The crypto crash stalled on Monday as Bitcoin and most altcoins suddenly stopped falling as the possibility of a war between the United States and Iran rose. Bitcoin price rose to $78,000 from this week’s low of $74,000, while Ethereum price rose to $2,300.
The market capitalization of all cryptocurrencies climbed from $2.6 trillion to over $2.83 trillion. This rebound mirrored the performance of American equities, which jumped by over 0.50% on Monday.
Cryptocurrency prices also rebounded after Tom Lee, the millionaire founder of FundStrat and BitMEX’s Chairman, predicted that they had bottomed out. Most importantly, the Crypto Fear and Greed Index dropped to the extreme fear zone of 17. In most cases, crypto prices rebound when the fear gauge crashes.
Still, there are three main reasons why the crypto market could crash further. First, the ongoing crypto rebound could be part of a dead-cat bounce (DCB). A DCB happens when crypto prices recover briefly during a crash. These events have been highly common during the ongoing crypto market crash.
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Second, there are signs that investors are staying on the sidelines. Data compiled by CoinGlass indicates a long/Short ratio of 49:52, suggesting that there are still more sellers than buyers.
Bitcoin Price Technical Analysis Suggests More Downside Ahead
The other main reason why the crypto market crash has more room to go is based on technicals. TradingView data shows that the Bitcoin price has remained below all moving averages and the Supertrend indicator.
The weekly chart shows that the coin formed a large rising wedge and a bearish flag pattern, both of which indicate more downside. Additionally, the coin declined by over 70% the last time the Supertrend indicator turned red.
Therefore, the most likely scenario is that Bitcoin continues to fall in the coming weeks or months. If this happens, the coin will drop to the Ultimate Support of the Murrey Math Lines tool at $50,000.
As Michael Novogratz recently predicted, a full rebound will be confirmed when the Bitcoin price rises above the key resistance levels at $100,000 and $103,000. Such a move will lead to more upside among other cryptocurrencies.
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