The FTX collapse continues to stoke fears of a contagion in the cryptocurrency space as investors wait to hear about businesses that may face the heat. One of the marquee names to come under the circle of suspicion is the Grayscale Bitcoin Trust (GBTC), which has seen its discount to Bitcoin’s (BTC) price reach record levels of about 50%.
Traders hate uncertainty and shy away from investing during these periods. That could be one of the reasons for a lack of buying interest in Bitcoin even after the sharp fall in its price. The Stock-to-Flow (S2F) model, which had seen its popularity soar during the bull phase, is coming under increasing criticism after the deviation between Bitcoin’s price and its projected price hit levels never seen before.
Does this suggest that the pessimism has reached an extreme or is it just that the S2F model is flawed?
During a bear phase, the general trend is down but there are always pockets of strength that may offer trading opportunities to long-only investors. However, rallies during bear markets are short-lived, hence traders may consider booking profits near strong resistance levels.
Let’s look at the charts of five cryptocurrencies that may attempt a rally in the near term.
Bitcoin continues to trade inside the tight range between $16,229 and $17,190. Generally, periods of tight consolidation are followed by an increase in volatility.
The downsloping 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 breaks below $16,229, the Nov. 9 intraday low of $15,588 may be threatened. A break and close below this support could signal the resumption of the downtrend. The next support on the downside is $12,200.
If bulls want to avoid a further decline, they will have to push and sustain the price above the breakdown level of $17,622. 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 has been trading near the moving averages, which have flattened out. This suggests that the pair has entered a state of equilibrium as both the buyers and sellers are undecided about the next directional move.
However, this uncertainty is unlikely to continue for long. If the price plummets below $16,229, the selling pressure could pick up momentum and the pair may drop to $15,588. If this support gives way, the pair may start the next leg of the downtrend.
On the contrary, if the price rises and breaks above $17,190, it will suggest that the current tight range was used by the bulls to accumulate. The pair could then rally to $18,200 and later to $18,730.
Toncoin (TON) has recovered sharply from its June low and managed to hold on to a large part of the gains. This suggests that traders are in no hurry to dump 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 sloping up and the RSI is in the positive territory, indicating a slight advantage to the bulls.
If the price rebounds off the 20-day exponential moving average ($1.65), the bulls will try to drive the price above the triangle. If they can pull it off, the pair could rally to $2.15 and thereafter climb toward 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 stiff resistance at $1.80. Repeated failure to sustain the price above this level may have tempted short-term traders to book profits. The bears are trying to capitalize on this situation and sink the price below the 50-SMA. If this support cracks, the pair could dive to $1.55.
Conversely, if the price rebounds off the current level, the bulls will again try to scale the wall at $1.80. The repeated retest 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) is attempting to form an inverse head and shoulders pattern, which will complete on a break and close above the neckline. If that 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 are aggressively defending the neckline. If the price breaks below the 50-day SMA ($0.21), the CHZ/USDT pair could decline to $0.18 and subsequently to $0.14.
Alternatively, if the price bounces off the current level, buyers will again attempt to propel the pair above the neckline and gain control.
The flattening moving averages and the RSI just below the midpoint do not give a clear advantage either to the bulls or the bears. Hence, it is better to wait for the price to breakout before establishing fresh positions.
The pair turned down sharply from $0.27 and the bears have pulled the price below the moving averages. If the price sustains below the 50-SMA, the pair could drop to $0.20. That could put the bears in the driver’s seat.
On the other hand, if the price turns up from the current level and rises above the 20-EMA, it will suggest that traders are viewing the dips as a buying opportunity. The pair could then rise to $0.26 and later to $0.28. Buyers will have to drive the price above this level to challenge the resistance at $0.30.
Related: FTX funds on the move as thief converts thousands of ETH into Bitcoin
Although Quant (QNT) has corrected sharply in the past few days, it is attempting to take support and bounce off the support line. This indicates demand at lower levels.
The downsloping 20-day EMA ($128) indicates advantage to bears but the RSI is trying to form a positive divergence. This suggests that the selling pressure could be easing.
Buyers will have to propel and sustain the price above the 20-day EMA to indicate that the corrective phase may be over. The QNT/USDT pair could then rise to the 50-day SMA ($151) and thereafter to $180.
This positive view could invalidate in the near term if the price continues lower and breaks below the uptrend line. The pair could then drop to $87 and later to $79.
The recovery in the pair is facing selling near the downtrend line. This suggests that bears are active at higher levels. The bears have pulled the price below the moving averages and will try to extend the decline to $105 and then to $94.
To invalidate this negative view, the bulls will have to kick and sustain the price above the downtrend line. The pair could then rise to $125 where the bears may mount a strong defense. If buyers overcome this barrier, the up-move may reach $136.
While most major cryptocurrencies extended their downtrend in the past few days, Trust Wallet Token (TWT) has moved in the opposite direction and risen sharply. This indicates outperformance in the near term.
The TWT/USDT pair soared from $1.03 on Nov. 10 to $2.73 on Nov. 14, a 165% rally within a short time. That pushed the RSI deep into the overbought territory, suggesting a minor correction or consolidation in the near term and that is what happened.
The pair is finding support near the 50% Fibonacci retracement level of $1.88 but the bulls are struggling to push the price above $2.45. This suggests the pair may consolidate between $1.81 and $2.45 for a few days.
Both moving averages are sloping up and the RSI remains in the positive territory, indicating that bulls have the advantage. If buyers drive the price above the $2.45 to $2.73 resistance zone, the pair could resume its uptrend. This positive view could invalidate on a break and close below the 20-day EMA ($1.70).
The bears pulled the price below the 50-SMA but they are struggling to keep the pair down. This suggests strong buying at lower levels. If buyers push the price above the 20-EMA, the pair could rise to the downtrend line.
A break above this level could clear the path for a possible rally to $2.45. This remains the key hurdle for the bulls to overcome. If they succeed in breaking it, the pair may retest $2.73.
On the downside, a slide below $1.92 could result in a decline to $1.81. This is an important level to keep an eye on because a break below it could tilt the advantage in favor of the bears.
The views and opinions expressed here 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.
Joseph Spezzano received a Masters Degree in computer science from The University of Massachusetts. Joseph has been working as a full-time blockchain programmer for the past 5 years. In his spare time, Joseph enjoys writing for CryptocurrencyInvestments.com and traveling.