The collapse of FTX continues to fuel contagion fears in the cryptocurrency space as investors wait to hear about companies that may face heat. One notable name coming under suspicion is the Grayscale Bitcoin Trust (GBTC), which has seen its Bitcoin opponent
The price reaches record highs of around 50%.
Traders hate uncertainty and stay away from investing during these periods. This may be one of the reasons for the lack of interest in buying Bitcoin even after the sharp drop in its price. The Stock-to-Flow (S2F) model, which has seen its popularity soar during its bullish phase, is coming under increasing criticism after the divergence between the Bitcoin price and previously unprecedented price levels.
Does this indicate that pessimism has reached extremes or that the S2F model is flawed?
View daily crypto market data. Source: Coin360
During a bear market phase, the general trend is down, but there are always pockets of strength that may provide trading opportunities for long-term investors only. However, rallies during bear markets are short-lived, and thus traders may consider profit-taking near strong resistance levels.
Let’s take a look at the charts for five cryptocurrencies that might try to rally in the near term.
Bitcoin continues to trade within the narrow range between $16,229 and $17,190. In general, periods of tight consolidation are followed by an increase in volatility.
BTC/USDT daily chart. Source: TradingView
The moving averages sloping down and the relative strength index (RSI) in negative territory suggest that the path of least resistance is to the downside. If the price drops below $16,229, the November 9 low of $15,588 could be threatened. A breakout and closing below this support may indicate a resumption of the downtrend. The next support on the downside is $12,200.
If the bulls want to avoid further declines, they will have to push the price and hold it above the $17,622 breakdown level. Such a move would suggest strong demand at lower levels. The pair could then climb to the psychological level at $20,000.
4 hour BTC/USDT chart. Source: TradingView
The pair was trading near the moving averages, which became flat. This indicates that the pair has entered a state of equilibrium as both buyers and sellers are hesitant about the next directional move.
However, this uncertainty is unlikely to last for long. If the price drops below $16,229, the selling pressure may gain momentum and the pair may drop to $15,588. If this support recedes, the pair may start the next stage of the downtrend.
Conversely, if the price rises and breaks above $17,190, it will indicate that the current narrow range has been used by the bulls to accumulate. The pair could then rise to $18,200 and later to $18,730.
Toncoin (TON) has recovered sharply from its June low and managed to hold onto a significant portion of the gains. This indicates that traders are in no hurry to exit positions at higher levels.
TON/USDT daily chart. Source: TradingView
The TON/USDT pair has formed a symmetrical triangle that usually acts as a continuation pattern. Both moving averages are gradually declining and the RSI is in positive territory, indicating a slight advantage for the bulls.
If the price bounces off the 20-day exponential moving average (EMA) at $1.65, the bulls will try to push the price above the triangle. If they can pull it back, the pair could rise to $2.15 and after that a rally towards the target target at $2.87.
Alternatively, if the price slips below the 20-day moving average, the pair could drop to the 50-day simple moving average (SMA) at $1.50 and then to the support line.
4 hours TON/USDT chart. Source: TradingView
The pair is facing severe resistance at $1.80. Repeated failure to maintain the price above this level may tempt short-term traders to take profits. The bears are trying to take advantage of this situation and plunge the price below the 50-SMA. If this support is broken, the pair could drop to $1.55.
Conversely, if the price rebounds from the current level, the bulls will try again to measure the wall at $1.80. Frequent retesting of a resistance level tends to weaken it. Closing above this resistance could open doors for a potential rally to $2.
Chiliz (CHZ) is trying to form an inverse head and shoulders pattern, which will complete on the breakout and close above the neckline. If it does, it could signal the start of a new bullish trend.
CHZ/USDT daily chart. Source: TradingView
The pattern’s target for the reversal formation is $0.54 but the bears are unlikely to give up easily. They aggressively defend the neckline. If the price breaks below the 50-day SMA at $0.21, CHZ/USDT could drop to $0.18 and later to $0.14.
Alternatively, if the price bounces off the current level, buyers will try to push again