More than $10 billion has been wiped out of the total cryptocurrency market capitalization after OKEx announced it would be suspending all withdrawals. The significant capital outflow saw Bitcoin, Ethereum, and XRP drop in tandem by more than 3%.
Now, different technical indexes suggest that all the markets could quickly turn from bad to worse as sell pressure mounts.
Bitcoin Seems to Have More Legs Down
Bitcoin’s price action has been contained within an ascending parallel channel ever since the September market crash.
Each time BTC has risen to the upper boundary of this technical formation, it drops to hit the lower edge, and from this point, it bounces back up again. This behavior is consistent with the characteristics of a channel.
Following the recent news about OKEx, the flagship cryptocurrency retraced nearly 3% and is now trading around the middle line of the parallel channel. A spike in sell orders around the current price levels could push BTC further down to the lower boundary of this technical pattern as has happened over the past month.
When looking at IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model, this thesis holds.
Based on this on-chain metric, Bitcoin faces a stiff resistance barrier ahead while it sits on top of weak support. An increase in selling pressure may indeed push prices to the next significant area of support, around $10,800.
Here, approximately 1.3 million addresses had previously purchased nearly 900,000 BTC. Such a critical supply barrier may have the ability to keep falling prices at bay.
Regardless, on-chain analyst Willy Woo maintains that the selling pressure behind the pioneer cryptocurrency is decreasing over time, which is a “sure sign of bull season.”
The pessimistic outlook will only be invalidated if Bitcoin manages to slice through the overhead resistance between $11,400 and $11,700. Turning this price hurdle into support will signal the breakout of the ascending parallel channel previously mentioned. Under such circumstances, BTC might march towards $13,000.
Ethereum Sits on Top of Massive Support Wall
Ethereum has been on a downtrend over the past four days that has seen its price drop by nearly 9%.
The sell-off came after the rejection from the x-axis of an ascending triangle that appears to be developing on its 4-hour chart since Sept. 5. Since then, Ether’s price action led to a horizontal line formation along with the swing highs and a rising trendline along with the swing lows.
If sell orders continue to pile up, the smart contracts giant would likely look for support around the ascending triangle’s hypotenuse. This critical barrier currently sits at $350.
Despite the high probability of a steeper decline, IntoTheBlock’s IOMAP reveals that Ethereum bears will have difficulty pushing prices down. Roughly 650,000 addresses had previously purchased 11.5 million ETH between $360 and $370.
Holders within this price range may buy more tokens to avoid seeing their positions go into the red. But if the sell-off intensifies, a drop to $350 is almost guaranteed, while slicing through this support level could trigger a 20% retracement.
On the flip side, investors must pay close attention to the x-axis of the ascending triangle previously mentioned. If the bulls manage to turn the $390 resistance into support, the odds for a 20% jump will increase drastically.
Such an upswing might see Ether rise to $470.
XRP Is Doomed to Retrace
Like the rest of the market, XRP was also affected by the recent news about OKEx. The cross-border remittances token took a nearly 4% nosedive in the past few hours. The downswing was significant enough to push prices below the 100-day moving average, which was acting as strong support.
Now that this critical barrier has been turned into resistance, XRP could drop further. Based on the descending parallel channel that formed in early August, this cryptocurrency could see its price plummet towards the channel’s middle or lower boundary.
These support levels sit at $0.22 and $0.19, respectively.
The only thing that could save XRP from such a pessimistic outlook is a break above the $0.26 resistance level. Slicing through this price hurdle will signal a breakout of the descending parallel channel previously mentioned.
By drawing a parallel line equal to the channel’s width, the upswing might see prices rise to $0.30.
The Crypto Market Moves Forward
Over the past few hours, the sell-off pushed Bitcoin, Ethereum, and XRP to critical support barriers. It seems that this new wave of FUD has discouraged investors from all the latest positive developments. Although OKEx’s users may not be able to withdraw their cryptocurrencies at the moment, data suggests that all funds are “SAFU.”
Though there is little reason to panic, short-sighted market participants will likely add a dose of volatility.
Thus investors must pay close attention to the different price levels previously mentioned. A potential downswing could be the last opportunity for sidelined investors to get back into the market before a new bull cycle begins.