Hope feeds a bear market. Sometimes, the harder a market bounces, the more brutal the ensuing declines. It’s the three R’s: rally, rollover, resume. This type of price action was the hallmark of the 2008 decline in stocks.
In big coins, there are signs of a failed hope rally.
Litecoin (LTC), which led crypto on the way up, has failed after retesting a broken uptrend line. The location of that trend line is at $75 (Figure 1). What was support, is now resistance. If Litecoin (LTC) breaks another support point at $65, new lows are possible.
Bitcoin Cash (BCH) is in an even more precarious position.
Bitcoin Cash spiked down and then came back up to retest the bottom of the gap on the Coinbase chart at $276. It may be an ominous sign that Bitcoin Cash (BCH) failed right at $276 (Figure 2). In an environment where legal issues and fraud hang over the entire crypto market, there is no way Bitcoin Cash (BCH) can survive in this environment. In sum, the Bitcoin Cash (BCH) chart hints at a vertical drop to double-digit prices.
The bearish case in Ethereum (ETH) is more subtle. Ethereum (ETH) has failed badly at low time frame resistance and the 50% retracement of the recent down move. The level of resistance is at $160. The failure at $160 can set up a much bigger down move (Figure 3).
Bottom Line: If a dark cloud hangs over the crypto market from the New York AG’s action, coins with questionable use cases are in trouble.
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