Bitcoin is in tight consolidation! Which direction will it strike?
Bitcoin fell between 5-12 May 2022 by over $13,000,i.e. over 33%. It increased the range of the ongoing from 28 March 2022 depreciation to over $21,000, i.e. 44%. In turn, counting from the peaks of November 2021, BTC decreased by over $42,000, i.e. 61%.
Such a significant sale caused the exchange of theoldest virtual currencies to drop from $69,000 to below $27,000, which was thelowest level since December 2020.
It is noteworthy that this trend did not stoparound the critical level of support of $29,000, where various types of demandreactions have occurred many times in the past. It was no different now.
This time, however, the rebound turned out to beextremely modest, and as a result, Bitcoin found itself in a horizontal trend.Considering that the consolidations are corrective formations, statistically,more often, the market will push out of this type of system in the directionconsistent with the earlier move.
This particular case increases the risk of apotential bottom breakout, which could signal a potential for further declinesto the $24,000 region or even below $20,000. This scenario may also besupported by the fact that the upper limit of this system coincides with themeasurement of 38.2% Fibonacci correction from an earlier downward impulse.
The current situation on the Ethereum quotes isalso identical. The price of this cryptocurrency fell between 3 April and 12May this year by 52%, dropping to the Tech Support area of $1,750, the lowest level since July 2021.
However, taking into account that the demandresponse that appeared around this support was much more modest than therebound observed in this area already in May, June and July 2021, one canassume that in the end, it will turn out to be only a correction, after whichthe ETH rate will return to around $1,750.
A permanent drop below this price level could openthe door for further declines to $1,400. There is another significant supportaround which we could expect a greater demand response.
It is worth mentioning here, however, that althoughthe consolidations are corrective formations, there is no rule determining whenthe market should break out of the system. This fact means that, although thestatistics favour further declines before they happen, the ETH exchange ratemay remain in the range of $1,900 to $2,150 for some time.
Looking at the XRP quotes, we can see that theprice of this cryptocurrency fell between 28 March and 12 May this year by over63%. This sell-off led to the breach of several important support zones and didnot stop until around $0.36, where on 12 May this year, there was a demandresponse.
However, the subsequent rebound did not last toolong. As a result, the XRP price has remained in the horizontal trend forseveral years. It assumes a return to the vicinity of $0.36 seems more likely.If, however, this support was permanently defeated, then the quotations of thiscryptocurrency could even move towards $0.20.
The current situation on Binance Coin's quotes isalso very interesting. The price of this cryptocurrency fell between 7 November2021 and 12 May 2022 by over 67%.
This sale only stopped around $260 technicalsupport - on Thursday, 12 May this year, there was a demand response. Due tothe rebound that has continued since then, the BNB price has risen by more than51%, thus returning to the area of previously defeated support (nowresistance) of $330.
If a larger supply relationship is around thislevel, signalling its potential rejection, the BNB price could return to around$260 or even drop further to the $200 region.
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