- Bitcoin has dropped by more than 20% over the past two weeks.
- Likewise, Ethereum has retraced by 19.5% since Apr. 3.
- Both assets have reached critical areas of support.
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Bitcoin and Ethereum kicked off the week in a negative posture. Although prices have rebounded over the last few hours, both cryptocurrencies appear to be hanging by a thread.
Bitcoin at Vital Support
Bitcoin sits on top of one of the most vital support areas on its trend, as whales appear to be increasing their holdings.
The pioneer cryptocurrency has seen its price drop by more than 20% over the past three weeks. It lost roughly 10,000 points in market value, going from a high of $48,200 on Mar. 28, to a low of $38,465 registered early this morning. The losses appear to have been contained by a critical demand zone that likely defines Bitcoin’s fate.
The 200-day moving average at $39,500 on the three-day chart and the 78.6% Fibonacci retracement level at $38,500 must continue to hold to avoid a brutal crash. Failing to do so may encourage investors to sell, putting enough pressure on Bitcoin to trigger a correction to $28,850 or even $28,830.
Despite the bearish outlook that a breach of the $38,500 support level presents, it appears that whales have been taking advantage of the recent correction to scoop up more Bitcoin at a discount.
On-chain data from Glassnode shows that the number of addresses on the network with a balance greater than 1,000 BTC has significantly increased since Apr. 8. Roughly 16 new whales have joined the network within such a short period.
Even though the increasing buying pressure might seem insignificant at first glance, it is worth noting that each of these new addresses acquired a minimum of $39,000,000 worth of Bitcoin.
Further buying pressure around the current price levels may help Bitcoin bounce off the $38,500 support. Under such unique circumstances, it might rise to retest the 50-day moving average at $43,670 on the three-day chart.
Only a sustained three-day candlestick close above this resistance level can invalidate the pessimistic outlook and lead to the resumption of the previous bullish trend.
Ethereum Threatens to Dip Lower
Ethereum also appears to hang by a thread as retail interest fades while prices dip below $3,000.
The second-largest cryptocurrency by market cap has endured a steep 19.5% correction over the past two weeks to recently hit a low of $2,883. The rising selling pressure may be attributed to a new delay in the protocol’s transition to Proof-of-Stake. As the “Merge” does not yet have a fixed date, interest in Ethereum appears to be declining.
The number of new daily addresses created on the Ethereum network has continued to trend downward. Such market behavior suggests a lack of interest from sidelined investors in scooping up more tokens at the current price level.
Network growth is often considered one of the most accurate price predictors for cryptocurrencies. Generally, a steady decline in the number of new addresses created on a given blockchain leads to a steep price correction over time.
Given the lack of interest, Ethereum bulls must do everything they can to avoid printing a daily candlestick close below $2,950. Breaching this support level can lead to a downswing to $2,570 or $2,160.
It is worth noting that there is still some hope as Ethereum has developed a golden cross between its 50 and 100-day moving averages. Still, bulls would have to step in now and push prices above $3,500 for Ethereum to resume its previous uptrend.
Disclosure: At the time of writing, the author of this piece owned ETH and BTC.
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