China witnessed a spike in COVID-19 cases and that has resulted in strict lockdown restrictions in several parts of the country. This triggered widespread protests in China and has possibly pulled the global stock markets lower.
In addition to the turmoil in China, the cryptocurrency markets, which are already in a bear market grip, are reeling under pressure from the Chapter 11 bankruptcy filing by BlockFi and its subsidiaries. Bitcoin (BTC) is down 21% in November, on track to its worst November performance since 2018.
The sharp fall in Bitcoin’s price has drastically reduced the number of wallets holding more than $1 million worth of Bitcoin. There were 112,898 millionaire wallets on Nov. 8, 2021, but Glassnode data shows that as of Nov. 25, only 23,245 wallets boast of a Bitcoin balance worth $1 million or more.
Could the weakness in the S&P 500 index (SPX) pull Bitcoin below $16,000? Let’s study the charts to find out.
The recovery in the S&P 500 index has risen close to the downtrend line. The bears are likely to defend this level as they had done on two previous occasions.
The sellers will have to sink the price below the 20-day exponential moving average (EMA of 3,922 to tilt the short-term advantage in their favor. Post that, the index could drop to the 50-day simple moving average (SMA) of 3,794 and later to 3,700.
Contrarily, if the price turns down from the current level or the overhead resistance but bounces off the 20-day EMA, it will suggest that traders continue to buy on dips. That could improve the prospects of a break above the downtrend line. If that happens, the index could rise to 4,300. Such a move will suggest that the downtrend has ended.
The U.S. dollar index (DXY) turned down from 108 on Nov. 21, indicating that the sentiment has turned bearish and the traders may be using the rallies to lighten long positions and establish short positions.
The downsloping 20-day EMA of 108 and the relative strength index (RSI) in the negative territory indicate that the bears are in command. If the bears succeed in pulling the price below 105, the selling could intensify and the index may slide to 103.50 and then 102.
On the other hand, if the rebound off $105 sustains, the recovery could reach the 20-day EMA. If the relief rally again faces rejection at this level, the likelihood of a break below 105 increases.
On the upside, buyers will have to pierce the resistance at 108 to signal a strong comeback. The index could then rise to the uptrend line, where it may face tough resistance from the bears.
Bitcoin’s relief rally could not even reach the 20-day EMA of $16,972, indicating that traders are hesitant to buy at higher levels. The sellers will now try to pull the price to the crucial support at $15,476.
The BTC/Tether (USDT) pair is forming a descending triangle pattern, which will complete on a break and close below $15,476. This negative setup has a target objective of $13,330.
The downsloping moving averages indicate an advantage to the bears, but the bullish divergence on the RSI suggests that the bearish momentum could be weakening.
If the price turns up and breaks above the downtrend line, it could invalidate the negative setup. That could open the doors for a possible rally to the overhead resistance at $17,622. Buyers will have to kick the price above this level to indicate that the downtrend could be ending.
Ether (ETH) reached the 20-day EMA of $1,233 on Nov. 26, but the bulls could not propel the price above it. This suggests that the bears continue to defend the 20-day EMA vigorously.
The sellers may try to pull the price to the support line of the descending channel pattern, which is close to the psychologically critical level of $1,000.
Buyers are likely to defend this level with all their might but they will have to clear the overhead obstacle at the 20-day EMA to start a sustained recovery. The ETH/USDT pair could then rise to the 50-day SMA of $1,337 and subsequently to the resistance line.
On the downside, a break and close below the channel could accelerate selling and sink the pair to the June low at $881.
BNB’s (BNB) recovery turned down from $318 on Nov. 26 and plunged back below the breakout level of $300 on Nov. 28.
The bears will try to solidify their position by pulling the price below the moving averages. If they succeed, it will suggest that the break above $300 may have been a bull trap. The BNB/USDT pair could then decline to $275 and later to $258.
If the price turns up from the moving averages, it will suggest that lower levels are attracting buyers. The pair could then again rise to $318. If the bulls drive the price above this resistance, the pair could rally to $338.
XRP (XRP) rose above the overhead resistance of $0.41 on Nov. 25 but the bulls could not sustain the higher levels as seen from the long wick on the day’s candlestick.
This may have attracted selling by the bears, who pulled the price below the 20-day EMA of $0.39 on Nov. 28. The price has dipped to the breakout level from the symmetrical triangle.
This is an important level to keep an eye on because a break below it will suggest that the XRP/USDT pair may extend its stay inside the $0.30 to $0.41 range for a few more days. The flattening 20-day EMA and the RSI near 45 suggest that the bullish momentum has weakened in the near term.
Buyers will have to push and sustain the price above $0.41 to signal the start of a new up-move.
Cardano’s (ADA) relief rally could not even reach the 20-day EMA of $0.33, indicating a lack of demand at higher levels.
The bears will try to build upon their advantage and resume the downtrend by pulling the ADA/USDT pair below the support near $0.30. If they do that, the pair could drop to the support line, where buyers may step in and arrest the decline.
This bearish view could invalidate in the near term if the price rebounds off the support near $0.30 and rises above the 20-day EMA. The pair could then attempt a rally to the downtrend line, indicating that the bears may be losing their grip.
Related: New BTC miner capitulation? 5 things to know in Bitcoin this week
Dogecoin (DOGE) soared above the psychological level of $0.10 on Nov. 27, but the bulls could not sustain the higher levels. Profit booking pulled the price back into the range on Nov. 28.
The 20-day EMA of $0.09 is gradually sloping up and the RSI is in the positive territory, indicating that buyers have a slight edge. If the price springs up from the 20-day EMA, the bulls will try to resume the up-move by pushing the DOGE/USDT pair above $0.11. If they manage to do that, the rally could reach the 61.8% Fibonacci retracement level of $0.12.
On the contrary, if the price turns down and breaks below the moving averages, it will suggest that the break above the range may have been a bull trap. The pair could then drop to the support at $0.07.
Buyers are struggling to push Polygon (MATIC) above the 20-day EMA of $0.88. This suggests that the bears are viewing the relief rallies as a selling opportunity.
The MATIC/USDT pair could again drop to the uptrend line. This level has acted as a strong support on four previous occasions, hence the bulls will again try to defend it aggressively. If the price bounces off the uptrend line, the pair could rise to the 50-day SMA of $0.90.
A break above this level will suggest that the bulls are on a comeback. The pair could then rise to $0.97. On the contrary, if the price breaks below the uptrend line, the pair could drop to the important support at $0.69.
Polkadot (DOT) is in a strong downtrend. Attempts by the bulls to start a recovery fizzled out at $5.53 on Nov. 24. This suggests that the sentiment remains negative and traders are selling on rallies.
The bears have pulled the price near the crucial support at $5. This is an important level for the bulls to defend because if they fail to do that, the DOT/USDT pair could resume the downtrend. The pair could then decline to $4.06.
Alternatively, if the price turns up from the current level or rebounds off $5, it will suggest demand at lower levels. Buyers will again try to push the price above the 20-day EMA of $5.57 and extend the relief rally. The pair could then rise to $6.50.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.