BTC and ETH See Intensified Selling Pressure as Contagion Fear Grips

Key Insights:

• Bitcoin (BTC) extended its losing streak to four sessions on Tuesday, with ethereum (ETH) visiting sub-$1,250.
• While the SEC win in its case against LBRY weighed, the demise of FTX and the collapse of FTT sent BTC and ETH into the deep red.
• The technical indicators remain bearish, signaling downward price trajectories as contagion fears grow.

Ethereum (ETH) tumbled by 14.92% on Tuesday. After holding steady on Monday, ETH ended the day at $1,334.

After a mixed morning, ETH rose to a late afternoon high of $1,580. Coming up short of the First Major Resistance Level (R1) at $1,603, ETH tumbled to a late low of $1,227. The extended sell-off saw ETH fall through the day’s Major Support Levels to end the day at $1,334.

On Tuesday, bitcoin (BTC) slid by 9.95%. Following a 1.54% loss on Monday, BTC ended the day at $18,559. Notably, BTC extended its losing streak to three sessions and visited sub-$17,000 for the first time since November 2020.

After a bearish morning, BTC rose to a late afternoon high of $20,712. Coming up short of the First Major Resistance Level (R1) at $20,988, BTC tumbled to a late low of $16,950. BTC fell through the day’s Major Support Levels. Despite a partial recovery to end the day at $18,559, BTC failed to move back through the Third Major Support Level (S3) at $19,380.

The demise of FTX and the collapse of FTT sent shockwaves through the crypto market. News of leading exchange Binance planning to acquire FTX provided little market comfort late in the Tuesday session.

Having just settled after the collapse of Terra Lab and the effects of the crypto winter, investors had been looking for brighter days ahead. However, the FTX liquidity crunch and Binance’s decision to step in highlighted the risks investors face.

Following Tuesday’s market reaction, investors will need to let the dust settle to gauge the full impact of the FTX demise and the implications of Binance taking over its non-US businesses.

Near-term, the markets will likely remain under pressure. Last time, exchange assurances of ample liquidity turned into the suspension of withdrawals and the freezing of accounts. Investors will be wary the second time, which will test buyer appetite.

This morning, market sentiment remained bearish, with investors facing some uncertain weeks ahead.

Ethereum (ETH) Price Action

At the time of writing, ETH was down 10.10% to $1,200. A bearish morning saw ETH slide from an early high of $1,338 to a low of $1,193.

Technical Indicators

ETH needs to move through the $1,380 pivot to target the First Major Resistance Level (R1) at $1,534 and the Tuesday high of $1,580. An ETH return to $1,350 would signal a bullish afternoon session. However, moves through the US session will depend on Binance and FTX news and updates from crypto exchanges.

In the event of an extended rally, ETH would likely test resistance at $1,600 but fall short of the Second Major Resistance Level (R2) at $1,733. The Third Major Resistance Level (R3) sits at $2,086.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1,181 in play. However, barring another extended afternoon sell-off, ETH should avoid sub-$1,100 and the Second Major Support Level (S2) at $1,027.

The Third Major Support Level sits at $674.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 200-day EMA, currently at $1,467. The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 200-day EMA ($1,467) would bring the 100-day ($1,505) and the 50-day ($1,515) EMAs and R1 ($1,534) into view. However, a failure to move through the 200-day EMA ($1,1467) would leave S1 ($1,181) in play.

Bitcoin (BTC) Price Action

At the time of writing, BTC was down 4.09% to $17,800. A bearish morning saw BTC fall from an early high of $18,600 to a low of $17,641.

Technical Indicators

BTC needs to move through the $18,740 pivot to target the First Major Resistance Level (R1) at $20,531 and the Monday high of $20,712. A return to $19,000 would signal a possible BTC rebound.

In the case of an extended rally, BTC would likely test resistance at $21,000 but fall short of the Second Major Resistance Level (R2) at $22,502.

The Third Major Resistance Level (R3) sits at $26,264.

Failure to move through the pivot would leave the First Major Support Level (S1) at $16,769 in play. Barring another extended sell-off, BTC should avoid sub-$16,000 and the Second Major Support Level (S2) at $14,978.

The Third Major Support Level (S3) sits at $11,216.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 200-day EMA, currently at $20,062. The 50-day EMA crossed through the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A BTC move through the 200-day EMA ($20,062) would support a breakout from the 50-day and 100-day EMAs to target R1 ($20,531). However, a failure to move through the 200-day EMA ($20,062) would bring the Tuesday low of $16,950 and S1 ($16,769) into view.