Feb 23, 2023
Crypto Decouples from US Equities, Signs of Recovery Emerge
The U.S. equities markets experienced their most severe decline of 2023 on Feb. 21 as investors reacted to the Federal Reserve’s plans to continue increasing rates. Although the crypto markets also fell, the impact was much less severe. Dylan LeClair, senior analyst at UTXO Management, noted that Bitcoin’s correlation to the S&P 500 index fell to its lowest level since late 2021.
Glassnode data showed that only 21% of coins sent by Long-Term Holders to exchanges at the start of the week were sent at a loss. This is a considerable improvement from mid-January, when 56% of LTH coins sent to exchanges were moved at a loss.
The decoupling of the crypto and the U.S. equities markets is a positive sign, yet traders should remain vigilant. If stocks take a major downturn and a risk-off sentiment takes hold, the crypto rally may struggle to maintain its gains.
Let’s dive into the charts of the top-10 cryptocurrencies to examine the important levels that could arrest the correction.
Bitcoin (BTC) faced resistance at $25,211 on Feb. 21, which could have caused short-term bulls to take profits. This could push the price to the first major support at the 20-day exponential moving average ($23,364). If the price rebounds off the 20-day EMA, it will show that buyers are not waiting for a deeper correction to buy. On the other hand, if the price slips below the 20-day EMA, it will suggest that traders are exiting the market. In that case, the BTC/USDT pair may drop to the 50-day simple moving average ($21,772). The trend could shift in favor of the bears if the price closes below the crucial support at $21,480.
Ether (ETH) has been unable to break the overhead hurdle at $1,743, indicating that bears are defending this level. If they succeed in pushing the price below the 50-day SMA ($1,550), the ETH/USDT pair could plunge to the immediate support at $1,461. Conversely, if the price rises above $1,680, it will suggest aggressive buying on minor dips. A break above $1,743 could start the next leg of the up-move to $2,000.
Binance Coin (BNB) has been unable to break the overhead resistance of $318, showing that bears are fiercely defending this level. If they succeed in pushing the price below the 50-day SMA ($306), the BNB/USDT pair could dump toward the next major support at $280. Conversely, if the bulls thrust the price above $318, they will have the upper hand.
XRP (XRP) continues to trade inside the descending channel pattern. If the price breaks below the moving averages, the bears will try to pull the price to the crucial support at $0.36. Alternatively, if the price breaks above the channel, it will suggest advantage to the bulls. The XRP/USDT pair may then attempt a rally to $0.43, where the bears are likely to mount a stiff resistance.
Cardano (ADA) has been trading in a tight range between the neckline of the inverse head and shoulders pattern and the immediate support at $0.38. If the price turns up from the current level or the 50-day SMA ($0.36), the bulls will make another attempt to clear the overhead hurdle. If they do that, the ADA/USDT pair may rally to $0.52 and then to $0.60. Conversely, a break below the 50-day SMA could pull the price to the strong support zone between $0.32 and $0.34.
Dogecoin (DOGE) has been stuck in a state of equilibrium between the bulls and the bears. The flattish moving averages and the RSI just below the midpoint indicate that the DOGE/USDT pair may oscillate between $0.10 and $0.08 for a while longer. On the upside, a break above $0.10 could put the $0.11 resistance at risk of breaking down. If that occurs, the pair may pick up momentum and soar toward $0.15. Conversely, a break below $0.08 could clear the path for a retest of the solid support at $0.07.
Solana (SOL) rose above the resistance line on Feb. 20 but the bulls could not build upon this momentum. If the price continues lower and breaks below the moving averages, the bears will try to solidify their position by dragging the SOL/USDT pair below the important support at $19.68. On the other hand, if the price turns up and rises above the resistance line, the bulls will take another shot at clearing the resistance line. If the price closes above $28, the bears may give up and the pair could then accelerate toward $39.
Shiba Inu (SHIB) has been stuck inside a large range between $0.000007 and $0.000018 for the past several months. The bulls tried to push the price to the resistance of the range but the bears had other plans. They stopped the rally near $0.000016. The bulls repeatedly purchased the dip to the 20-day EMA ($0.000013) but they could not kick the price above $0.000014. This indicates that traders lightened their positions on rallies. The price has once again slipped below the 20-day EMA and the bears will try to sink the SHIB/USDT pair to $0.000011.
Finally, Polkadot (DOT) closed above the neckline of the inverse H&S pattern on Feb. 19 but the bulls could not build upon this momentum. If the price fails to quickly rise back above the neckline, the bulls may bail out of their positions. That could start a deeper correction toward the $5.50 to $5.87 zone. On the other hand, if the price turns up and rises above the neckline, it will indicate that the sentiment remains positive and traders are buying the dips. The DOT/
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