Things got ugly really quickly today for the crypto-market, as the correction that we have been monitoring gathered speed, and the majors declined below key support levels, dragging the smaller coins lower as well. As we noted a couple of weeks back, (and updated our long-term view this weekend), the huge rally of the previous months made the market ripe for a correction, and now we have a 45% dip in Ethereum and a 25% pull-back in Bitcoin, with the two majors clearly dominating the market today.
The mainstream media jumped on the story delivering another blow to the market, and now the coins are likely getting close to a tradable bottom given the negative sentiment. The search term cryptocurrency crash is really trending on Google, and although this might not be indicative of a bottom in prices, it likely signals the proximity of a short-term bottom in time.
As Warren Buffet said, you should be buying when there is blood on the street, and sure enough, we are getting there, but after a 20-fold increase in ETH and an almost 300% rise in BTC in a couple of months, more correction could be needed before a long-term rally to new highs. With correlations being as high as now, the smaller coins are also likely nearing, at least, a short-term buying opportunity.
This morning we noted that a break below $2450 is expected with a test of the $2350 level and possibly the $2150 support as well. Bitcoin is right at the $2350 level now, and it broke below the long-term trendline. The currency is holding up better than its peers, but a quick spike towards the prior low at $2150 is still possible before a sustained bounce.
Ethereum is has entered the $200-$230 range this afternoon and it got as low as $2o5, approaching the key $200 level that represents a 50% correction from the top near $400. That level could serve as a good final target for the current move (with a possible “stop-hunting” spike below it), although the coin is short-term oversold, and volume is already climactic, pointing to a close bottom.