Trading Bitcoin, Ethereum as Cryptos Swoon Over Binance-FTX Drama
Bitcoin and ethereum are getting hammered on Wednesday, down 9% and 13% respectively. That’s as more fear continues to circulate throughout the industry.
On Tuesday, reports surfaced that Binance would buy FTX as the latter struggled through some massive liquidity issues.
On Wednesday, however, some reports surfaced that the deal could fall through now that Binance has a better idea of what it’s involved in.
Coin base (COIN) – Get a free report and Robinhood (HOOD) – Get a free report have also taken a beating, both shares down more than 10% at one point today.
Worth noting is that FTX CEO Sam Bankman-Fried owns a notable stake in Robinhood.
Even if everything can work out just fine, “liquidity issues” are never something investors want to hear, and it rightly scares them.
Trade with Bitcoin
Monthly chart of bitcoin.
Chart courtesy of TrendSpider.com
Bitcoin Breaks New 2022 Lows With This Week’s Decline. Now down by approx. 75% from the tops, it is between the correction size of the last two big declines.
That’s when it fell 83.6% in 2018 and 71.7% in 2020.
On the downside, two main levels stand out to me right now: $13,750 and the $10,000 to $12,000 zone.
The first level was a major breakout mark after the withdrawal of covid-19.
The second zone was a notable area of resistance for several years, despite a few short-term rallies over it. A test of that range — especially near $10,000 — is likely to draw buyers in, at least for a temporary reprieve.
On the upside, see the previous low of $17,600. It goes back to this summer when bulls saw a strong bounce from this area.
If bitcoin can regain this level, we could have a bullish reversal on our hands, opening the door to $20,000 plus.
Trading with Ethereum
Ethereum monthly chart.
Chart courtesy of TrendSpider.com
Looking at ethereum, it trades much better than bitcoin. First, it has not broken new lows so far this year.
Instead, it continues to cut around the $1,000 to $1,100 zone, trying to hold the 50-month moving average and 78.6% retracement.
If it can do that and avoid making new lows below $880, then bulls have an argument to stay long. The problem is that bad news can be lower.
Below $1100 opens the door to $1000 and below that the $880 low is back in play. If ethereum trades below all these levels, the $750 zone could be on deck.
On the upside, $1,700 to $1,750 remains resistance, along with the 10-month moving average.
While that would represent a major rally from current levels, ethereum cannot enjoy a sustained uptrend until it clears this zone.
