XRP has shown massive weakness as the cryptocurrency is sued by the SEC. Its price dropped significantly from $ 0.65 to $ 0.21 in four days, a crash of 67%.
Meanwhile, other altcoins have also corrected significantly in the past 24 hours, with investors likely concerned that XRP may not be the only coin on the SEC’s radar.
Ether (ETH) fell 14% on December 24, then rebounded to $ 550. While Chainlink corrected 38% to a recent low of $ 8. Sushiswap (SUSHI) saw the biggest fix and the flash crash drop from $ 2.75 to $ 1.10 – a 61% crash.
The question, then, is whether the XRP debacle will continue to hurt the altcoin market in the near term. Let’s take a look at the technicalities to identify areas of current support and resistance.
Ether seeks new low after recent drop
The weekly chart for Ether looked awesome and hasn’t changed since the recent dropdown. In this regard, construction is still bullish and rising.
The recent high of $ 675 confirms a new high, after which a higher low will ensure a continuation of the bull market for Ether. This higher low will likely occur in the area around $ 450. This is the area of previous resistance eager to turn around for support before the chase occurs.
However, to have such a correction, Bitcoin (BTC) would have to see a severe correction. Otherwise, this scenario is unlikely to occur. As long as Ether stays above $ 450, a further rally may push Ether towards $ 1,200-1,300 next year.
The resistance of $ 620 is the next crucial level
Ether’s daily chart looks less bullish as it has crossed the crucial $ 620 threshold, which should have been crossed for an immediate bullish continuation. Going above $ 620 would practically guarantee a new high price for ETH.
However, the previous resistance zone and rejection at $ 620 suggests that a bigger drop is likely in the near term.
Therefore, the crucial support area to hold for Ether is now the $ 550 area as it is the recent low. As long as this holds, the bullish case is still on the table.
The price will likely drop to the $ 450 region if $ 550 fails as support after another rejection at $ 620. This $ 450 level is the previous resistance zone and a significant support zone over the weekly period.
Bitcoin’s dominance becomes parabolic
The weekly Bitcoin dominance chart shows an advance towards 70%. The main reason for this rally is the weakness of XRP since it is the second largest altcoin.
The dominance chart will continue to rise if XRP continues to dip. At the same time, the weakness of ETH / BTC also doesn’t help justify another season at the start of 2021.
However, one thing to watch out for is the potential top of the Bitcoin dominance chart, as it typically occurs in December. Since 2016, the dominance graph peaked in December. After this peak, altcoins saw massive gains in the first quarter.
The ETH / BTC pair is key here as it needs to bottom out before a possible altcoin rally.
Unfortunately, the Ether Weekly chart shows a clear breakdown under the support of the BTC pair, indicating that further weakness for altcoins is likely.
However, as long as ETH remains above 0.021 sats, there are still bullish arguments to be made, as the upward construction would still be intact.
Ideally for ETH, a recovery of the 0.026 sats level would indicate strength and a continuation of the pursuit, so traders should watch this level first. If that doesn’t hold up, the next area to watch is the 0.021 sats area next to the $ 450 area.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You need to do your own research when making a decision.