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Issue 201 – One More Leg Lower for Cryptos?

April 27, 2022


The crypto market is bouncing from support today, following the S&P 500 nearly tick for tick.

But is the bottom in?

That’s the question everyone wants to know, so I’ll share my views on that in today’s newsletter.

I discuss the S&P 500, the total crypto market cap (TOTAL), BTC, ETH, and VET!


S&P 500 (SPX500)

The S&P 500 is enjoying some relief today following a severe drawdown since the 21st.

It may not sound like much to a crypto trader, but the S&P dropped 8% in just four days. That’s a brutal move for the index.

Today’s bounce should be no surprise as Tuesday’s session closed right at 4,140, which has been key support since February.

However, I’m not convinced that the low is in for US stocks.

A bottom at 4,140 seems too easy, especially considering the recent deviations that have led to pullbacks.

I wouldn’t be surprised to see a deviation toward 4,000 S&P before the bottom is in.

And this matters for crypto as Bitcoin has been following the S&P 500 since this selloff began.

Total Crypto Market Cap (TOTAL)

The total crypto market cap held on to the support I mentioned in yesterday’s video.

That level was right at $1.72T, which was just below yesterday’s close, signaling that it was still intact as key support.

So it was no surprise to see TOTAL rally today and right into the $1.8T resistance area.

I still think the market sees one more leg down before we get a true bottom. For TOTAL, that could mean a move to $1.55T support.

That would likely coincide with a $35,000 BTC and $2,500 ETH.

Alternatively, a daily close above $1.8T would cast doubt on the above scenario.

Bitcoin (BTCUSDT)

Bitcoin is bouncing today from the $37,600 area, which served as support in late February and March.

However, BTC is also holding below $39,500, which served as support since April 11th before closing below the level on Tuesday.

So I think buyers have to be careful until $39,500 is reclaimed on a daily closing basis.

I continue to think there’s a decent chance Bitcoin tests the $35,000 region before the low is in.

Of course, that will depend on whether or not levels like $37,600 and $39,500 hold or not in the coming days.

Ethereum (ETHUSDT)

ETH continues to move lower within a descending channel from the April high.

It also broke below a short-term bear flag pattern just the other day, which I mentioned on Twitter.

The objective of that structure puts the upcoming low at around $2,500. Time will tell if that comes to fruition or not.

If it does, $2,500 also lines up with the March lows and the bottom of an ascending channel from January.

I think the odds are relatively high that we see ETH retest that $2,500 region before the next leg higher materializes.

If Ethereum bounces there and breaks free from the descending channel in the chart below, I’ll be eyeing a retest of the failed weekly level at $4,000 in the coming months.

That may sound like a lofty target, but markets love to retest failed levels before making their next move.

VeChain (VETUSDT)

VET lost the $0.055 handle yesterday, a level it had previously held above on the 18th. That means $0.055 is new resistance.

The next key support for VETUSDT is the $0.044 region, which has supported VET since January.

I’d expect a decent bounce from that region if tested, perhaps back to $0.055 and maybe even higher if BTC and ETH give us a relief rally this summer.

Alternatively, a daily close below $0.044 would open up the next key support at $0.035.

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Justin T Bennett

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About the Author

I'm Justin Bennett, a currency trader turned crypto enthusiast.

My journey started with stocks in 2002. After limited success, I transitioned to currencies in 2007, which later became a full time trading gig.

The journey continued, and in 2020, I committed to learning about cryptocurrencies. It was love at first sight.

Cryptocademy.com is the culmination of my love for cryptocurrencies, my passion for financial markets, and desire to learn and teach.

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