sep. 3 and fell to an intraday low of $45.40, which is a huge negative.
The moving averages are on the verge of a bearish crossover and the RSI has dipped into the negative zone, which suggests that the bears have the upper hand.
Any recovery is likely to face stiff resistance at $51 and above it at the 20-day EMA. If the price turns down from either level, a drop to $39 is likely.
This bearish view will be invalidated if the bulls can push the LTC/USD pair above $51 and sustain the level for three days.
Traders rushed to book profits in Crypto.com Coin (CRO) on Sep. 3, which resulted in a break below both the moving averages for the first time since April, which suggests that the upward momentum has broken.
The next support on the downside is $0.14 and if that cracks, the correction can extend to $0.127459, which is the 38.2% Fibonacci retracement level of the entire up-move that started way back in mid-March.
If the CRO/USD pair rises from either level, it will suggest that the sentiment remains positive as the bulls are buying on dips to strong support levels.
However, if the bears sink the price below $0.127459, the next support is the 50% Fibonacci retracement level of $0.107801.
Binance Coin (BNB) had closed (UTC time) above the overhead resistance of $24.4588 on Sep. 2, which showed that the sentiment was bullish.
However, it did not take long for the sentiment to change and the BNB/USD pair turned around and plunged below the critical support of $20.5710 on Sep. 3.
This is a good example of how sentiment can turn around in a jiffy, hence, traders should always be very alert.
When the price dips below both moving averages, it signals weakness. The bears will now try to sink the pair to $18.23 and if that support also cracks, the decline could extend to $16.40.
This bearish view will be invalidated if the bulls can push the price above $20.571 levels and sustain it for three days. Such a move will indicate that the current fall was a bear trap.
The failure of the bulls to sustain Bitcoin SV (BSV) above $200 on Sep. 2 attracted selling, which intensified on Sep. 3 and pulled the altcoin to the critical support at $146.20.
The weak attempt to rebound from the current levels suggests a lack of confidence among the bulls that this support will hold. If the bears sink the BSV/USD pair below the $146.20–$135 support zone, a drop to $77 is possible.
Conversely, if the bulls defend the $146.2 levels aggressively, the pair could attempt to rise to $200 and remain range-bound between these two levels for a few days.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.