The prices of the two leading cryptos, Bitcoin and Ethereum, are consolidating again in a tight range. When this happened before, there was an approx 25 % fall in the prices of both coins.
Bitcoin has been oscillating between $ 21,800 and $ 17,600 for the last two weeks after falling from the previous range of $ 32,500 and $ 28,200, stagnating for about a month.
Similarly, Ethereum too has entered a tight range of $ 1,200 and $ 900. The previous consolidation range for Ethereum was between $ 2,150 and $ 1,700, where it spent more than a month.
As per technical analysis theories, when the traded entity enters a consolidation phase, it is followed by a rapid breakout, either upside or downside. This phenomenon was recently seen when both the counters broke downside and gave a massive rally. The longer the consolidation phase, the sharper the following move.
Next support and resistance levels
In case of a breakdown from the current consolidation box, Ethereum could plummet to historical levels of $ 400. If broken upside, it could rise to $ 1,700, the previous support level.
If Bitcoin breaches the level of $ 17,600, then we can see the next level of $ 12,200 and $ 10,000 downside. Upside, it can reach as high as $ 28,000, where it will face stiff resistance.
Bitcoin has lost 70 % of its value from its peak which was last seen in November 2021. Ethereum has lost approx 80 % of its value. All other altcoins too have lost 70 to 90 % of their values. However, such volatility is fairly common in cryptocurrencies. Upon inspecting the Bitcoin and Ethereum charts, one can see that 30 to 60 % drawdown is a fairly common occurrence in both.
With increasing acceptance and regulation of Bitcoin across the globe such volatility is expected to continue in Bitcoin. SEC seems to be moving towards accepting Bitcoin as a commodity and treating it accordingly. Ethereum is waiting for ‘The Merge’, which is expected to happen by August of this year. Post the merge, ETH will move to proof of stake from the current proof of work protocol. That time could be the deciding factor in the fate of Ethereum.
All charts in this article have been sourced from tradingview.com