Crypto Market Slides On Fears Of New Covid Variant

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Key takeaways News of a new strain of Covid in South Africa has rocked the crypto market. The sale wiped out $ 350 billion from the crypto’s total market cap. Bitcoin and Ethereum have collapsed by more than 8% as downward pressure mounts. The two main crypto assets now hold critical support areas. Share this article

Bitcoin and Ethereum appear to have reached a crucial support level after recording massive losses following the news of a new variant of Covid in South Africa. The large demand wall could determine whether BTC and ETH will fall further or resume their uptrends.

The crypto market suffers a crash

Cryptocurrency investors appear to have entered a state of “fear” upon news of the identification of a new variant of Covid in South Africa. The variant was first identified on Tuesday and panic ensued throughout the week, with several countries in Europe and Asia banning travel to southern Africa.

Along with the crypto market decline, the FTSE 100 fell 3% on Friday, while oil prices also fell. Dow futures are down 700 points in anticipation of a bloody market opening.

The sudden surge in sales in the cryptocurrency industry has caused the total market cap to shrink by 9% of its value in the past 12 hours. About $ 350 billion was eliminated from the market and over $ 530 million was liquidated in the market during the same period.

Source: Coin360

Among the biggest losers are AVAX from Avalanche, CRO from Crypto.com and ATOM from Cosmos, each crashing by over 17%. Bitcoin and Ethereum also suffered significant losses but appear to be holding stable support.

Bitcoin and Ethereum reach start or stop point

Bitcoin fell 8% shortly after being rejected by the $ 60,000 resistance zone.

The drop was large enough to push prices down to test the lower bound of a parallel channel, where BTC has been held since mid-June. The crucial support level coincides with the 200-year-old moving average at $ 54,000.

There is a high probability that Bitcoin will rebound in this demand area because whenever prices have fallen to the channel’s lower trendline since mid-June, the downtrend has reached exhaustion, leading to a bullish pulse towards the middle or upper edge of the pattern. Similar market behavior could now occur, especially considering a bullish divergence forming on the 12-hour chart between the Relative Strength Index or RSI and the price of BTC.

If buy orders rise around the support level of $ 54,000, Bitcoin could bounce back to $ 65,000 or even hit a new all-time high at $ 75,000.

However, a sustained 12-hour close below $ 54,000 could invalidate the bullish thesis. In such unique circumstances, BTC could drop to $ 51,000 or even $ 47,000.

Source: TradingView

Ethereum has also reached a critical demand area after suffering a 12% price correction.

The support level of $ 3,985 has so far kept the number two in crypto from taking significant losses over the past month. Every time ETH has touched this critical area of ​​interest since October 20, prices have rebounded quickly. The recent retest may now represent the last opportunity for sidelined investors to return to the market.

A spike in buying pressure around the $ 3,985 area could put Ethereum back on track to meet the $ 9,000 target presented by a cup and handle model.

Source: TradingView

It should be noted that a decisive 12 hour candlestick near the support level of $ 3,985 could invalidate the bullish outlook. Breaking such a strong demand wall could prompt investors to exit positions in anticipation of further losses quickly. The sell could then push Ethereum up to the 200 twelve hour moving average at $ 3,700 or even $ 3,300.

Disclosure: At the time of writing, the author of this feature owned BTC and ETH.

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