Following the rejection from the $12,500 resistance level on August 17th, Bitcoin has endured a downtrend that has seen it lose most of the gains incurred throughout the first half of the month.
The increasing selling pressure behind it has taken many investors by surprise since some of the lower cap altcoins have entered full-blown bull rallies. While BTC continues flirting with the idea of a steeper correction, its price continues to bleed.
Such market behavior was visible on August 25th as the flagship cryptocurrency lost a critical support level. Bitcoin opened Tuesday’s session hovering at $11,765. Although it gained roughly $13 in market price after the daily open, it turned around quickly. By 8:00 UTC, BTC had retraced 2.15% to trade a low of $11,525.
This price hurdle served as stiff support allowing prices to rebound momentarily. Bitcoin bounced off this supply wall towards $11,670, but the bears made it clear that they were not done. As sell orders continued to pile up, the pioneer cryptocurrency was forced to resume the downtrend.
As a result, BTC took a 4.56% nosedive that saw it drop to an intraday low of $11,137 by 18:00 UTC. Given the significance of the downswing, sidelined investors seem to have taken advantage of the low prices to get back into the market. The spike in demand was significant enough to push Bitcoin up to close on August 25th at $11,341, providing investors a negative daily return of 3.60%.
Ethereum Takes a 6% Nosedive Towards $370
When looking at Ethereum from a macro-perspective, its price seems to have formed a double bottom pattern. This technical formation suggests that the downtrend reversed, and Ether is now bullish. The so-called “W” pattern anticipates that a further spike in demand could see Ether surge towards $800 or higher.
Regardless of the long-term forecast, the smart contracts giant also saw its price plummet on August 25th. The downward price action began immediately after the daily open when ETH was trading at $408.22. From that point on, the bears took full control of Ether pushing its price down by 4.42%.
By 8:00 UTC, the second-largest cryptocurrency by market cap was trading at a low of $390.20. Some buy orders appear to have been triggered around this level, which helped Ether to rebound to $400. However, the bears stepped back in around this price point.
What came next was another significant downswing where Ethereum plunged by 7.42% to reach an intraday low of $370.51. This price hurdle was able to contain ETH from declining further and allowed it to rebound. Ether was able to close the day at $383.61, providing investors with a negative daily return of over 6%.
Signs of a Rebound
Despite the recent downward price action that the top two cryptocurrencies by market capitalization experienced, different technical indices suggest that they are poised to rebound. The Tom Demark (TD) Sequential indicator, for instance, is about to present a buy signal on BTC’s daily chart while the bullish formation already formed on ETH’s 1-day chart. If these signals are validated by a spike in demand, these cryptocurrencies could be bound for a one to four daily candlesticks upswing.
It is worth mentioning that while there is a high probability of a rebound, Bitcoin faces a massive supply wall between $11,400 and $11,700. Here, data reveals that roughly 2 million addresses had previously purchased about 1.2 million BTC. These investors may try to break even in their underwater positions, consequently increasing the selling pressure behind the flagship cryptocurrency. Meanwhile, the most significant barrier ahead of Ethereum sits between $406 and $418.
It remains to be seen, whether or not BTC and Ether will slice through the significant resistance ahead to continue reaching higher highs.
Executive Director at CEX.IO. His area of responsibility includes customer relationships with institutional and VIP-clients, overseeing the creation of the company’s development strategy, new products, markets and partnerships. As a member of the board of directors, Konstantin is also responsible for corporate governance.