bitcoin (btc) closed last week with gains of 9.55%, but started the new week on a weak note, falling near $40,500. bitcoin's sharp correction also caused sell-offs in several altcoins. According to data from CoinGlass, long liquidations between cryptocurrencies for December 11 amounted to more than $300 million.
The sharp drop does not change the trend of bitcoin and altcoins, since corrections are an integral part of any bullish trend. Generally, vertical rallies are followed by strong pullbacks, which shake out the weaker ones and allow long-term investors to buy more at lower levels.
The corrections are unlikely to extend further due to several bullish catalysts in 2024. Analysts expect one or more bitcoin exchange-traded funds to receive regulatory approval in January, which could be a game-changer. This will be followed by the bitcoin halving in April and finally, expectations of a rate cut by the US Federal Reserve could boost risk assets. Goldman Sachs anticipates the Federal Reserve will begin cutting rates in the third quarter of 2024.
What are the important levels that could stop the fall of bitcoin and altcoins? Let's analyze the graphs to find out.
S&P 500 Index Price Analysis
The bulls have successfully held the S&P 500 Index (SPX) above the breakout level of 4,541 over the past few days. This suggests that buyers are trying to convert the level into support.
The ascending 20-day exponential moving average (4,531) and the relative strength index (RSI) near the overbought zone indicate that the path of least resistance is to the upside. If buyers pierce the overhead resistance at 4,650, the index could gain momentum and rise to 4,800.
This bullish view will be invalidated in the short term if the price declines and falls below the 20-day EMA. That will indicate aggressive selling at higher levels. The index could then fall to the 50-day simple moving average (4.393).
US Dollar Index Price Analysis
The US Dollar Index (DXY) bounced off the 61.8% Fibonacci retracement level of 102.55 on November 29, indicating buying at lower levels.
The relief rally has reached the 20-day EMA (104), where the bears are mounting a tough defense. One small positive in favor of the bulls is that they have not allowed the price to fall much below the 20-day EMA.
There is minor resistance at 104.50, but if this level is scaled, the index could rise towards the 50-day SMA (105). The flattening of the 20-day EMA and the RSI near the midpoint suggest a range formation in the near term. Strong support on the downside is at 102.46.
bitcoin price analysis
bitcoin's tight consolidation near $44,700 resolved lower on December 11. The failure to resume the upward movement may have attracted selling by traders.
A minor positive in favor of the bulls is that the price rebounded from the 20-day EMA ($40,708), as seen from the long tail of the candle. Buyers will try once again to push the btc/USDT pair above $44,700, but the bears may not give up easily. The negative RSI divergence warns that bullish momentum is slowing.
If the price falls below the 20-day EMA, the correction could deepen to the breakout level of $37,980. This level is likely to attract solid buying from the bulls. On the upside, a break and close above $44,700 will indicate that the bulls have taken control again.
Ether Price Analysis
Ether (eth) dropped from $2,403 on December 9 and fell below the $2,200 breakout level on December 11. This suggests that the bulls are rushing towards the exit.
The price action of the past few days has formed a negative divergence on the RSI, indicating that the bullish momentum is weakening. Still, the bulls are trying to vigorously defend the 20-day EMA ($2,186).
If the price rebounds from the current level, the bulls will again try to resume the uptrend by pushing the eth/USDT pair above $2,403. If they do, the pair could rise to $2,500 and then $3,000.
This optimistic view will be invalidated if the price closes below the 20-day EMA. That may deepen the correction to the 50-day SMA ($2,012).
BNB Price Analysis
BNB (BNB) witnessed an off-day candlestick pattern on December 11, indicating a tough battle between the bulls and the bears.
The long tail of the day's candle shows aggressive buying at lower levels. If the price sustains above $239.2, the BNB/USDT pair is likely to gain momentum and shoot up to $265. This level may prove to be a difficult hurdle to overcome, but if buyers are successful, the pair will complete a bullish inverse head and shoulders pattern.
The trend will turn in favor of the bears if they sink and sustain the price below $223. Then, the pair could fall to the fundamental support of $203.
XRP Price Analysis
XRP (XRP) broke through the $0.67 resistance on December 8, but the bulls were unable to take advantage of this breakout on December 9. This suggests sales at higher levels.
The bulls again tried to push the price above $0.67 on December 10, but the bears held firm. This started a sharp pullback, falling below the 50-day SMA ($0.62) on December 11. If the price closes below the 50-day SMA, the XRP/USDT pair could fall to the crucial support of $0.56.
If the price rises from the current level, it will indicate that you are buying the dips. The bulls will again try to overcome the $0.67 hurdle. If they do, the pair may rise to $0.74, where the bears are expected to mount a strong defense.
Solana Price Analysis
Solana (SOL) faces selling with the overhead hurdle of $78. Failure to scale this level may have started the pullback on December 11.
The SOL/USDT pair finds support at the 20-day EMA ($63), indicating that lower levels continue to attract buyers. If the bulls maintain the bounce, the pair could retest the $78 high. A break and close above this level could open the doors for a possible rally to the psychological level of $100.
If the bears want to avoid the rally, they will have to drag the price below the 20-day EMA. That may start a deeper correction towards the crucial support at $51.
Related: Is bitcoin's price drop towards $40,000 a bear trap?
Cardano Price Analysis
Buyers pushed Cardano (ADA) above the overhead resistance of $0.60 on December 9 and 10, but were unable to hold the higher levels.
The bullish move of the past few days pushed the RSI deep into the overbought zone, indicating that the rally was overextended in the short term. This may have tempted short-term bulls to book their positions, which started the pullback on December 11.
The ADA/USDT pair is trying to find support at the 50% Fibonacci retracement level of $0.51. If the level holds, buyers will again try to push the price to the local high of $0.65. On the other hand, a break below $0.51 could sink the pair to the 20-day EMA ($0.45).
Dogecoin Price Analysis
The bears are posing a strong challenge to Dogecoin (DOGE)'s rally to $0.11, as seen from the long wick of the December 11 candle.
The price may fall to the 20-day EMA ($0.09), which is an important level to pay attention to. A strong bounce off the 20-day EMA will suggest that sentiment remains positive and traders are buying the dips. That increases the possibility of a break above $0.11. If that happens, the DOGE/USDT pair may jump to $0.15.
Conversely, a drop below the 20-day EMA will suggest that traders are aggressively booking profits. Then, the pair may extend the decline to the 50-day SMA ($0.08).
Avalanche Price Analysis
Avalanche (AVAX) has been in a strong uptrend over the past few days. Buyers easily broke through the $31 barrier on December 9 and reached $38 on December 10.
The vertical rally pushed the RSI deep into the overbought territory, indicating that a correction or consolidation is possible in the near term. The price retreated on December 11, indicating that short-term traders may be taking profits.
If buyers do not allow the price to fall below $31, the probability of a rally above $38 will increase. The AVAX/USDT pair could rise to $46 and then $50. Instead, if the price declines and falls below $31, it will suggest the start of a deeper correction at the 20-day EMA ($25.85).
This article does not contain investment advice or recommendations. Every investment and trading move involves risks, and readers should conduct their own research when making a decision.
