Bitcoin price was hovering around $97,500 on Wednesday after falling 4.47% since Monday. Ethereum price ended below the daily support level of $3,721, indicating that the decline continues. Ripple price finds support around $1.96. A closing price below this would indicate further decline.
Bitcoin (BTC) price was hovering around $97,500 on Wednesday after falling 4.47% so far this week. Ethereum (ETH) also followed BTC’s lead and closed below a key support level, hinting at a continued decline ahead. Ripple (XRP) has rebounded from a key support level. A closing price below this would indicate further decline.
Also on Tuesday, crypto community members spoke out about the potential of Google's new quantum chip and Willow's ability to crack blockchain networks and disable the security of public-key cryptography. Markets faced mixed emotions.
Bitcoin bulls show signs of weakness
Bitcoin price has fallen 4.47% this week through Tuesday. As of this writing Wednesday, it is hovering around $97,500.
Traders should be cautious as the relative strength index on the daily chart is showing signs of weakness. The recent upward trend in Bitcoin price since mid-November reflects the decline in RSI levels over the same period, indicating that bullish momentum is weakening. Furthermore, if the RSI closes each day below the neutral level of 50, it generally indicates that bearish momentum is gaining momentum.
If BTC continues its decline and closes below the $90,000 support level, losses could widen towards the next support level at $85,000.
BTC/USDT daily chart
On the other hand, if BTC continues its recovery and closes above $104,088, it could extend the rally towards an all-time high of $119,510. This level coincides with the 141.4% Fibonacci extension from the November 4 low of $66,835 to Thursday's all-time high of $104,088.
Ethereum price ends below daily support, set for decline
Ethereum price faced a rebound from the $4,000 level on Friday and fell 9.4% by Tuesday, ending below the daily support level of $3,721. As of writing on Wednesday, it has recovered slightly and is trading at around $3,660.
If ETH continues to decline, it could extend the decline and retest the weekly support level at $3,454. If we are able to close below this level, we could see a further decline to retest the psychological importance level of $3,000.
The RSI on the daily chart is at 55 and has turned downward after rejecting the overbought 70 level, suggesting weaker bullish momentum. The Moving Average Convergence Divergence (MACD) indicator also supports the price decline. The MACD line showed a bearish crossover on Tuesday, indicating a sell signal.
ETH/USDT daily chart
However, if ETH rises and closes above $4,000, the rally could extend and re-attempt the $4,200 level.
Ripple could face a downside if it closes below the $1.96 support level
Ripple price faced resistance near the $2.66 level on Sunday and fell more than 15% the next day. On Tuesday, it rebounded 7% after retesting the $1.96 support level. At the time of writing on Wednesday, it was hovering around $2.33.
If XRP declines and closes below the $1.96 level, the decline could widen to retest the weekly support level at 1.40.
The RSI on the daily chart is reading 63 and has turned downward after rejecting the overbought level of 70, suggesting weaker bullish momentum. Furthermore, the MACD indicator also confirms the decline in Ripple price. The MACD line showed a bearish crossover on Tuesday, indicating a sell signal.
XRP/USDT daily chart
However, if XRP rebounds and closes above the $2.66 level, the rally could extend to retest the psychologically important level of $3.00.
Frequently asked questions about Bitcoin, altcoins, and stablecoins
Bitcoin is the largest cryptocurrency by market capitalization and is a virtual currency designed to function as money. This form of payment is not controlled by any particular person, group, or entity and eliminates the need for third parties to participate during financial transactions.
An altcoin is any cryptocurrency other than Bitcoin, but some consider Ethereum to be a non-altcoin because it is these two cryptocurrencies that forks occur. If this is true, Litecoin would be the first altcoin to fork from the Bitcoin protocol and thus be an “improved” version of it.
A stablecoin is a cryptocurrency that is designed to have a stable price, and its value is backed by the reserves of the asset it represents. To achieve this, the value of one stablecoin is pegged to a commodity or financial instrument, such as the US dollar (USD), and its supply is regulated by an algorithm or demand. The main purpose of stablecoins is to provide an on/off ramp for investors who wish to trade and invest in cryptocurrencies. Also, since cryptocurrencies are generally volatile, stablecoins allow investors to store value.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the market capitalization of all cryptocurrencies combined. This clearly shows the interest in Bitcoin among investors. BTC's dominance typically occurs around bull markets, where investors turn to relatively stable, high-market-cap cryptocurrencies like Bitcoin. Decreasing BTC dominance usually means investors are moving their capital and profits to altcoins in search of higher returns, which usually causes an explosive rally in altcoins.
