Cryptocurrencies on the verge of prolonged major crash
As the market capitalization of the entire crypto industry continues to fall, the two major cryptocurrencies Bitcoin and Ethereum are on the verge of collapsing through major support levels, which should lead to another strong decrease of up to 50%.
It’s been a few bad weeks for cryptocurrencies. Just six weeks ago, the industry was setting new records and turning millionaires into novice investors. Since that peak in mid-April, more than half of Bitcoin’s value has been wiped out, and a further decline looks likely. So what is most likely to be in crypto over the next few days and weeks, and how could you profit from it?
General crypto weakness
The first thing to understand is that there is an overall drop in virtually all cryptocurrencies that are unrelated or otherwise tied to the value of a non-crypto asset. If you look at recent price charts for almost all of the major cryptocurrencies, you will see almost identical declines for all of them.
This is a bad sign for bulls in any cryptocurrency. A sharp drop in the asset class as a whole is a sign that they are swimming against the tide. You can choose the best cryptocurrency, but all you will likely get for it is the smallest loss, not a win.
Bitcoin crossing the $ 30,000 mark
There are so many bearish signs in the Bitcoin price table below, it’s hard to know where to start:
- Yesterday saw the lowest daily close in 5 months.
- The price ended head and shoulders lower in mid-May once it fell below around $ 48,000.
- Price currently appears to be finishing an even lower bearish head and shoulders at this time. As of this writing, the price is breaking the low point reached during the recent period of consolidation over the past four weeks.
- Based on the previous price action at these levels, it appears that If the support level at $ 28,607 were to break down, the price could drop quickly to $ 20,000 before reaching a previous congestion area that would likely provide support. The price could even continue to drop to $ 10,000.
Bitcoin Daily Price Chart 2021
Ethereum below $ 2,000
Until recently, Ethereum held up better than Bitcoin, which marked an unusual role reversal from most of the crypto era. This is no longer the case because Ethereum is doing as badly as Bitcoin in some ways, although the full downside may be limited:
- The price has fallen by more than 60% since its high just six weeks ago. This is a slightly steeper drop than the one Bitcoin experienced during the same period.
- Price has just broken through what appears to be a very strong support level at $ 1751.
- Bitcoin may have to fall further in any major drops ahead than Ethereum, as the area below $ 1971 can be seen to the left of the price chart below as being quite crowded.
Ethereum Daily Price Table 2021
What does this mean for traders?
Sadly, the savage crypto boom of the past few years has seen many, mostly younger, traders and investors drawn into buying cryptocurrency for fear of missing out. This is completely understandable, as the lucky ones were created very easily and almost by accident while the merchants of doom were giving their warnings.
Anyone who thinks that cryptocurrencies can only rise, and therefore dips need to be bought, is not facing the reality. The truth is that any cryptocurrency, be it Bitcoin or Ethereum, cannot be accurately valued for its fair value or any other intrinsic value, and that is exactly why they are so volatile.
In a few years, it’s possible that a Bitcoin could be worth half a million dollars, or even nothing.
The way for traders to have the best chance of profiting from cryptocurrency price movements is to be prepared to trade momentum either long or short, being very ready to leave trades quickly when they go wrong or stop moving in the desired direction.
Traders should currently seriously consider short-term trading in major cryptocurrencies in the short term. This is because it is best to use cryptocurrency CFDs from a reputable Forex / CFD broker.