Following the SEC’s demand, investors probably fear that XRP is not the only currency on the regulator’s radar.
XRP has been showing massive weakness after SEC demand. Its price fell significantly from $0.65 to $0.21 in four days, a 67% drop.
Meanwhile, other altcoins also corrected significantly in the last 24 hours, as investors probably fear that XRP is not the only currency on the SEC’s radar.
Ether (ETH) fell 14% on December 24th and then rebounded to $550. Whilst Chainlink corrected 38% to a recent low of $8.
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So the question now is whether the XRP debacle will continue to damage the altcoins market in the short term. Let’s take a look at the technical aspects to identify the areas of current support and resistance.
Ether looks for a new higher minimum after the recent fall
Ether’s weekly chart looked great and did not change after the recent drop. In that sense, the construction is still upward and on an upward trend.
The recent high of $675 confirms a new high, after which a higher low will ensure the continuation of the bullish market for Ether. This higher low is most likely to occur in the area around $450. This is the previous resistance zone eager to seek support before continuation occurs.
However, to have such a correction, Bitcoin (BTC) would have to undergo a severe correction. Otherwise this scenario is unlikely to occur. As long as Ether remains above $450, a renewed rally may push Ether towards $1,200-1,300 next year.
The $620 resistance is the next crucial level
Daily chart of ETH/USD. Source: TradingView
Ether’s daily chart seems less optimistic, as he broke below the crucial threshold of $620, which should have been broken for an immediate upward movement. Breaking above $620 would virtually guarantee a new high for the price of ETH.
However, the previous resistance zone and the rejection at $620 suggests that there is likely to be more downside in the short term.
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Therefore, the crucial support zone for Ether is now the $550 area, as this is the highest recent minimum. As long as that holds, the bullish case is still on the table.
It is likely that the price will fall to the $450 region if $550 fails as support after another rejection at $620. This $450 level is the previous resistance zone and a significant support area in the weekly time period.
The Bitcoin domain becomes parabolic
Weekly graph of the Bitcoin domain. Source: TradingView
The weekly Bitcoin domain graph shows an advance of about 70%. The main reason for this rebound is XRP’s weakness, as it is the second largest altcoin.
The domain graph will continue to rise if XRP continues to fall. At the same time, the weakness of the ETH/BTC pair also does not help in the case of an ‚altseason‘ in early 2021.
Bitcoin’s dominance reaches an annual peak in the midst of massive XRP sales as its price slowly returns to $24,000
However, one thing to keep in mind is the possible peak in Bitcoin’s dominance table, as is usually the case in December. Since 2016, the dominance table has peaked in December. After this peak, the altcoins saw massive gains in the first quarter.
The ETH/BTC pair is key here as it has to bottom out before a potential rally for the altcoins occurs.
Unfortunately, Ether’s weekly chart shows a clear breakdown below the support in the BTC pair, indicating that there is likely to be further weakness for the altcoins.
However, as long as ETH remains above 0.021 sats, a bullish argument can still be made for further gains, as the bullish construction would still be intact.
Ideally for ETH, a recovery from the 0.026 sats level would indicate strength and further continuation, so traders should look at that level first. If that does not hold, the next area to look at is the 0.021 sats zone along with the $450 region.