Tesla CEO Elon Musk tweeted on May 13 that the company will stop accepting Bitcoin (BTC) payments for its vehicle purchases, citing “rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.” Shortly after the announcement, Bitcoin price dropped by 17% to hit a new local low at $ 46,000.
While Musk’s decision is a short-term blow to the sentiment of the market, it is unlikely to change the course of the crypto markets altogether because the institutional demand for cryptocurrencies remains high. Proof of this came yesterday as Cowen Inc., a 103-year-old bank, announced that it had partnered with Standard Custody and Trust Co. to enter the crypto custody business.
Another indication of increasing institutional interest in crypto is the sharp rise in “crypto under the custody” of Gemini crypto exchange. The Winklevoss twins’ led exchange now has $ 30 billion worth of crypto under custody.
The long-term picture for cryptocurrencies remains strong but the short-term price fluctuations may cause large drawdowns to portfolios. Hence, traders should watch the price action closely and follow their trading rules without getting sucked into trades driven by emotions.
Let’s analyze the charts of the top-10 cryptocurrencies to determine the trends and the path of least resistance for the next move.
Bitcoin has formed a bearish head and shoulders pattern, which will complete on a breakdown and close below the neckline of the setup. The sharp fall on May 12 and today had pulled the price down to the neckline but the bulls are attempting to defend the support.
However, the 20-day exponential moving average ($ 54,958) has started to turn down and the relative strength index (RSI) has dipped into the negative zone, indicating the bears have the upper hand.
If the price breaks below the neckline, the H&S setup will complete. This pattern has a target objective at $ 31,653.73. However, it may not be a straight dash lower as the bulls will try to stall the decline at $ 42,500 and then $ 40,000.
Contrary to this assumption, if the bulls sustain the price above $ 46,985, the BTC/USDT pair could rally to $ 52,323,21 where the bears are again likely to mount a stiff resistance.
Ether (ETH) formed a bearish engulfing pattern on May 12 as the price reversed direction after hitting a new all-time high at $ 4,374.67. However, the long tail on today’s candlestick suggests the sentiment remains positive and bulls are buying the dips.
Both moving averages are sloping up and the RSI is near the overbought zone, suggesting that bulls are in control. The buyers will now try to push the price above the all-time high. If they succeed, the ETH/USDT pair may rally to $ 5,000 and then $ 5,723.66.
Contrary to this assumption, if the price turns down from the current level or the overhead resistance and breaks below the 20-day EMA ($ 3,348), it will suggest that supply exceeds demand. That could pull the price down to $ 3,000 and then the 50-day simple moving average ($ 2,552).
Binance Coin (BNB) is facing strong resistance near the $ 680 level. Repeated failures to rise and sustain above this level may have attracted profit-booking from short-term traders on May 12, which pulled the price below the 20-day EMA ($ 593).
However, the long tail on today’s candlestick suggests strong buying at lower levels. If the bulls push and sustain the price above the 20-day EMA, the BNB/USDT pair may retest the $ 680 resistance.
A break and close above the resistance could start the next leg of the uptrend that may reach $ 771. Conversely, if the bulls fail to sustain the price above the 20-day EMA, the pair may gradually drop to the 50-day SMA ($ 496) and then $ 440.
After sustaining above the breakout level at $ 1.48 since May 6, Cardano (ADA) has broken out of the $ 1.83 overhead resistance. This suggests the bulls have overpowered the bears and the uptrend has resumed.
The rising 20-day EMA ($ 1.52) and the RSI above 66 suggest the path of least resistance is to the upside. If the bulls can sustain the price above $ 1.83, the ADA/USDT pair could rally to the next target objective at $ 2.25.
Contrary to this assumption, if the price turns down from the current level and breaks below $ 1.83, the pair may extend its range-bound action for a few more days. A break and close below $ 1.48 will suggest that the bears have overpowered the bulls and the pair may then drop to the 50-day SMA ($ 1.32).
Dogecoin (DOGE) bounced off the 20-day EMA ($ 0.43) on May 11 but the higher levels met with selling pressure as seen from the long wick on the day’s candlestick. The selling resumed on May 12 and the bears pulled the price below the 20-day EMA.
The buyers are attempting to defend the 61.8% Fibonacci retracement level at $ 0.38 but they are facing stiff resistance at $ 0.45. If the price turns down and plummets below $ 0.35, the DOGE/USDT pair may drop to the 50-day SMA ($ 0.25).
Alternatively, if the price rebounds off the current level and rises above $ 0.45, it will suggest accumulation at lower levels. The pair may then rise to $ 0.55 where the bulls are likely to encounter stiff resistance. If the price turns down from this resistance, the pair may consolidate between $ 0.45 and $ 0.55 for a few days.
The bulls failed to sustain XRP above the downtrend line for the past few days, indicating strong resistance by the bears. That may have resulted in short-term traders dumping their positions, pulling the price down to the 50-day SMA ($ 1.20).
If the price rebounds off the 50-day SMA, the bulls will again try to push the XRP/USDT pair above the downtrend line and the overhead resistance at $ 1.66. If they manage to do that, the pair could retest the 52-week high at $ 1.96.
However, the 20-day EMA ($ 1.41) has started to turn down and the RSI is trading in the negative zone, suggesting a minor advantage to the bears. If the sellers can sink and sustain the price below the 50-day SMA, the pair may decline to $ 1.01 and then $ 0.88.
Polkadot (DOT) has repeatedly failed to break above the $ 42.28 overhead resistance, suggesting the bears are defending the level aggressively. However, the bulls continue to buy at lower levels as they have not allowed the price to sustain below $ 32.50.
The flat moving averages and the RSI near the midpoint indicate the DOT/USDT pair could remain stuck between $ 32.50 and $ 42.28 for a few more days.
A breakout and close above $ 42.28 could push the price to an all-time high at $ 48.36. This level may again act as stiff resistance but if the bulls drive the price above it, the pair may resume its uptrend toward the target objective at $ 58.06.
Alternatively, if the bears sink the price below $ 32.50, the pair may drop to $ 26.50. A strong bounce off this level will suggest the pair may extend its stay inside the large $ 26.50 to $ 42.28 range for a few more days. A break below $ 26.50 could suggest the start of a new downtrend.
Bitcoin Cash (BCH) rose to a new 52-week high at $ 1,638.08 on May 12 but the bulls could not sustain the higher levels. That resulted in aggressive profit-booking by traders, pulling the price down to the 20-day EMA ($ 1,213).
The bearish engulfing candlestick pattern on May 12 suggests a possible trend reversal. If the bears can break and sustain the price below the 20-day EMA, the BCH/USDT pair could drop to the 61.8% Fibonacci retracement level at $ 1,054.41 and then to the 50-day SMA ($ 867).
Contrary to this assumption, if the price recovers and sustains above $ 1,213.51, the pair may enter a range-bound action for a few days. The flattening 20-day EMA and the RSI just above the midpoint also suggest a few days of consolidation.
Litecoin’s (LTC) failure to sustain above the resistance line of the ascending broadening wedge formation on May 12 could have attracted strong selling by traders. That dragged the price down to the 20-day EMA ($ 313).
If the bears sustain the price below $ 300, the LTC/USDT pair could drop to the 50-day SMA ($ 260) and then to the support line of the wedge. A break below the wedge could signal the start of a new downtrend.
On the contrary, if the bulls sustain the price above the 20-day EMA, the pair may attempt a recovery, which is likely to face stiff resistance near $ 340. A break above the resistance line of the wedge will suggest that the correction has ended.
Uniswap (UNI) continues to trade inside an ascending channel. The bears pulled the price below the 20-day EMA ($ 38.35) on May 10 but they could not break the 50-day SMA ($ 34.50) support, which shows buying at lower levels.
The bulls tried to resume the up-move on May 12 but they could not sustain the higher levels as seen from the long wick on the day’s candlestick. This indicates traders are selling their positions on rallies.
Buying near the 50-day SMA and selling at higher levels suggests a range-bound action for a few days. The next trending move may start if the bulls push and sustain the price above $ 45. Conversely, a break below the support line of the channel could start a new downtrend.
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.
Market data is provided by HitBTC exchange.
Author: Cointelegraph By Rakesh Upadhyay
This post originally appeared on Cointelegraph.com News