Cryptocurrencies Basing, or Bear Market Pause?

Many cryptocurrencies and digital assets are currently in consolidation phases, in short-term ranges as they digest the previous aggressive sell off seen in digital assets in June, after the similarly forceful losses in May. These breakdowns came on the back of the whole bear market and crypto winter that has been evident through 2022. The key question being asked is, are the current consolidations part of a bottoming process, or just a pause in a bigger bear market? We take a look at the key levels for the two benchmark cryptocurrencies, for Bitcoin (BTC) and Ethereum (ETH).

A Consolidation For Cryptocurrencies Hints At A Bottom

The May and June plunges in the major cryptocurrencies have been driven by a domino effect of instability in the sector, first highlighted by the collapse of the Terra ecosystem in early May 2022. Each of these sell offs were preceded by consolidation phases, which had hinted at possible bottoming patterns.

The sideways, range activity for many cryptocurrencies since mid-June through early July has again indicated the possibility of basing activity. The question is, what do the major digital currencies need to do to signal more robust recovery potential, and where are the risks for another aggressive sell off?

Also Read: When Is The Best Time To Buy Crypto?

Bitcoin Resistance Levels For A Better Base

The June plunge in Bitcoin took it down to hold just above a critical level we had flagged in our report How Low Can We Go? Bearish Bitcoin and Ethereum Targets, and held at this support, the 78.6% Fibonacci retracement of the whole 2019-2021 bull run, at 17380. The subsequent consolidation above this level has set up a possible bottom, but minimally the market needs to overcome the 21864 level to signal a possible base, with a better recovery expected with a move above 23276. This would also likely see a reversal above the down trend line from April, further enhancing the basing and recovery prospects. Below 17380 would signal a likely kore aggressive sell off.

Ethereum Targets To Signal A Possible Bottom

In the same article as noted above we highlighted that Ethereum had already broken its 78.6?% retracement level but has now held at 880. Above 1279 is needed to secure a base and ideally above the down trend line from April (currently at 1655). But below 880 opens risk down to 725, with a threat of a deeper target at 311!