The crypto market continued to slide during Friday’s 24-hour trading session, with Bitcoin BTC/USD leading the way by dropping over 2.5% and Ethereum ETH/USD falling about 1.5% amid a bearish turn in the general stock market, caused by housing crisis and interest rate fears.
The sharp downturn, which started on Wednesday and accelerated on Thursday, caused the cryptos to plunge through their 200-day simple moving averages (SMAs) on the 24-hour charts.
The 200-day SMA is an important bellwether indicator. Technical traders and investors consider a stock or crypto trading above the level on the daily chart to be in a bull cycle, whereas a stock trading under the 200-day SMA is considered to be in a bear cycle.
The 50-day SMA also plays an important role in technical analysis, especially when paired with the 200-day. When the 50-day SMA crosses below the 200-day SMA, a death cross occurs whereas when the 50-day SMA crosses above the 200-day, a bullish golden cross takes place.
If the crypto sector and the general market continue to slide into next week, stock market volatility is likely to rise. Traders wishing to play the potential volatility in the stock market can use MIAX’s SPIKES Volatility products. The products, which are traded on SPIKES Volatility Index SPIKE, track expected volatility in the SPY over the next 30 days.
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The Bitcoin And Ethereum Charts: Bitcoin and Ethereum plunged 12.08% and a whopping 14.83% at one point on Thursday. On Friday, the cryptos were trading on declining, yet above-average volume, indicating the bears are in control rather than that consolidation is taking place.
The cryptos’ downturns caused Bitcoin and Ethereum to break down under the 200-day SMA, which is a cause for concern. If Bitcoin and Ethereum continue to trade under the bellwether, the 50-day SMA will cross under the 200-day, which will cause a death cross to form.
Both the apex cryptos are trading in a downtrend, forming a series of lower highs and lower lows. However, Bitcoin and Ethereum haven’t printed lower highs since Aug. 8 and Aug. 17, respectively, which suggests at least a temporary rebound is likely to take place.
Traders can also expect the cryptos to eventually bounce because each of their relative strength index has plunged under the 30% level, which indicates Bitcoin and Ethereum are oversold.
Bitcoin has resistance above at $25,772 and at $27,113 and support below at $25,288 and at $24,206.
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