How far can this drop in the cryptocurrency market go?

Julien Moretto – 21 Apr 2021


The price of Bitcoin is down 13% on a week. The asset is trading at around €46,000 ($55,000) on April 21. The main reason for the drop was a major power outage in China that affected Bitcoin mining, and rumors of tougher regulation of the industry. However, technical analysis has already shown for several days that the uptrend is likely to run out of steam. This correction could still continue and Bitcoin is not safe from falling back below $50,000. Nevertheless, we are still in a long-term uptrend, which started in the fall of 2020. The most likely outcome is that this correction is just a blip before the market resumes its uptrend. We see in our technical analysis the price levels that are potentially interesting to buy.

Despite the decline in recent days, it has been noticeable since the beginning of April that altcoins are generating higher performance than Bitcoin. Specifically, Bitcoin’s share of the overall cryptocurrency market is shrinking. Not to the benefit of big projects like Ethereum, but to new altcoins, or less capitalized altcoins. Data that shows that euphoria and greed have taken over the market a bit, with investors hoping to make ever greater returns through altcoins with low prices. The perfect example of this phenomenon is the price of Dogecoin, which has gained more than 700% since April 1st, benefiting from social networks hype, fueled in particular by the regular tweets of Tesla CEO Elon Musk.

On the macroeconomic front, fears of higher than expected inflation seem to be starting to show: the dollar is weakening and the US stock market indices are also down since Monday. But above all, the precious metals market, with gold at the top of the list, is recovering. These assets are usually used as a hedge by professional investors when they feel that uncertainty is returning to the markets. We will have to follow the evolution of this situation in the coming weeks.

  • According to CoinGecko, market capitalization is down to $2100 billion from $2300 billion last week.
  • Bitcoin’s dominance continues to fall: 49% market share versus 52% last week.
  • The best performance in the top 50 can be attributed to Dogecoin (DOGE) with +240% over one week.

We invite you to discover our video analysis (in french and dated from April 20):

Bitcoin (BTC)

The Coinhouse recommendation :
Wait

  • Following this weekend’s decline, Bitcoin is trading around €46,000 ($55,000) on April 21 and is in a technical bind. A sustained breach of the €50,000 ($60,000) mark has failed and is a short-term warning. If the price returns to $58,000-60,000 level and gets stuck again, we will lighten up on Bitcoin. It will then be likely to see a longer correction. The price would go into the price range between €35,000 and €38,300 ($42,000 and $46,000) where we will look for medium/long term purchases. On the other hand, if the price rises quickly and ends a day above $60,000, the odds will be high that it will continue to rise directly towards $70,000 and above.

Ethereum (ETH)

The Coinhouse recommendation :
Taking profits between $2400 and $2600

  • Ethereum (ETH) remains broadly stable over a week despite this weekend’s drop. The asset is trading at €2,000 ($2,400). Our zone between €1,930 and 2,100€ ($2,300 and $2,500) has worked well for taking profits. The price of the ether looks like it will retest this area this week, and we still recommend lightening up on positions here for those who haven’t done so yet. If the trend deteriorates on Bitcoin, the ether price will also fall. An interesting area to look for medium-term buying is between €1,470 and €1,600 ($1770 and $1920). On the other hand, if the ether price ends a day above $2,400, we should consider a continuation of the short-term rise and possibly a new all-time high ahead.

EOS

The Coinhouse recommendation :
Buy on the $5,40 zone

  • EOS is one of those crypto-currencies that have only seen a late return to the upside. The project is struggling to convince by its fundamentals. Technically, the price nevertheless accelerated upwards in April, breaking a major resistance at around $5.40/$5.50, which dated back to February 2020. This rise stopped last week at the $9 resistance that historically blocked the price in spring 2019. For those who would like to gain exposure to EOS, we advise waiting for the current correction to clear. If the price returns to the $5.40 pivot and signs of a bullish reversal are noticed, a buy position may be attempted. A break of the $9 mark will be synonymous with a clear acceleration to the upside.

Tops & flops of the week (top 50 marketcap)


Tops

1- Dogecoin (DOGE) : +241%
2- VeChain (VET) : +60%
3- Ethereum Classic (ETC) : +54%


Flops

1- Stellar (XLM) : -23%
2- Ripple (XRP) : -22%
3- Avalanche (AVAX) : -20%

All information in this article is provided for informational purposes only, although it has been compiled from reputable and reliable sources. It does not constitute an offer to buy or sell digital assets, nor does it constitute an offer to provide services in respect of digital assets, nor does it constitute advice, inducement or recommendation to deal in such digital assets. It constitutes simple information that is under the user’s absolute control. We inform you that if you choose to invest in digital assets, you must be aware of our general terms and conditions of sale (https://bit.ly/2FGW2ek) and accept the various risks listed and defined on our legal warning page (https://bit.ly/3c4sQKc)

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